The Asia Pacific region is likely to emerge as the major beneficiary of the Regional Comprehensive Economic Partnership (RCEP) as importers will increasingly move away from the EU, US and other non-member markets, says a new report by the United Nations Conference on Trade and Development (UNCTAD).

New trade worth $17 billion on the anvil

Titled, ‘A New Centre of Gravity’, the report forecasts, exports worth billions of dollars will get diverted from nations not included in the trade deal. Importers in the RCEP block will capitalize on tariff concessions offered in the agreement, boosting intra-Asia exports by nearly 2 per cent from 2019 levels, or approximately $42 billion. Non-member nations will no longer benefit from lower tariffs as the 15 members will secure trade roughly worth $25 billion. They will also generate new trade worth $17billion amongst member states. RCEP will emerge a as the new centre of world trade, predicts the report. Tariff concessions offered by the agreement will boost trade within the newly formed bloc, it adds.

Deals with broader trade issues

Covering almost a third of the world’s population and 30 per cent of its GDP, the RCEP agreement was finalized on January 1. The deal brings together the 10 Asean nations, alongside China, Australia, New Zealand, Japan and South Korea. It standardizes trade rules across the region. One of the primary goals of the agreement is to support wider business environment by dealing with broader issues such as intellectual property, e-commerce, regulation of competition and government procurement. The deal has been delicately negotiated to help countries protect their export sectors. However, the UNCTAD report says, tariff concessions offered in the agreement may lead to disruptions in world trade pattern in future.

Tariff elimination to boost exports

The RCEP agreement eliminates tariffs on 90 per cent goods over the next 20 years. It also eliminates tariffs on 65 per cent of products traded within the bloc. This tariff elimination will benefit Japan most as it exports to member countries will grow 5.5 per cent or $20 billion from 2019.

Other countries like Australia, China, South Korea, and New Zealand are also likely to benefit from tariff reductions. China’s exports to the RCEP bloc will grow by $11.2 billion, Korea’s exports by $6.7 billion, Australia’s by $4.1bn while New Zealand’s exports will grow by $1.1 billion.

Trade diversion to impact developing nations

The RCEP-led trade diversion will also affect major markets such as the US and the EU besides impacting the developing economies of Bangladesh and Pakistan. As per the report, the EU will lose exports worth $8.3 billion to RCEP countries while US’ exports are expected to be hit by $5.1billion. Hong Kong’s exports will decline by $3.3billlion and Taiwan’s by $3billion.

Countries like Bangladesh, Pakistan and Sri Lanka will suffer bigger losses with Bangladesh reporting a 12 per cent drop in exports to RCEP. Exports by smaller emerging economies including Vietnam, Cambodia, Indonesia and the Philippines are also likely to drop due to tariff concessions, with Vietnam’s exports dropping by $1.5 billion. Yet, the UNCTAD report, upholds joining of RCEP by these countries as it strengthens their economic integration and offers them various other benefits like a boost in foreign direct investment, technology sharing, structural transformations, etc.

Reputed brands Puma, Nike, Zara, C&A and GAP have not complied to all labor laws, reveals Workers Rights Consortium (WRC). A report by the independent organization overseeing labor rights says, over 400,000 workers in Karnataka, India have been paid less than the state’s legal minimum wage since 2020. The total amount of unpaid wages in the state exceeds £41 million. Each worker earns around £83 a month. Scott Nova, Executive Director, WRC calls this the biggest wage theft ever in the fashion industry. Western brands have failed to ensure due payment to workers despite persistent demands from the consortium, he opines.

Supplier’s defense

Suppliers on the other hand defend their stance stating the Ministry of Labor had issued a decree suspending minimum wage increase shortly after its implementation in April 2020. The Karnataka High Court is yet to give its final decision on the issue, they add. However, the HC has already said the Ministry of Labor’s decree as illegal in September last year and suppliers need to pay the minimum wage, including all arrears to workers, argues WRC

Meanwhile brands Puma, Nike, Zara, C&A and GAP say they are committed to pay legal minimum wage to workers. However, it depends on their suppliers, who also need to comply with the court order. Nike for example expects suppliers to comply with local legal requirements and also the brand’s code of conduct. C&A has directed suppliers comply with the court order and is awaiting a written confirmation from factories. Zara-owner Inditex has introduced a strict code of conduct for suppliers to ensure factories pay legal minimum wages. These wages need to be sufficient to meet the basic needs of workers and their families, Nova adds.

WRC also encourages suppliers to pay variable dearest allowance, the local equivalent to half-yearly salary adjustment granted by the government, adds Nova. In this regards, C&A continuously undertakes a series of initiatives and processes to guarantee respect for its employees and the law at all its stores, distribution centers and other administrative areas. Meanwhile Puma states, despite having limited influence over Karnataka’s suppliers, they are encouraging them to pay due minimum wages.

UK-based sustainable activewear brand Tala plans to utilize the £4.2 million raised in seed funding to invest in boosting activewear inventory, hiring and global expansion.

As per Apparel Resources, the funding round was jointly led by equity firm Active Partners and venture capital company Venrex. Other investors include the likes of Pembroke VCT and Simon Mottram, Founder Rapha (a sportswear brand), amongst many others.

Grace Beverley, CEO and Founder, Tala said the company will use some of the investment to buy deeper into popular styles.

Notably, Tala, which makes clothes in Vietnam, China, Turkey and Portugal, lists down every factory it uses on its website. It offers high-performance and sustainable activewear, including leggings, shorts, sports bras, tops, hoodies, tracksuits, outerwear and underwear.

The National Council of Textile Organizations (NCTO) has welcomed the House passage of the America Competes Act, a legislative package that will help close the de minimis loophole on duty-free imports from China and also renew the Miscellaneous Tariff Bill (MTB), both important provisions to U.S. textile manufacturers.

According to Kim Glas, President and CEO, NCTO, the legislation contains a provision that would effectively prohibit China from exploiting the Section 321 de minimis mechanism in US trade law, a win for US textile producers and workers.

The Import Security Fairness Act allows imports valued under $800 to come into the United States without paying duties and taxes, bypassing inspections by U.S. Customs and providing a backdoor to Chinese goods produced with forced labor. The loophole has not only fueled the rise of imports from foreign e-commerce companies and mass distributors, but it has also put our domestic manufacturers and workers at a competitive disadvantage.”

Another important provision in the legislation renews the MTB for two years, which would extend limited tariff relief on a range of manufacturing inputs used by US textile producers.

As per a new report by IndexBox, cotton prices in India are expected to rise by 5 per cent in 2022 on account of strong global demand and limited supply.

In 2021, the average cotton price surged by 41 per cent Y-o-Y to $2.23 per kg. Despite the global cotton production rebounded after a 2020's drop last year, reaching the pre-pandemic level of 26.3M tonne, growing demand outstrips supply.

In H1 2022, cotton prices are projected to increase, as global production at the beginning of the year is lower than in the previous months due to smaller crops in India and the U.S. This year, the average annual cotton price is expected to pick up by 5 per cent Y-o-Yto approximately. to $2.34 per kg. Instigated by boosting demand and high domestic cotton prices, China is forecast to ramp up imports sharply, also stimulating the price rally.

According to China National Intellectual Property Administration (CNIPA), the application for patents of all kinds by the Chinese sewing machinery industry increased by 19.79 per cent to 8,775 in 202.

Of all these applications, patent for invention formed 25.29 per cent (2,219), new practical patent shares 62.94 per cent (5,523) and patent for appearance design (including textile equipment) contributes 11.77 per cent (1,033).

These figures indicate that the overall scientific research and innovation capacities in the Chinese sewing machinery sector and the growth in the quantity and quality of invention patents over the years.

The data also shows that the sewing sector has seized the opportunities created by a new round of technological revolution and industrial transformation, built robust strength of independent research and development and laid a solid foundation for constructing a sector proficient at innovation.

Spanish retailer Mango aims to generate a revenue of €1 billion by the end of this fiscal year. As per an Apparel Resources report, the retailer also plans to expand its brick-and-mortar store network in the current fiscal year. In 2021, Mango launched 221 new stores, taking its overall store count to 2,447. Its latest store was launched at Manhattan-based Fifth Avenue. It also launched the sustainable fashion brand Alter Made that offered the best of durable and timeless high-quality pieces with sustainable characteristics.

Known mainly for women’s wear, menswear and kidswear, Mango has over 16,000 stores across the globe. The brand was founded in 1984 with first website launched in 1995. In 2000, the brand opened its first online store. Its men’s line H. E. by Mango was created in 2008. It was renamed as Mango Man in 2014. Mango also launched a range for teenagers, Mango Teen, via a pop-up shop in Barcelona in September 2020. In 2021, Mango launched a new Mediterranean-inspired store concept to meet higher sustainable standards.

Denim brand Soorty has teamed up with Lenzing to launch Reload in Blue, a collection of elevated loungewear styles that make soft denim suitable for home wear. As per a Sourcing Journal report, the collection offers Zoom-appropriate athleisure sets and sleepwear alternatives made of denim. It combines the companies’ commitment to limiting their environmental footprint. It includes Lenzing’s environmentally responsible and biodegradable fibers as well as the LEED-certified production methods of Soorty’s vertically integrated infrastructure.

Fabrics in the collection are made with Tencel Lyocell, a certified fiber produced from sustainably sourced wood using closed loop and environmentally responsible processes. Lenzing provides physical identification for every Tencel branded fiber with its fiber identification technology, assuring brands and consumers that the raw materials it uses originate from responsible resources.

Designed in New York and produced in Karachi, Pakistan, the collection is now available for view at Soorty’s newly opened SpaceD showroom in New York’s Flatiron District. The space serves as a meeting location for brands and sustainably minded individuals to connect and accelerate progress towards a sustainable denim sector.

Hanesbrands has raised its revenue targets for 2024. The company expects to surpass the $8 billion revenue mark by this year, from prior goal of $7.4 billion. It expects sales at Champion brand to reach $3.4 billion for the same time period. In addition, it expects to have a cumulative three-year free cash flow of about $1.6 billion by 2024.

Hanesbrands’ revenues from activewear segment continue to increase year-over-year despite the pandemic. As per a Woman’s Wear Daily report, its total activewear sales increased 11.4 percent, or $46 million, during the quarter, year-over-year. For the full year, activewear sales rose nearly 42 per cent to nearly $1.7 billion. The firm logged more than $60 million for the quarter, or $77 million for the year. Hanesbrands’ global sales of innerwear remained roughly flat in the last three months but continued to be dominated on the strength if men’s, women’s and children’s divisions, as well as socks. Its, overall innerwear sales fell in 2021, compared with prior year, on account of HanesBrands’ decision to exit the PPE category early last year.

Steve Bratspies, CEO says, the company is implementing a three-year, $600 million stock repurchase program based on its confidence in future growth. It also plans to sell its US Sheer Hosiery business for an undisclosed amount. The transaction is part of the group’s continued efforts to focus on areas of the business with the greatest growth potential.

Muhammad Ayub, President, Bangladesh Cotton Association says, stakeholders in the Bangladesh’s garment industry and the concerned ministries need to take various steps to clear current container backlog and ship congestion. They need to consider roads and railways as means of import alongside the shipping routes. Stakeholders also need to make efforts to ensure supply of cotton through diplomatic contacts and trade cooperation agreements with various cotton producing countries, says Ayub. They need to focus on global cotton production, use, etc by forming a high-powered committee of Bangladesh Cotton Association, Bangladesh Textile Mills Association, Bangladesh Garment Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association and the ministries of textiles, commerce, agriculture and foreign affairs, he adds.

Currently, Bangladesh imports cotton from different West African countries besides Australia, Brazil and the United States. According to the data provided by the International Cotton Advisory Committee, global cotton production increased 9 per cent in 2020-21, while its consumption increased by 20 per cent. Moreover, freight rate increased 3-4 times when international trade reopened after almost coming to a halt due to the COVID-19 pandemic. All these factors contributed to the increase in cotton price in the international market.