If the United States withdraws from the Transpacific Agreement, there will be less risk of competition from Asian countries for the Central American textile industry.
If the US does eventually abandon the Trans-Pacific Partnership Agreement (TPP), as promised by President-elect Donald Trump, the Central American textile industry could benefit from the elimination of the possibility that the US, its main market, will buy textiles from Vietnam at lower prices.Since the start of negotiations for the TPP, the Central American textile industry has tried to negotiate bilaterally with the US in order to minimize the negative effects that the TPP could have on the industry in the region.
In the agreement between the region and South Korea the rule of origin for Salvadoran Textiles was recognized, which will prevent the importation of fabrics to later be used in the manufacture of garments in El Salvador.
The Salvadoran government managed to include in the agreement the recognition by South Korea of a rule of origin for textiles, in order to protect the entire chain in a country where virtually all of the raw materials for the manufacture of garments are produced, with the exception of cotton.
Colombia is replacing the controversial mixed tariff with a threshold of $10 / kg for clothing and between $6 and $10 per pair of shoes, and will temporarily apply the maximum tariffs of 40% and 35%, respectively, and above the threshold, a tariff of 15%.
The Panamanian government has expressed its opposition to the new measures implemented by Colombia.The Minister of Commerce and Industry, Augusto Arosemena said the neighboring country"... can not adopt in parallel through supposed customs controls, measures which violate other obligations on market access and customs valuation, still less substantiate them using arguments that were rejected in two legal cases, as the supposed justification of enforcing laws on money laundering.
An end has been reached to the additional time period requested by Colombia to continue charging the 10% tariff on textiles and footwear coming from the Colon Free Zone, but it is not known whether they will continue to implement the measure.
A strategy focused on increasing competitiveness by reducing production costs and facilitating the creation of added value is what industrial enterprises have asked for.
Improving training in the use of new tools and technology and giving more value to final production are two of the main challenges faced by companies in the industrial sector.The union that brings them together is aware that the potential of the country in this sector can not be maximized if aspects affecting global competitiveness are not improved.
Although clothing and car wiring harnesses continue to lead, the number of types of goods exported under the free zone regime has gone from ten in 2008 to 20 today.
Production and export of clothing and wiring harnesses are still the main goods produced and exported under free trade zone conditions, but now others have been added such as as cigars, edible oil, fruits, leather shoes, paper, cardboard, and manufactured leather covers for furniture.
The textile sector claims that the high cost of electricity in the country has become a limiting factor to foreign investment.
The union of textile companies states that more foreign investment could reach the industry if the cost of electricity was not so high.According to Dean Garcia, executive director of the Nicaraguan Association of the Textile and Apparel Industry (Anitec),"... there could be benefits from the entry of textile companies and spinning mills setting up in Nicaragua and producing sufficient raw material for the industry that already exists in the country. "
A report by the Business Intelligence Unit at CentralAmericaData.com notes that in 2015 Central American countries imported $318 million worth of yarns, filaments and textiles, led by El Salvador with $157 million.
El Salvador was the main importer of synthetic filaments, strips and materials similar to synthetic textiles last year, according to data on the Textiles and Raw Materials Market compiled by the Business Intelligence Unit at CentralAmericaData.com.
To compensate for the loss of market which is expected once the Transpacific Agreement takes effect, the textile industry intends to resume FTA negotiations with the northern country.
A free trade agreement with Canada would allow the exporting textile companies to enter a market with high potential, since according to theexecutive director of Camtex, Patricia Figueroa, the country imports more than $14,000 million a year in textiles products and confection of synthetics such and towels, carpets, curtains and tablecloths. "
At the end of the first half of the year maquila textile exports to the United States grew by 13% compared to the same period in 2015.
Figures from the biannual report by the US Office of Textiles and Clothing (OTEXA) show that between January and June Nicaragua sold 255 million square meter equivalents (SME) to the United States generating revenues of $708 million.
The devaluation of the Mexican peso could be one of the reasons behind the increase in the illegal entry of footwear from that country into Guatemala.
The effect of shoe smuggling across the border with Mexico is added to footwearimports from Asia, which despite paying the corresponding duties and taxes are,"... still priced below those of the local market"said Bayron Almorza, president of the Union of Footwear attached to the Chamber of Industry of Guatemala, to Prensalibre.com.
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