Issue 491| October 19, 2018
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Welcome to The WRAP Weekly newsletter.  Feel free to look around and thank you for being a loyal reader.


The WRAP Up
This week, we certified 
31 factories in  13  countries:

Bangladesh, China, El Salvador, Honduras, India
Indonesia, Jordan, Malaysia, Mexico, Nicaragua, Pakistan, Sri Lanka, 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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Notice: The WRAP team will be engaged in a company-wide retreat from October 22 to 26. As such, there will be no edition of The WRAP Weekly next week. See you in November!
Upcoming Events

October 18
Ho Chi Minh City, Vietnam
The WRAP Blog
By:
Gerwin Leppink



This Week's Headlines


Bangladesh
BanglaOn Monday, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that the implementation of the new wage structure for apparel workers would be a significant challenge for the sector and could lead to the closure of some readymade garment (RMG) units. Siddiqur Rahman, president of the BGMEA, called for the Bangladeshi government to intervene and stabilize apparel prices within the country in order to sustain the wage increase recently enacted by Dhaka. ( Dhaka Tribune

Clash At least 18 persons were injured when employees of a garment factory in Gazipur clashed with local police on Monday during a march to protest unpaid wages. The workers were protesting the fact that the management of the Intramex factory, located in the Laxmipura area of Gazipur, had not paid employees in over five months. The demonstration was sparked when factory management failed to carry through on an October 14th deadline to pay out September wages. ( The Daily Star)

Bangladeshi garment manufacturers want to join with their Sri Lankan counterparts to enhance the garment supply chain by reducing production lead time by at least ten days. Under a new agreement between the  Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and their Sri Lankan counterparts, Bangladeshi garment manufacturers will send essential items to different garment factories in Sri Lanka for finer washing, remaking, and inserting various accessories. After finishing the goods, Sri Lanka will ship them off with the 'Made in Bangladesh' label to different European markets. ( The Daily Star)

Belgium
Now in beta, the free-to-use Open Apparel Registry (OAR) seeks to become the "go-to source" for identifying apparel facilities and their clients by collating different factory lists into a central, open-source database. Users can currently access the names, addresses, and affiliations of more than 50,000 factories and mills, each of which brandishes a unique OAR ID for ease of tracking. The database itself is not owned by any one particular entity, but instead supervised by an interim board of directors made up of individuals with experience in the sourcing realm. ( Sourcing Journal)
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Cambodia
Cambodia The European Union (EU) threatened to withdraw Cambodia's special trade status if Prime Minister Hun Sen was reelected, sparking concerns that the country's economy could face significant hardship should the EU proceed with this measure. Currently, Cambodia enjoys tariff-free access to the European market, resulting in annual exports totaling around U.S. $6 billion. The EU cited concerns with the regime's record on human rights, along with fears that the most recent elections may have been rigged to return the current government to power.( Sourcing Journal)
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China
The United States is warning China to refrain from weakening its currency as a way to lessen the pain of President Trump's tariffs, with top American officials suggesting that any trade deal between the two countries should contain measures to prevent manipulation of the renminbi. The renminbi has fallen six percent against the dollar this year, raising concern that the Chinese government is intervening to help make its exports cheaper in the face of Mr. Trump's tariffs on U.S. $250 billion worth of Chinese goods. ( New York Times )

In China's manufacturing heartland around the Pearl River Delta, the 10 percent tariffs imposed by the U.S.  are causing little concern. The 25 percent duties that loom next year are another matter. The muted impact of the current round of tariffs on China's manufacturers so far is expected to be confirmed in third-quarter economic data scheduled for release on Friday. The economy, in the throes of a policy-induced slowdown, is seen ticking down a notch with gross domestic product expanding 6.6 percent from a year earlier. That domestic slowdown combined with external pressure resulting from the threat of additional tariffs is prompting manufacturers to prepare for a more difficult 2019. ( Sourcing Journal)
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Ethiopia
The fourth Africa Sourcing and Fashion Week (ASFW) served as an opportunity for around 250 apparel and textile firms from across Africa to come and showcase their product offerings. Those assembled at the event also discussed the present and future for the continent's apparel industry. While there is enthusiasm regarding the expansion of the industry, all agreed that there was still a lot of challenges, including insufficient infrastructure to transport goods and materials and inadequate skills training for employees. ( Just Style)
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India
Indian spinners who, last year, had reported low profitability, are breathing a sigh of relief following the surge in export demand for cotton yarn in 2018. The revival in export demand has enabled ICRA's sample of large spinning companies to report a healthy growth of five percent year-on-year in the first quarter of the fiscal year, which has translated into a sales increase of nearly 12 percent during the quarter. ( Fibre2Fashion)

Tiruppur, India's knitwear hub known for its cluster units, appears to be fading away due to several garment manufacturers closing local facilities and shifting production to countries such as Ethiopia and neighboring Sri Lanka which boast fewer roadblocks in accessing the European Union and the United States. Investors also cite lack of national government support and ever-growing bureaucratic red tape as motivation for shifting more production out of India. ( Deccan Herald)

Myanmar
Dozens of Burmese  garment workers were injured on Monday after a clash with assailants wielding iron bars outside a Chinese-owned factory in Yangon. Hundreds of employees of Fu Yuen Garment Co Ltd, which has produced clothes for German supermarket chain Lidl and British fashion brand Joules, have been striking for weeks demanding the reinstatement of 30 sacked workers. The origin of the assailants is unknown at this time, with workers claiming the factory had hired the attackers to stir public sentiment against their efforts, while the factory owners are claiming that the striking workers were responsible for the violence. ( Reuters)

Netherlands
Dutch investors are calling for better wages in the garment industry. Eight institutions representing a combined 725 billion euros (U.S. $839 billion) in financial firepower - Achmea Investment Management, ASN Bank, ASR Nederland, Kempen, MN, NN Investment Partners, Robeco and Triodos Investment Management - have linked arms to create Platform Living Wage Financials (PLWF), a coalition that is further backed by ABN Amro, an Amsterdam-based bank, and the pension funds PME, PMT and MITT.  ( Sourcing Journal)
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Panama
A World Trade Organization (WTO) panel recently rejected Panama's claim for U.S. $210 million annual sanctions on Colombia for non-compliance with an earlier ruling against tariffs on clothing, textile, and footwear imposed by the latter to target alleged "money laundering." Panama won at the WTO in 2016 after complaining about Colombian tariffs on the same items. ( Fibre2Fashion)

Switzerland
UPU The Trump Administration on Wednesday announced its intent to withdraw from the Universal Postal Union (UPU), a little-known United Nations agency that governs global postal rates.  This announcement represents another move against international institutions considered harmful to U.S. interests. The decision was borne out of frustration with shipping discounts imposed by the UPU that allow China and some other nations to ship products into the U.S. at cheaper rates than American companies receive to ship domestically. ( The Hill)

Tajikistan
Tajikistan's production of textile and apparel rose by 30 percent in the first eight months of this year, totaling more than U.S. $89.6 million, according to a report released by the country's Department of Energy and Industry. The industrial production index in the sector rose by 29.1 percent due to an increase in the output of cotton fiber, fabric, carpets, carpet products, and hosiery. Textile exports amounted to more than U.S. $149.6 million for the said period, which was U.S. $ 71.6 million, or 92 percent, more than the same period last year. Out of that, over U.S. $106.9 million is accounted for by exports of cotton fiber, a top news portal in the region reported citing a statistics agency of the country. ( Fibre2Fashion)

United Kingdom
Britain will lose access to dozens of trade agreements if it chooses to exit the EU without a formal deal in March next year, Her Majesty's government confirmed in a "no-deal Brexit" planning notice published Friday. The paper, drawn up by the Department for International Trade, says "around 40 free trade agreements with over 70 countries" will no longer apply to the U.K. if it leaves the European Union without a withdrawal agreement. ( Politico)

United States
SearsSears, the one-time titan of American retail, filed for bankruptcy ahead of a U.S. $134 million debt payment due Monday, and announced that it would close 142 stores. For years, Sears has contended with the threat that it would become the latest big-name retailer to fall to online competition and crushing debt. The icon once known for its pristine catalogs, saw its stock price plunge last week after reports that it had hired an advisory firm to prepare a bankruptcy filing ahead of the October 15 payment.  ( The Washington Post )

Companies already dealing with increased costs from raw materials and tariffs will now have to pay more for delivering packages in the crucial last mile of order fulfillment. The United States Postal Service (USPS) this week filed a notice with the Postal Regulatory Commission (PRC) for price hikes to take effect January 27. The proposed prices would raise mailing services product prices around 2.5 percent, while shipping services price increases vary by product. The increases range from U.S. $0.70 to U.S. $1.05 per parcel, depending on package size. ( Supply Chain Dive)

In its October report on the state of the market, Cotton Incorporated said Hurricane Michael, the second storm in a month, topped Hurricane Florence as a more significant threat to U.S. production. Michael covered more cotton acreage, and the crops in its path had a higher percentage of bolls open and more vulnerable, according to the report. 
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President Donald Trump vaguely threatened to terminate the newly agreed upon United States-Mexico-Canada Agreement (USMCA) if Mexico fails to stop a caravan of immigrants from entering the United States. The threat came via the President's Twitter account and was a part of a larger threat to seal the U.S.'s southern border with Mexico. The USMCA, which is the successor to the North American Free Trade Agreement (NAFTA), has not been finalized and Congress is not expected to take up ratification of the new treaty until 2019. ( The Washington Post)
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  www.wrapcompliance.org .

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