Issue 492| November 2, 2018
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Welcome to The WRAP Weekly newsletter.  Feel free to look around and thank you for being a loyal reader.

This week, we certified 
22 factories in nine  countries:

Bangladesh, Cambodia, China, Egypt, Haiti, India, Indonesia, Jordan, and Vietnam.

In his op-ed for Sourcing Journal, WRAP President and CEO Avedis Seferian addresses the need for a clear, concise, and harmonized framework for social  compliance within the apparel sector. 
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Gerwin Leppink

This Week's Headlines

BanglaDhaka will not extend the tenure of the Accord on Fire and Building Safety (Accord) beyond November 30, ending hopes that the European run organization charged with factory safety and remediation would see their mandate to remain in Bangladesh extended for an additional three years. The tenure of the Accord, a platform of nearly 200 retailers, was initially supposed to come to an end in May this year, but the government extended it by six months to November 30. ( The Daily Star)

Exports from Bangladesh into India grew 142 percent in the first quarter of the new fiscal year, with apparel leading the way with a total of U.S. $145 million worth of exported goods.   Bangladesh has been enjoying duty-free market access to India, attracting global retailers that are increasingly opening outlets in India. In addition, Indian clothing chains are importing more as they find it more financially lucrative when compared to domestic production.  ( Dhaka Tribune )

Once a thriving aspect of Bangladesh's apparel manufacturing industry, the opportunities for subcontractors have dwindled as brands and retailers have imposed strict controls in the wake of disasters like the Tazreen Fashions fire in 2012 and the Rana Plaza building collapse in 2013. With tighter safety measures imposed after those tragedies, subcontracting factories found it harder to exist in the marketplace and consequently, some within the industry find it harder for new investors and entities to enter the nation's apparel production sector. ( The Daily Star)

CanadaA sprawling Pacific trade deal led by Japan is on the verge of kicking in provisionally after Canada became the fifth country to formally ratify the pact. Prime Minister Justin Trudeau's government sent a formal notice of its ratification on Saturday to New Zealand, which is compiling records for the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Canada finalized its legal process over the weekend after lawmakers passed the deal Thursday.  ( Bloomberg )

With both nations embroiled in trade disputes, China and the United Kingdom are slowly investigating expanding their relationship when it comes to trade.  While China and the U.K. have had a prosperous relationship when it comes to fashion, there are many fearful that the fallout from a potential "no-deal" Brexit could stretch into Asia. To that end, British apparel brands have been working hard to solidify their relationships with Chinese buyers and assure them that their goods are on par with those from places like France and Italy.  ( Sourcing Journal )
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Political strife continues to ravage Guatemala, especially in the wake of President Jimmy Morales ending the mandate of the Commission Against Impunity in Guatemala (CICIG), an anti-corruption group set up by the United Nations in order to clean up domestic politics. With the fight against corruption no longer a priority within the nation, many are fearing that there will be an adverse impact to the nation's garment export business. However, that impact has not become apparent as of yet; August of 2018 saw six percent growth in apparel exports when compared to the same period in 2017. (Just Style)
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IndiaIndia's position in the World Bank's Ease of Doing Business ranking rose 23 spots to rank 77th rank among 190 countries measured by the index.  India has improved on six of the ten parameters on starting and doing business, which includes ease of starting a business, construction permits, getting electricity, getting credit, paying taxes, trade across borders, enforcing contracts and resolving insolvency, according to the World Bank's report. ( Fibre2Fashion )

Far less regulated than factory work, home-based work, defined as labor performed in households and small workshops rather than the traditional factory setting, is still not well understood by brands and retailers, and is prevalent in developing nations like India. Many home workers, who operate informally at the bottom of the supply chain, are among the sector's most exploited. They may not work under the generally accepted definition of sweatshop-like conditions, but the irregular, extremely low-paid and piece-rate nature of the job means home workers frequently lack job security or stable incomes. ( Sourcing Journal )
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Historically, China and Japan have proven to be rivals within Asia, arguing over vast swaths of territory in the surrounding oceans. However, with ongoing uncertainty in global trade markets, that dynamic could be shifting dramatically. Last week's visit to Beijing by Japanese Prime Minister Shinzo Abe is being viewed as a turning point in relations between the two nations, with  plans for a broader regional economic partnership and a special trade zone linking up China, Japan and South Korea to be discussed in a future summit between Abe and Chinese President Xi Jinping. (BBC)

Kenyan farmers will start commercially growing transgenic Bt cotton beginning next April after a nearly two-decade wait. This development could represent a game-changer in Kenya as it could revive the nation's long-dormant apparel and textile production industry and potentially reduce the nation's dependence on secondhand clothing imports.  Bt cotton yields almost three times more than current conventional varieties and takes between 130 and 180 days to mature. ( Fibre2Fashion)
South Africa
SASouth Africa's Clothing and Textile Competitiveness Programme (CTCP) has helped sector exports grow from R7.1 billion (U.S. $4.9 billion) in 2008 to R25.1 billion (U.S. $17.9 billion) in 2017 and will receive its share of the R15.9 billion (U.S. $11.1 billion) allocated to various government programs. The Small Business and Innovation Fund (SBIF) will also help entrepreneurs in the pre-start-up phase. As a result of these government initiatives,  twenty-two new leather factories have been opened in the last nine years creating 2,200 jobs. (Fibre2Fashion)
United States

When U.S. tariffs were levied in September on U.S. $200 billion worth of Chinese imports, brands began shifting their manufacturing footprint in order to compensate for the changing landscape. The initial round of 10 percent tariffs did not cover apparel or footwear, but it did include fabric and handbags. Now, a new series of duties targeted for early next year on U.S. $257 billion in trade with China will likely include clothing with the current 10 percent tariffs expected to rise to 25 percent on January 1. With this reality in mind, American clothing manufacturers are beginning to shift their production footprint with several brands reducing their output from China by as much as 20 percent. 

Personal Consumption Expenditures (PCE) for clothing and footwear fell U.S. $2.62 billion in September, to U.S. $402.94 billion. This represents a 0.6 percent drop from August, according to Bureau of Economic Analysis (BEA) figures released Monday. Overall real PCE, which includes an adjustment for inflation, rose 0.3 percent in September, reflecting an increase of U.S. $33.5 billion in spending for goods and a U.S. $3.5 billion increase in spending for services, according to BEA. ( Sourcing Journal)
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According to the just-released Better Buying Purchasing Practices Index (BBPPI) Fall 2018, more than 55 percent of suppliers have been impacted by high-pressure cost negotiation techniques. These tactics included measures such as not paying for samples, not paying on time, not paying the full price listed on a purchase order, and demanding that level prices be maintained from year-to-year. The report, produced by Delaware-based Better Buying, contends that increased financial pressures on suppliers increases the risk for issues such as business failure, supply disruption, and environmental and human catastrophe and urges brands to maintain a holistic approach when attempting to reduce costs. (Just Style)
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Fashion trends seesaw constantly, but rarely does an entire category shift. Yoga pants have managed to plunge denim into a crisis, with many brands looking to adapt as quickly as possible. Brands are adding innovations such as stretch and contouring to denim while attempting to maintain their traditional rugged appearance. However, yoga pants are still a hot commodity within the industry as consumers spent over U.S. $48 billion on active-wear last year with additional growth predicted by the end of this year. ( Sourcing Journal)
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St. Louis' efforts to re-establish itself as a hub for clothing manufacturing and design are poised to take a big step forward if a team of apparel and fashion industry veterans can pull off a plan to build a high-tech garment factory downtown. Labor costs are going up as the middle class grows in developing countries, and the supply chain of offshoring makes big clothing companies less able to react to consumer tastes. ( St. Louis Post Dispatch)

The holiday season is a crucial time for U.S. retailers, and with consumers facing more constraints on their time than ever, retailers are looking to speed up the experience for customers. Some of these steps include providing additional delivery options, expanding online shopping accessibility and increasing the hours for physical retail locations to meet demand. Many within the industry view these measures as imperative, with consulting firm Deloitte predicting a five percent rise in sales this season. ( Sourcing Journal)
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Around the world, companies and countries are vying for business currently leaving China due to the ongoing trade war with the United States. While the Trump Administration has made it clear that one of its goals in confronting China on trade is to spur growth in American domestic manufacturing, there are few indicators of that occurring. Instead, Vietnam, along with other Asian countries are witnessing an influx of manufacturers looking to evade the ongoing China/U.S. trade war.  ( The Economist )

A project to make the textile industry more environment-friendly has been launched in Hanoi by the World Wide Fund for Nature (WWF) and the Vietnam Textile and Apparel Association.  The initiative will engage multiple players in the sector to promote improving the nation's overall water quality and encouraging sustainable energy use.   The textile and apparel industry is one of Vietnam's most economically essential business areas as it contributes 15 percent of exports and has seen a steady annual growth rate of 12 percent since 2010. (Vietnam News )
About WRAP
Headquartered in Arlington, Virginia, USA, with regional offices in Hong Kong, SAR, and Dhaka, Bangladesh, full-time staff in Europe, India and Southeast Asia (Thailand, Vietnam, and Indonesia), and for Latin America, WRAP is an independent, objective, non-profit team of global social compliance experts dedicated to promoting safe, lawful, humane, and ethical manufacturing around the world through certification and education. To learn more about WRAP, please visit .

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