Risks for the Apparel Maquila in Central America
A regional industry at risk: You can now add the reduction of US imports to the elimination of the Multi-fiber Agreement of a few years ago.
Monday, April 20, 2009
The apparel maquila is confronting a new challenge. The US recession has caused a contraction in clothing sales and hence a reduction in imports. Asian, Latin American, African and other regional producers are already embroiled in a fierce competition for the US market. It is a new challenge because it is adding to what the region faced some years ago following the abolition of the MFA, which enabled China to become the world’s gigantic "sewing machine."
Between January and May sales grew by 25% compared to the same period in 2010.
Exports have grown a mild 3.4%, with agricultural goods leading the way; Guatemala’s trade balance with the U.S. remains negative.
Guatemala is preparing a plan to inspect factories in order to avoid a possible arbitration, forced by the US, for non-compliance of labor standards under CAFTA.
The main textile company in the country will cut 4000 jobs in the next few months.
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