The impact that the crisis will have on companies related to the textile, leather and clothing sector in Central America is estimated to be explained, to a greater extent, by the expected drop in sales of carpets and curtains.
The "Information System for the Impact Analysis of Covid-19 on Business", developed by the Trade Intelligence Unit of CentralAmericaData, measures the degree of impact that the crisis will have on companies according to their sector or economic activity, during the coming months.
The union of sheep producers confirmed that the Chinese government has already approved the protocol and the respective certification for imports of sheep leather from Costa Rica.
From a statement issued by the Costa Rican Sheep Association:
San José, Costa Rica, November 30, 2017. The governments of China and Costa Rica have reached an agreement so that producers of Costa Rican sheep can export leather of these animals to the Asian nation.
In 2016 Central American countries imported $28 million worth of footwear and parts from Mexico, 7% more than in 2015.
Figures from the information system on the Central American Market for Footwear and its parts, compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption = "Click to interact with the graph"]
In 2015 Panama led the importation of footwear and related materials in the region, with $234 million, followed by Costa Rica, which imported $155 million, and in third place Guatemala, with $154 million.
Data from the report Foreign Trade Office on Shoes, similar articles and related materials,prepared by Business Intelligence Unit at Centralamericadata.com shows that in 2015 the countries of the region imported $757 million, corresponding to a volume of 84,484 tons.
Coffee, textiles, clothing accessories and leather are some of the products that have opportunities for being sold in the European country.
In addition to traditional products such as coffee, textiles, leather and accessories, representatives of the Franco-Nicaraguan Chamber of Commerce identified opportunities in the French market for other non-traditional export products such as chia.In 2015 the country exported $32 million worth to the European country and imported goods worth $110 million, according to central bank figures.
In 2014 imports of leather goods and saddlery amounted to $1,647 million, a growth rate averaging 7% a year.
From a statement issued by the Costa Rican Foreign Trade Promotion Office (PROCOMER):
Leather has resurfaced as one of the leading fashion styles, both on Canadian catwalks and in retail stores, being recognized for its softness, durability and luxuriousness.
As part of the controls to combat smuggling, between May and July 29 companies were suspended from the list of importers, which represents 60% of the total volume of pairs of shoes entering the country.
In order to detect and prevent irregularities in the import of footwear, the General Administration of Federal Tax Audit Tax Administration Service of Mexico carried out 31 audits "...
The sharp rise in the world price, generated by increased demand and shortage of tanning skins is turning traditional shoe leather into a luxury product.
The rise in price due to scarcity and increased demand has started to create the perception that leather is a commodity which is too expensive to use for mass shoe production and is more geared towards a higher segment.
It has been announced that a tax of 25% to 30% will be applied to imports of footwear, as part of the suspension of tariff reduction implemented by the previous government.
In addition to the tariff, shoes "... may only be imported through nine customs offices, instead of the previous 33: Lazaro Cardenas, Manzanillo, Mexico, Guadalajara, Veracruz, Tijuana, Mexico City International Airport, Ciudad Hidalgo and Nuevo Laredo. "
The strong growth in demand from China can be taken advantage of by Central American producers.
From a statement by the Foreign Trade Promotion Office of Costa Rica:
Asian demand is not only revolutionizing the international meat market, it is also driving demand for leather. South American countries such as Argentina, Brazil and Uruguay have detected a sharp increase in demand for leather in China.
In Costa Rica only 10% of cattle hides are processed and consumed by the local industry, the remaining 90% is salted and exported.
Elfinancierocr.com reports that in Costa Rica, "Five years ago, tanneries changed their production process from making finished leather to salted hides, a raw material generates higher returns."
As a result, the local companies that require leather in their production processes have been forced to import their raw material.
An official delegation is inspecting phytosanitary conditions in the Central American country in order to allow imports of beef, leather and milk powder.
A Statement from the Ministry of Agriculture reads:
Costa Rica continues its attempts to open up new export markets for products of animal origin, by receiving Russian health authorities who are conducting an audit visit which runs from May 22 until June 1.
Since the beginning of commercial relations with China, imports of textiles, shoes and leather goods have exceeded those from the US.
According to data from Costa Rica's export promotion agency, Procomer, since 2010 imports of US leather have been exceeded by those from the Republic of China, which reached $198 million, after bilateral relations were established.
China endorsed the health protocol necessary to allow the entry of Costa Rican leather products.
By signing these health protocols, the importing country - in this case China - supports compliance with certain standards established for the product in question by the exporting country, this in order to ensure regular exports to the Chinese market.
The maximum AQSIQ chief, Wei Chuanzhong, pledged to speed up the procedures necessary to approve other pending protocols: dairy, beef, pork and chicken.
Costa Ricans are opening the way in the Chinese market, relying on a sanitary protocol that is being defined in FTA negotiations.
Traditional markets for the export of hides, leather and fur such as the United States and Europe have reduced product purchases by over 50%. In the first quarter of this year, Costa Rica exported $7 million worth of the product, while exports were $17 million during the same period in 2008.