Companies in the Asian country are looking to provide Guatemalan textile workers with accessories, threads and synthetic fabrics with finishes.
Textile companies in Guatemala envisage the possibility of generating more value in their supply chain with products that can be provided by Chinese companies that specialize in accessories and other necessary inputs for the textile production chain.
Efforts are growing to minimize the impact of the possible signing of the Trans-Pacific Partnership Agreement, and a tariff reduction program with long deadlines for sensitive products has been proposed.
As negotiations proceed to sign the Trans-Pacific Partnership Agreement (TPP), the textile industry in El Salvador is stepping up its efforts to maintain the conditions of the CAFTA treaty and minimize the impact that the TPP will have on the sector in the long term. One of the main risks is that "... Vietnam could introduce products from China and then export them tariff-free to the United States, which would give them a huge competitive advantage. "
The maquila industry approves of the government's decision to apply for formal admission into the agreement, which would improve conditions for textile companies competing with countries like Vietnam.
The Honduran Maquila Association (AHM) is one of the unions in the country which is most interested in being part of the trade union agreement, because the United States is the main destination for its production, and where textiles also come from countries that are already part of the agreement, such as Vietnam.
Honduran textile companies are not prepared for the total elimination of industrial exclusions demanded by Peru in the negotiation of the trade agreement.
The textile sector represents 20% of the items to be negotiated in order to close the FTA deal with Peru. This negotiation focuses on issues relating to rules of origin of threads and a request by Peru to eliminate industrial exclusions.
Between January and October foreign sales in the sector amounted to $1.281 billion, 5.9% more than the $1.21 billion generated in the same period in 2013.
From a statement issued by the Nicaraguan agency for promoting and exporting (PRO-NICARAGUA):
Nicaragua is the second country in the framework of DR-CAFTA with the highest percentage of exports of textiles in 2014.
Textile companies operating in free zones are preparing adjustments such as reductions in production lines in order adapt supplies in the event of the loss of tariff preference level, or TPL.
Although the timeframe for the expiration of the Tarriff Preference Level system with the United States is December 31, several companies are already starting to take steps to adjust their production in anticipation of the agreement not being renewed.
The Under Secretary of Commerce in the United States sees no need for renewal of preferential tariff arrangements, which up to now have favored Nicaragua's textile industry.
Statements by the senior official of the Obama administration fell like a bucket of cold water over textile entrepreneurs, who claim that without the renewal of TPL, production costs will increase by up to 40%.
Peruvian negotiators have asked Honduran maquila companies to use thread from the South American country at the same time as demanding that the agreement not contain exclusions.
The United States is the largest supplier of yarn for used by the Honduran textile industry and at the same time is the largest buyer of its production. In the context of negotiations, Peru is calling for more flexibility so that Honduras can the raw material not only from the US but also from the South American country.
Nicaraguan businessmen have proposed that Central America as a whole operates a preferential tariff treatment in the US for imports of textiles in the region.
After trying to negotiate, through several formats, tariff preference levels (TPL), so far unsuccessfully, textile entrepreneurs are now appealing to the union of the region to address the issue with the US once again.
The guild is analyzing looking for new markets to buy raw materials for the manufacture of textiles, if the US does not renew the tariff preferences.
The Tariff Preference Level (TPL) expires on December 31 and if it is not renewed the Nicaraguan textile industry will be looking for new suppliers such as India, China and Chile, which have lower supply than in the United States.
80% of the volume exported by the Honduran maquila sector in the first half of 2014 corresponds to textiles, 15% to harnesses, and the remaining 5% to other goods.
A report by the Central Bank of Honduras (BCH) specifies that when comparing the figure for the first half of this year with the same period of 2013, "... A slight increase of $8.2 million is observed. "
Analysis of the impact of the Trans-Pacific Partnership on the region.
The competition which sectors such as textiles could face is one of the elements raising questions among employers in the region, compared to the real benefits that could be accrued if Central America participates in the Strategic Economic Trans Pacific Partnership (TPP).
The presence of direct competitors, such as countries like Vietnam, in the textile sector, and the possibility of losing dominance in the American market due to trade rules that TPP countries must meet, is unsettling the productive sectors in the region and forcing a reckoning of the pros and cons of a possible entry to the block to be undertaken.
Textile entrepreneurs anticipate an increase in Canadian investment once the trade agreement with this country takes effect on October 1st, 2014.
Daniel Facussé, president of the Honduran Maquila Association reported that "... representatives of three Canadian companies visited the country and showed interest in investing in maquila and buying sportswear.
The possibility that the United States will not renew tariff preferences for Nicaraguan textiles at the end of the year is forcing the industry to prepare changes to their production schedule.
Although there is a possibility that the United States will grant an extension of the benefits of the Tariff Preference Level (TPL), if they are not renewed, starting January 1st, 2015 the Nicaraguan textile sector may no longer sell to United States products made from raw materials from countries that are not part of DR-CAFTA.
Nicaraguan textile companies expect an increase in sales after obtaining 'Better Work' certification which establishes better working conditions for employees.
The implementation of the program run by the International Labour Organization is a condition of international clothing brands such as Levi's, Target, GAP and other textile mills which need to buy materials to make their clothes, therefore its implementation in Nicaraguan companies is key to improving competitiveness and attracting new investment to the sector.