Issue 488| September 27, 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 
57 factories in  14  countries:

Bangladesh, Cambodia, China, Guatemala, India, Indonesia, Jordan, Mexico, Pakistan, Philippines, Sri Lanka, Thailand, United States, and Vietnam.

On September 20, WRAP participated in the webinar "Working Hours Best Practices" in cooperation with the American Apparel and Footwear Association. To download a recording of the webinar, click here. To view other AAFA webinars on a variety of topics, please click here
Upcoming Events

October 1-2
WEAR Conference
Toronto, Canada

October 18
Ho Chi Minh City, Vietnam
The WRAP Blog
Khoa Nguyen

This Week's Headlines

At the 19th Annual Textech Bangladesh International Expo 2018, Indian fabric manufacturers openly discussed their desire to become bigger players in the Bangladesh apparel production supply chain. Currently, Bangladesh imports fabric worth U.S. $7 billion a year for use in garment production. At this time, China is the leading supplier to Bangladeshi factories, with fabric exports totaling a little over U.S. $5 billion, with India coming in at U.S. $2 billion. Indian fabric manufacturers cite lower transport and overhead as their top selling point. ( The Daily Star )
Bangladesh has become a leader in the construction of environmentally conscious apparel production factories, as the country possesses the highest number of Leadership in Energy and Environmental Design (LEED) green garment factories certified by the US Green Building Council (USGBC). However, there is unrest emerging from the ranks of green garment factory owners, who have spent billions of dollars for setting up the units, due to the fact that brands are not paying higher prices from apparel sourced from these facilities. ( The Daily Star )
China will cut import tariffs on goods including machinery, paper, textiles and construction materials from Nov. 1, in a move that would lower costs for consumers and companies as a trade war with the U.S. deepens. The decision will reduce tariffs for 1,585 products according to Chinese state radio. The combination of these and other tariff cuts this year will reduce the tax burden on consumers and companies by about 60 billion yuan ($8.7 billion), the radio reported. The Chinese government has yet to detail how the general tariff cut will apply to U.S. goods affected by retaliatory tariffs in the trade war. ( Sourcing Journal )
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Dongguan is looking to become a smart manufacturing base, banking on the rise of domestic tech brands and booming domestic consumption. There are over 157,000 industrial enterprises across the city, which have formed mature and advanced industrial clusters, backed up by five pillar industries, including electronics information manufacturing; electrical machinery and equipment manufacturing; textile, clothing and shoe; food and beverage manufacturing; and paper and paper products. ( South China Morning Post )
Hong Kong
Esquel Group, Hong Kong's most prolific maker of cotton shirts, is putting a bold new plan into action, one that transitions from a low-cost business model predicated on favorable locations for production towards a robotic future. The company has invested in San Francisco robotics company Grabit with the aim of automating its production lines, a move that will allow it to set up production where its customers are. ( South China Morning Post )
Transport companies throughout India are increasing their costs, due to gas prices which continue to rise. Fuel prices have crossed Rs 82 (U.S. $1.03) per liter, and Indian garment traders are now going to be forced to raise the overall cost of readymade garments by 0.5 percent. There are fears of further hikes in garment prices as Indian industry experts are fully expecting full prices to cross the Rs 100 ($1.19) mark shortly. (Bangalore Mirror)
Working from home or a small workshop as opposed to in a factory, is commonplace in the fast-fashion supply chain. This is particularly prevalent in countries such as Bangladesh, China, India, and Vietnam where millions of low-paid and predominantly female homeworkers face challenges such as uncertain employment status, isolation, and a lack of legal recourse. Now, there are revelations that conditions like these exist in Italy, the source of some of the world's most expensive wardrobe items.  ( New York Times )
The text of the Trump Administration's trade agreement with Mexico is due to be released on Friday, launching a contentious approval process as pressure mounts on Canada to sign a revamping of the North American Free Trade Agreement (NAFTA). The text will flesh out an agreement in principle reached by the United States and Mexico on Aug. 27 that aims to re-balance trade between the two countries and modernize the 1994 NAFTA pact with new chapters on digital trade, and stronger labor and environmental standards. ( Reuters )
Myanmar and Turkey have been listed by the United States Department of Labor's Bureau of International Labor Affairs (ILAB) in its annual List of Goods Produced by Child Labor or Forced Labor. Garment industries in both countries were cited as having employed child labor. The report, which includes 148 commodities from 76 countries, was mandated by the Trafficking Victims Protection Reauthorization Act of 2005 and is updated regularly. ILAB continuously collects data from worldwide exporters to educate industry leaders on dangerous goods and regions that might otherwise escape notice.  ( Sourcing Journal )
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Brands are now looking to the Philippines as a regional alternative to production in China due to the imposition of additional tariffs by the United States. Before the trade duties came into force, production costs were almost 15 percent higher than they would be in China, but now with the prices evening out, Chinese apparel producers are looking to the Philippines as a means to escape the trade war. ( Just Style )
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South Korea
South Korean President Moon Jae-in and U.S. President Donald Trump signed a renegotiated free-trade agreement on the sidelines of the United Nations General Assembly, marking the President's first finalized trade agreement since entering office. The signing ceremony in New York on Monday represented significant progress for proponents of free trade between the partners, as Trump last year reportedly planned to withdraw from the pact, which came into effect in 2012 . ( Sourcing Journal )
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Sri Lanka
Police said that over 300 employees of a garment factory in Minuwangoda were hospitalized last Saturday due to food poisoning. Police reported that 156 employees had been admitted to the Gampaha Base Hospital, while 150 employees were admitted to the Minuwangoda Hospital. Police are continuing their investigation into the source of the mass illness.  (Adaderana)
World trade will slow more sharply than previously expected this year and next as global tariffs rise and maybe even weaken further if additional levy increases are implemented, the World Trade Organization (WTO) said Thursday. The Geneva-based body responsible for enforcing the rules that govern global trade warned that the rise of protectionist trade policies throughout the world will continue to create instability in the global trade market. ( Wall Street Journa l)
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Amid rising trade tensions and uneven economic conditions, global yarn and fabric manufacturing showed significant declines in the first quarter of 2018 compared to the fourth quarter of the prior year. The Swiss-based International Textile Manufacturers Federation (ITMF) reported that world yarn production decreased nine percent in the period. Increases of three percent in the U.S. and 12 percent in Brazil canceled out production reductions of 13 percent in Africa, 11 percent in Asia and 1.5 percent in Europe. ( Sourcing Journal )
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United Kingdom
According to the World Container Index (WCI), despite a brief drop over the last few days, world freight rates remain comparatively high, and fuel prices showing no signs of falling, shippers can expect costs to stay inflated. The WCI is measured by British consulting firm Drewry and is a composite of container freight rates on eight critical routes to and from Asia, Europe, and the United States. Freight rates were down 1.6 percent to U.S. $1,725.32 per 40-foot container or equivalent unit (FEU) for the week ending Thursday. However, the composite index was up 24.6 percent compared with the same period of 2017. The average composite index of the WCI for year-to-date was U.S. $1,459 per FEU, which is U.S. $57 below the five-year average of U.S. $1,516 per FEU, Drewry noted.  ( Sourcing Journal )
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United States
Retailers are continuing to embrace mobile apps as a means of driving up business; however, there is a catch. According to the online research firm Criteo, these apps cannot merely exist in a vacuum; retailers must actively promote them to get the desired uptick in business. According to Criteo's report, retailers that actively support their in-house shopping apps see those apps collect a 65 percent share of all transactions, assisted by a conversion rate that is three times higher than shopping over the mobile web. Year-over-year, in-app purchases grew by 30 percent in 2018.  ( Sourcing Journal )
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The "Made in the USA" label is making a comeback, albeit a slow one. From 2013 through 2016, American based apparel manufacturers have noted a five percent rise in capital expenditures and modest increases regarding domestic shipping of apparel. However, employment in the sector continues to decline as manufacturers continue to embrace automation to remain competitive with foreign producers.  ( Sourcing Journal )
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The tariff wars are heating up between the U.S. and China, and if clothing ultimately gets caught in the crossfire, that will have a lot to do with the price of apparel in America. With new 10 percent tariffs taking effect Monday on Chinese sourced goods such as travel bags, leather clothing, woven fabrics and wool yarn, companies like Samsonite and Gap have already expressed plans to raise prices.  ( Sourcing Journal )
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Former Congressman Darrell Issa has been nominated by President Trump to head the United States Trade and Development Agency (USTDA).  The USTDA is a small independent federal agency with a U.S. $79.5 million budget whose primary goal is to increase U.S. exports in emerging economies. It attempts to do this in a variety of ways, including conducting reverse trade missions and hosting training conferences and workshops. Issa, the former Chairman of the House Oversight and Government Reform Committee, is a long-time businessman who founded several automotive-related firms.  ( San Diego Union Tribune )
To decrease the threat of counterfeit products in different industries, Applied DNA Sciences has introduced a biochemistry-based innovation in apparel authentication. By partnering with North Carolina-based thread manufacturer American & Efird LLC, Applied DNA Sciences unveiled a DNA-tagged thread that includes a DNA marker, which can test authenticity by adding a small amount of activator fluid to a swab that has been brushed on the product to collect a sample.  (California Apparel 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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