leather api 2

8/14/2019 Leather API 2

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LEATHER INDUSTRYLEATHER INDUSTRY

PRESENTED BY:

BEENISH ZUNNOONMADIHA NASIR


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WHAT IS LEATHER?WHAT IS LEATHER?

Leather is defined as animal skin that has been

chemically modified to produce a strong, flexible

material that resists decay.

The term HIDE is used for the skin of cattle andSKIN is used for skin of smaller animals such as

goat, sheep, and calves.

The process of using chemicals to turn skins and hides

into leather is called tanning.


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AGENDAAGENDA IMPORTANCE STRUCTURE -units in leather sector -tanneries in Pakistan -Raw material

GLOBAL SCENARIO -major buyers -Global demand -market share -vacant area in trade

Foot and mouth disease

WTO

Impact of wto

Where does leather industry fall inwto

Role of government

Tax

Sectoral issues

Future of leather industry


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IMPORTANCEIMPORTANCE

It is the 2nd largest export earning sector

after textile.

This sector provide employment to

250,000 peoples. The fine quality of leather produced in

Pakistan is recognized worldwide.

Raw material for leather industry are

easily available in Pakistan that are hides

from cows, buffalos, goat and sheep.


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STRUCTURE OF LEATHERSTRUCTURE OF LEATHER

INDUSTRYINDUSTRY


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UNITS IN LEATHER SECTORUNITS IN LEATHER SECTOR

UNITS NUMBER

GARMENTS 461

FOOTWEAR 524

GLOVES 348

GOODS 142

TANNERIES 725

SPORTS 160


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TANNERIES RUNNING INTANNERIES RUNNING IN

PAKISTANPAKISTANAlmost 2500 leather units are running in Pakistan.

which are located in Karachi , Sialkot, Kasur,

Faisalabad, Multan, Peshawar and Gujranwala.

Major tanneries are located at Karachi,Kasur andSialkot.


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RAW MATERIALRAW MATERIAL

Livestock is the main

source of raw material

for leather products.

Skins and hide take a

very low share , 4% of

total value of livestock.


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GLOBAL SCENARIOGLOBAL SCENARIO


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MAJOR BUYERSMAJOR BUYERS

Leather industry in an export-oriented sectorLeather industry in an export-oriented sector

and major buyer of Pakistani leather are:and major buyer of Pakistani leather are:

Italy

Spain

Portugal

South Korea

Germany

France United kingdom

Dubai

United states of Ameri


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GLOBAL DEMANDGLOBAL DEMAND

The demand for tanned leather is rising as the

developed countries have closed their tanneries due to

strict environment control laws.

The number of tanneries in Pakistan are increasing tomeet up with the global demand.

India is a major competitor of Pakistan but its leather

does not enjoy good reputation because their cattle's

have thinner skins and hides than those of in Pakistan


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GLOBAL DEMAND (cont)GLOBAL DEMAND (cont)

Until 1970s , Pakistan

exported raw hides,

skins and semi-

processed leather in theform of picked, wet blue

and crust leather .Then ,

in 1980s finished leather

and leather products

became major export.


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SHARE IN GLOBAL MARKETSHARE IN GLOBAL MARKET

COUNTRY %AGE SHAREEXPORT VALUE (US$)

China 40% $ 8 billion

India 10% $ 2 billion

Turkey 8% $ 1.6 billion

Italy 8% $ 1.6 billion

Pakistan 3% $ 0.7 billionOther

countries31% $ 7.2 billion


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VACANT AREAS IN LEATHERVACANT AREAS IN LEATHER

TRADETRADE

Shoe Upper Leather (Gents and Ladies) +

Children Shoes

Garment Leather (Trousers etc.)

Gloving Leather (Fashion Gloves)

Leather Goods (Purses, File Covers, Briefcases,

Key Chains etc.)

Leather Chemicals (Manufacturing of Leather

Chemicals locally instead of imported

materials.)


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FOOT & MOUTH DISEASEFOOT & MOUTH DISEASE

The FMD resulted in the massive culling of cattle in the UK . It meant that it would take years for the UK to rebuild its cattle

stock and the resultant shortage of availability of domesticleather .

The three resulting consequences of FMD are:

1.Import leather from outside, the main beneficiaries of which canbe Pakistan and India whose tanning industries have thecapacity and capability to meet UK's demand in terms ofquality and quantity .


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FOOT & MOUTH DISEASEFOOT & MOUTH DISEASE

(CONT)(CONT)

2. UK would resort to placing direct orders for leather products.

3. Increased joint-venture in the value-added leather products.

All three potential scenarios can help Pakistan to make a deeper

penetration in the UK and also a unique chance to make it

sustainable.


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WORLD TRADE ORGANIZATIONWORLD TRADE ORGANIZATION


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Formation 1 January1995 Headquarters Geneva ,SwitzerlandMembership 151 member statesOfficial languages English, French, Spanish

Director-General Pascal LamyBudget 175 million Swiss francs

Staff 635Website http://www.wto.int/

The World Trade Organization deals with the rules of trade between nations ata near-global level .
http://en.wikipedia.org/wiki/Date_of_establishmenthttp://en.wikipedia.org/wiki/January_1http://en.wikipedia.org/wiki/1995http://en.wikipedia.org/wiki/Headquartershttp://en.wikipedia.org/wiki/Genevahttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Official_languagehttp://en.wikipedia.org/wiki/English_languagehttp://en.wikipedia.org/wiki/French_languagehttp://en.wikipedia.org/wiki/Spanish_languagehttp://en.wikipedia.org/wiki/Director-General_of_the_World_Trade_Organizationhttp://en.wikipedia.org/wiki/Pascal_Lamyhttp://en.wikipedia.org/wiki/Operating_budgethttp://en.wikipedia.org/wiki/Swiss_franchttp://en.wikipedia.org/wiki/Employeehttp://en.wikipedia.org/wiki/Websitehttp://www.wto.int/http://www.wto.int/http://en.wikipedia.org/wiki/Websitehttp://en.wikipedia.org/wiki/Employeehttp://en.wikipedia.org/wiki/Swiss_franchttp://en.wikipedia.org/wiki/Operating_budgethttp://en.wikipedia.org/wiki/Pascal_Lamyhttp://en.wikipedia.org/wiki/Director-General_of_the_World_Trade_Organizationhttp://en.wikipedia.org/wiki/Spanish_languagehttp://en.wikipedia.org/wiki/French_languagehttp://en.wikipedia.org/wiki/English_languagehttp://en.wikipedia.org/wiki/Official_languagehttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Genevahttp://en.wikipedia.org/wiki/Headquartershttp://en.wikipedia.org/wiki/1995http://en.wikipedia.org/wiki/January_1http://en.wikipedia.org/wiki/Date_of_establishment


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MISSION- Its main mission is to ensure that trade flowsas smoothly, predictably and freely as possible.

FUNCTION- It oversees the implementation,administration and operation of the covered agreements and it

provides a forum for negotiations and for settling disputes.


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IMPACT OF WTOIMPACT OF WTO

The Agreement on Technical Barriers to Trade (TBT) and theAgreement on the application of Sanitary and PhytosanitaryMeasures (SPS) can have significant impact on Pakistansability to increase the exports in this sector .

The environmental issues related with the leather industry inPakistan could have significant negative effects on its exports .

If the Pakistani exporter does not improve the quality of theproduct, the current competitive advantage that Pakistan has in

this field could quickly fade away.


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IMPACT OF WTO (cont)IMPACT OF WTO (cont)

The debate in the leather sector rages about whether unfinished

leather should be exported.

The exporters of leather garments want exports of raw leather

to be restricted to give them a competitive advantage of

cheaper raw material. But the tanners claim every right to fetch

the best price for their products.


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WHERE DOES LEATHERWHERE DOES LEATHER

INDUSTRY FALL IN WTO?INDUSTRY FALL IN WTO?

GENERAL - leather and leather products are covered underthe general provisions of the GATT 1994.

TARIFFS- No import tariffs are applied to raw hides andskins in Pakistan at present .

EXPORT SUBSIDIES- export subsidies/refunds are

hardly used in the sector. However, Pakistan has given 25 %freight subsidy on exports of leather garments for a period of

one year, starting from January 1 to December 31, 2005.


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INDUSTRY FALL IN WTO (cont)INDUSTRY FALL IN WTO (cont)

EXPORT PROHIBITION AND RESTRICTION-Restrictions on export of raw hides and skin, wet blue and crust, aretypically imposed in order to assist the development of the domestic

tanning and leather manufacturing industries

FOOD SECURITY-Provides income and is a source ofemployment in tanning and manufacturing.


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INDUSTRY FALL IN WTO (cont)INDUSTRY FALL IN WTO (cont)

ENVIRONMENTAL MEASURES- Tanning industrycan be highly polluting. The cost of meeting environmental

standards is one reason for shift of activity from developed todeveloping countries.

RURAL DEVELOPMENT- important

SAFEGUARD MEASURES- limited


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ROLE OF GOVERNMENTROLE OF GOVERNMENT

(NILT) National Institute of Leather

Technology - The only institute in

Karachi which offers programs

for the development of the leather

sector.

No subsidiary provided by

government.


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ROLE OF GOVERNMENTROLE OF GOVERNMENT

Leather product development center is being put under the

control of NILT to facilitate better skill development. they

work with provincial government to improve quality of

livestock for raw material.(2004)

Trade policy (2003-04) offers consulting services for technical

up gradation and marketing.

Highly trained Korean technicians are engaged by PLGEA toimpart training to Pakistan labor force.


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TAXESTAXES

Sales tax is reduced.

No quota on export.

Government deduct 6% tax on export.


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SECTORAL ISSUESSECTORAL ISSUES

TANNING

Shortage of local hides

fulfillment to environmentalstandards

High proportion of damagedhides due to diseases andimproper slaughtering or

preservation

FOOTWEAR

Undeveloped industry

Lack of marketing linkages

Lack of trained human

resource

Non-availability of quality

shoe component/accessories


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SECTORAL ISSUES (cont)SECTORAL ISSUES (cont)

GARMENT/GLOVE

Narrow product mix

Lack of design/developmentfacilities

Procedural barriers in

importing raw material

LEATHER GOODS

Undeveloped industry

Low technology level

Lack of marketing linkages


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FUTURE OF LEATHERFUTURE OF LEATHER

INDUSTRY (recommendations)INDUSTRY (recommendations)

Introducing Brand Names

Focusing on Footwear Sector

Tackling Environmental and Labor Issues

Control on Smuggling & Diseases of

Livestock

Reduction of Duties on Machinery


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