PART III

Trading Partners

CHAPTER 10

The Americas and the Caribbean Basin

LABOR COSTS FOR TEXTILE PRODUCTION IN THE

AMERICAS

Textile production costs

are lower outside the U.S.

but quality and efficiency

are issues.

3

ROLE OF

NORTH

AMERICAN

(NAFTA)

COUNTRIES IN

TEXTILES AND

APPAREL

The North American Free Trade Agreement (NAFTA) went into effect in 1994 between the United States, Canada, and Mexico

By 2002 the United States was the largest trading partner of Canada and Mexico and the largest foreign investor in both countries

The effect of NAFTA on the industrial well-being of the participating countries has been controversial

---Briefing paper NAFTA 2011

5

THE UNITED STATES

Market-oriented economy; private individuals and business firms make most decisions

Long-term problems include:

•Rapidly rising medical costs

•Pension costs of the aging population

•Sizable trade and budget deficits

•Stagnation of income for middle and lower-income groups

6

DOMESTIC PRODUCTION OF TEXTILES AND

APPAREL

7

Between 1980 and 2002, the apparel workforce was cut 56.6 percent

Over past 15 years U.S.-based manufacturers, such as

VF Corporation and Levi Strauss & Co., have closed

dozens of plants in the U.S. and moved them to low-wage

countries

DOMESTIC PRODUCTION OF TEXTILES AND

APPAREL

8

New York’s Garment District

is major fashion marketing

center but the district’s

manufacturing faces

extinction

In January 2010, Mayor

Bloomberg announced

initiative to ensure fashion

industry continues to be

centered in New York

(Feitelberg & Moin, 2010)

CALIFORNIA APPAREL CENTERS

9

Manufacturers also abandoning

the San Francisco area

Opportunity to develop a niche

market of designer venues

Levi Strauss & Co. and Guess

still have headquarters here but

source production offshore

U.S. RETAILING

Walmart, mergers, and the growing visibility of fast-fashion retailers from Europe, such

as H&M and Zara, are the big news

Merchandisers still source at major trade fairs, but they are moving toward developing

private label merchandise and sourcing off-shore

Increased Internet shopping

10

11

U.S. ROLE IN THE TEXTILE AND APPAREL TRADE

12

In addition to NAFTA, the United States has many free trade and trade preference programs with countries around the world

MEXICO

NAFTA’s benefits across the country were unequal

Institutional failures in improving accountability, regulatory effectiveness, and control

of corruption have moderated the gains provided by NAFTA (NAFTA, 2003)

13

RETAILING IN MEXICO

Retailing in Mexico developed two distinct parts:

A growing, modern retail sector with specific target markets, operational efficiencies, and

advanced technology

The traditional retail sector with open markets in which prices are bartered, and taxes not paid

Walmart is now Mexico’s largest retailer and is Mexico’s largest private sector

employer

Sam’s Club is also very successful in Mexico

14

FREE TRADE AGREEMENT (FTA)

http://www.youtube.com/watch?v=VevlD6jNPE

E&feature=related American workers

http://www.youtube.com/watch?v=3REN2Mii7

xA&feature=related South Korean farmers

http://today.msnbc.msn.com/id/45340184/ns

/us_news-life/ Wall street protest

http://www.youtube.com/watch?v=J3O0A5Jwc

y0

15