duty free sourcing and american trade preference programs
TRANSCRIPT
DUTY FREE SOURCING AND
AMERICAN TRADE
PREFERENCE PROGRAMSOpportunities and Challenges
OVERVIEW OF TEXTILES AND APPAREL Total American Imports of
Textiles & Apparel: $107. 4 billion (2014)
Approximately - $82 Billion in Apparel - $25 Billion in Textiles
Growth in textile and apparel imports between 2013 and 2014: 2.6%
A growth of $2.7 billion Current environment presents opportunity
for investment2008 2010 2012 2014 2015
93.1 93.3
100.9
107.4110.4
Total U.S. Textiles & Apparel Imports by
year ($billions)
CURRENT TEXTILES AND APPAREL IMPORTS
China Vietnam CAFTA India NAFTA Indonesia Bangladesh AGOA+QIZ+ HELP & HOPE
0
5
10
15
20
25
30
35
40
45 Approx. Imports in $billions (2014)
$5 Billion
$2.9 Billion
$6 Billion
$1.5 Billion
$10 Billion
$41 Billion
$6.7 Billion $8.2 Billion
$5.1 Billion
• Currently $2.9 Billion come from AGOA, QIZ, and HELP & HOPE programs
• Represents big growth potential for duty-free sourcing
$6.2 billion
$1.2 billion $840 Million $930 Million $750 million $750 Million $435 Million
- Duties paid- Duties Saved
SIGNIFICANT OPPORTUNITIES IN TRADE PREFERENCE PROGRAMS
3 Long-term Strategies for Apparel Haiti HELP and HOPE Programs Egypt-Israel QIZ Program AGOA (African Growth and
Opportunity Act)
Provide potential duty-free sourcing, often using 3rd country inputs
PREFERENCE PROGRAM UTILIZATION
AGOA+QIZ+HELP & HOPE3%
Other17%
China40%
Vietnam10%
Bangladesh5%
Indonesia5%
India6%
CAFTA-DR8%
NAFTA6%• Preference programs
combined exports to US: • Growth of 23% from
2009 to 2014
2014 US Market Share
AGOA: 10 year renewal (to 2025) with 3rd party sourcing
Haiti HELP & HOPE II: 5 year extension to 2025
QIZ: does not expire, recently expanded
Renewal, Extension and Expansion of Duty-Free
Sourcing
Preference Programs: Not a World Away
HAITI – HOPE II & HELP
The HOPE II and HELP programs extended until 2025
Maintain enhanced access to the American market
Renewed opportunity for growth and investment
HAITI – HOPE II & HELP
$854.3 million total U.S. imports in 2014 (includes CBTPA)
8% increase 2013-2014 12% increase 2014-2015 (YTD) 60% increase in Haitian textile and
apparel imports since 2010 Haiti’s share of U.S. clothing imports
are up 25% since 2009. Textiles and apparel now account for
90% of Haitian exports and nearly one-tenth of GDP
HAITI’S GROWING COMPETITIVE ADVANTAGES
Proximity of Haiti to the American market is a major benefit for both producers and consumers
Reduction of shipping costs Quick turn around from production to the market to meet consumer
needs A growing competitive advantage
A growth in foreign direct investment in recent years. Tax benefits Benefits of 3rd party sourcing Competitive labor costs
THE HAITIAN OPPORTUNITYHOPE- HELP- CBTPA
Presented by Mark D’Sa – US Department of State
WHAT’S AVAILABLE IN HAITI ?
HOPE Woven 200,000,000
HOPE Knit 200,000,000
HOPE Value Add 332,915,916
CBTPA Knit 970,000,000
CBTPA T Shirt 72,000,000
Total 1,774,915,916
Available TPLs (SMEs)
Exports are
growing at
15.5% per year Jobs are growing at
11.3 % per yearSME utilization is growing at an average of 6.78% annually
Based on the last five years
TEE SHIRTS, JEANS, WORK WEAR,PERFORMANCE KNITS, UNDERWEAR, WOOLEN SUITS, OVERCOATS, CHILDREN’S WEAR, SCRUBSJust some of the products “MADE IN HAITI”
THE NUMBERS BEHIND THE PROGRESS
Category 2010 2011 2012 2013 2014Year Ending
Aug-15
Total US Export (US $$) 517,569,303 701,475,798 730,050,515 803,337,058 854,286,569 904,725,306
Total SMEs Exported/Utilized 253,059,766 275,627,575 270,374,140 306,440,449 313,930,534 335,151,576
Apparel Industry Jobs 27,144 26,835 29,404 31,462 36,350 40,904
USD Exports per job $ 19,067.5 $ 26,140.3 $ 24,828.3 $ 25,533.6 $ 23,501.7 $ 22,118.3
SME Utilization / Job 9,322.86 10,271.20 9,195.15 9,740.02 8,636.33 8,193.61
Change in SME utilization/yr 0 8.92% -1.91% 13.34% 2.44% 6.76%
Change in Jobs0 -1.14% 9.57% 7.00% 15.54% 30.01%
Change in Exports0.00% 35.53% 4.07% 10.04% 6.34% 12.62%
THANK YOUQuestions / Queries to [email protected]
QIZ: QUALIFYING INDUSTRIAL ZONEEGYPT-ISRAEL
Allows Egypt to export products to the United States duty-free Products must contain inputs
from Israel.
Never expires
QIZ RULES OF ORIGIN
Eligibility: QIZ factories must meet a regional value content of 35%.
Can include inputs from Israel, Egypt, and the United States.
Israel’s contribution must be at least 10.5% of the content requirement.
QUALIFYING INDUSTRIAL ZONES
Since its inception, the QIZ program has continued to expand
In total, the program now encompasses 15 designated zones
QIZ EXPORTS
Egyptian textile and apparel production have provided an important source of exports to the U.S.
Egyptian operations and trade have continued throughout periods of unrest
2014
2013
2012
2011
2010
2009
Egypt’s Textiles and Apparel Exports Value To U.S.
$ Export Value
Arab Spring
QIZ Your Duty Free Gateway
to the US MarketSourcing Journal Summit NYC 2015
Gabby BarIsraeli Co-Chairman of QIZ committee
Ministry Of Economy
What is QIZ?
• A QIZ is an area in Egypt, that was designated by the United States, from which goods can be exported duty free and quota free to the United States.
• In order to enter the US duty free and quota free, these goods must meet the QIZ Agreement criteria and must be approved by the QIZ Committee.
“Win.Win.Win”• For the U.S:
(a) An unlimited term agreement
(b) Allows unlimited textile and apparel imports to USA, duty free
(c) Access to highly professional, experienced and skilled
Egyptian suppliers
(d) Diversifies the sources of imports into the U.S
“Win Win Win”
• For Israel: “Opens” new markets for Israeli export
• For Egypt: Improves competitiveness of their exports to the U.S
• Joint objective: To enhance business and industrial cooperation
and to increase bilateral trade between Egypt and Israel, thus
contributing to the bilateral cooperation and peace!
QIZ Rules of Compliance
The final products must undergo substantial transformation
Other inputs- Direct & Indirect, Local & Foreign origin
65.0%
Israeli direct inputs10.5%
Egyptian direct inputs
24.5%*
The Final Product
11.7% Minimum Egyptian inputs
*Up to 15% can also be sourced from the U.S.
Israeli IndustryAdvanced Technology and Materials!
Fabrics
Zippers
Chemicals
Interlining
Elastics
Labels
Threads
Hangers
Packaging
Washing Materials
Yarn
THANK YOU FOR LISTENING!
תודה רבהشكرا
BY THE NUMBERS
Land Area1 Million KM2
12 Day Shipping
90 Million People-------------
Labor Force
27 Million
$286 Billion
More than 1,500 Garment Factories
Total Garment Industry Output
$3.2 BillionTextile & Garment Workers
1,500,000
56%% of Garment Production
Exported to the U.S.
Over 30 Years of Garment Export Experience
EGYPT & GARMENT INDUSTRY FACTS
Q.I.Z. Stats• Duty Free• No Expiration• No Fabric Restriction• Stress Tested & Passed!• Nearly $7.5 Billion in Total QIZ Exports• Est. $900 MM in 2015 Exports• Over 700 Certified QIZ Factories• 15 Designated Zones• New Zones being added• Flexibility in Israeli component use
What’s in it for You!
Experienced Managers and Supervisors
Quality Control
15 Commercial Ports• High Compliance Standards• Multiple Ports• Competitive Pricing• Air Cargo Service• Lead time 75 to 120 days• Qualified Production Personnel• Quality Control• Laundry Experts• Training Institutes• University Degrees in Textiles• Banks : Trade Facilitation• Customs Officials• Sales & Merchandising• Experienced Machine Operators• Product Diversity• Product Development• Garment Export Council
Vision For the FutureEgypt to become the leading exporting MENA country in the Textiles industry, focusing
on high and medium value added products catering to the world’s largest retailers and manufacturers with reliable and agile delivery.
V. Strategic Objectives Creation of 1 Million New Job Opportunity Train 750,000 Workers, Supervisors and Managers Increase exports to achieve USD 10 Billion Attract local and Foreign Investments of USD 13.5 Billion Increase the Value-Added to 70% of locally manufactured raw materials
VI. Strategic Focus Expanding the Industrial Base through Developing and Enhancing the
Competitiveness of local industry Backward Vertical Integration of Industry, promoting investments into primary
textiles and fiber production Foster Export’s growth and market entry Focus on Human Capital Development Reform of Government policy
Thank You
AGOA: OPPORTUNITIES AND POTENTIAL
• Renewal: 10 years (to 2025) with 3rd party sourcing benefits
AFRICA: A HUGE AND DIVERSE OPPORTUNITY
• Sub-Saharan Africa Pop.:• 800 Million (approx.)• Pop. Growth: 2.3%
• Economic Growth: • 4.7% per annum• Global GDP Avg: 2.4%
• Continued growth + duty free access to American/EU markets
• well positioned to provide duty-free sourcing opportunities
AGOA ELIGIBILITY• 41 AGOA participant-
nations 26 qualified for textile and apparel benefits
*South Africa does not qualify as an LDBC and is ineligible for 3rd party fabric provision
• Benin• Botswana• Burkina Faso• Cameroon• Cape Verde• Chad• Cote d'Ivoire• Ethiopia• Ghana• Kenya• Lesotho• Liberia• Madagascar
• Malawi• Mauritius• Mozambique• Namibia• Niger• Nigeria• Rwanda• Senegal• Sierra Leone• South Africa*• Tanzania• Uganda• Zambia
AGOA Apparel Provision:Qualifying Countries
AGOA ELIGIBILITY AGOA textile and apparel
benefits: Eligibility based upon progress in:
Market-based economies The rule of law Barriers to U.S. trade and investment Corruption Poverty Education Human rights Labor rights
Eligibility is reviewed on a yearly basis.
RULES OF ORIGIN
Certain apparel allowed to enter the U.S. duty-free provided one of the following rules
is met: Apparel made of U.S. yarns and fabrics Apparel made of U.S. fabrics and/or knit-to-shape components,
from U.S. yarns and sewing thread Apparel made of regional sub-Saharan Africa (SSA) yarns and
fabrics (subject to a cap) Apparel made in a designated SSA lesser-developed beneficiary
country (LDBC) of third-country (China, Pakistan India, etc.) yarns and fabrics (subject to a cap)
Items containing less than 10% 3rd party fabrics that are otherwise eligible (de minimis rule)
SHORT SUPPLY LISTQualification for short supply:1) Yarns and fabrics designated as ‘not
available’ in commercial quantities in the U.S.2) Yarns and fabrics considered in short supply
in NAFTA Short supply items can be sourced from
anywhere and qualify as duty-free Not subject to a cap or de minimis rule
US IMPORTS THROUGH AGOA (2014)
Top 10 African textile-apparel exporters to the American market (Approx. 2014):
1) Kenya - $380 million 2) Lesotho - $290 million 3) Mauritius - $223 million 4) Swaziland - $55 million
5) √ Madagascar - $20 million 6) South Africa - $18 million 7) Tanzania - $17 million 8) Ethiopia - $12 million 9) Botswana - $9 million 10) Malawi - $4 million Total African Exports0
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
$802,968,443
Total AGOA Textile-Apparel Exports to U.S. Market
2010 2011 2012 2013 2014
$1,035,857,859
US IMPORTS THROUGH AGOA (2014)
Valuable import items: Men’s/boys’ woven cotton trousers ($166,081,359)
Lesotho, Kenya, Mauritius
Men’s/boys’ woven cotton shirts ($148,078,693) Kenya, Mauritius, Ethiopia
Manmade fiber sweaters ($97,870,263) Lesotho, Kenya, Malawi
Women’s/girls’ woven cotton trousers ($94,570,113) Kenya, Lesotho, Mauritius
Women’s/girls’ knit synthetic fiber trousers ($83,335,904)
Lesotho, Kenya, Mauritius
THE FUTURE OF AGOA
Problem: AGOA has been underutilized Only 4 countries achieved a per capita value >$10 for
non-energy AGOA exports Mauritius, Lesotho, Swaziland, South Africa
The countries that focused on textile and apparel production have benefitted the most
GROWING AGOA Multiple Market Access
Duty free access to the US and EU markets AGOA Competitive Advantages
Target high duty rate items Leverage existing production
Only scratched the surface of what is possible
OVERVIEW 3 great opportunities for duty free
sourcing Flexibility in 3rd country inputs
Full range of products A growing presence in the US market 10 years or more to capitalize on these
investments and strategies
Gail W. StricklerAssistant United States Trade Representative for Textiles and Apparel
For further contact: [email protected]+1-202-290-7454
www.ustr.gov
Mark D’SaUnited States Department of StateContact: [email protected]
Gabi BarIsraeli Co-Chairman of QIZ committee
Ministry Of EconomyContact: [email protected]
Waleed El-ZorbaChairman of Nile Clothing Company
Contact: [email protected]
Hon. Joshua SetipaMinister of Trade and Investment
Government of LesothoContact: [email protected]
Karla MagruderFabrikology International
Contact: [email protected]