One of the most common questions our team at the American Apparel & Footwear Association (AAFA) receives from our members, policy makers, and the media, this question often results in a lengthy discussion about sourcing trends, material and factory costs, government regulations, consumer demand, and investment. If you know anything about these topics, you know it is not an easy conversation, mostly because every company’s sourcing strategy is different and unique. What works for one company or product category may not work for another.
With more than 97% of the apparel and 98% of the shoes sold in the United States produced outside the United States, we often think of apparel and footwear as an import driven industry. These imports support more than four million US jobs and contribute to more than $350 billion in annual retail sales. This economic impact because of imports is not to be diminished simply because it stems from imports.
At the same time, demand for Made in USA product has grown over the past few years. In fact, last year we saw an increase in consumption of domestically made apparel and the first ever decrease in apparel and footwear imports. This gain for domestic manufacturers sends a clear signal that momentum for Made in USA continues to be a viable sourcing option in providing the right product to the right market at the right price.
Most notably, though, is global demand for US-made product. Looking specifically at the European market, US apparel exports are up across the board, including countries like the United Kingdom, the Netherlands, Italy, and France. US denim jeans manufacturers alone sold 1.73 million pairs of jeans worth $30.3 million to Europe in 2012.
“Made in LA” denim is one of the product categories driving Made in USA growth. But the recent decisions by the EU to slap a retaliatory tariff on US made women’s jeans stifle that growth.
You see, the European Union announced on May 1, 2013 that it was going to impose a 26% retaliatory tariff increase on US-made women’s jeans, along with a few other unrelated items, like frozen sweet corn. The tariff, which went from a workable 12% and is now an unworkable – and unacceptable – 38%, stems from a piece of legislation known as the Bryd Amendment.
Even though Congress has repealed the Bryd Amendment, they left in place funds to continue paying US companies who claim unfair imports have hurt their business. It’s important to note that the companies claiming to have been hurt are not apparel and footwear companies. But, as long as the payments continue, the E.U. can levy punitive tariffs on any product it wishes in the amount equal to what the US government pays out.
In June, I had the great opportunity to moderate a dynamic panel discussion with industry, government, and business representatives hosted by Tradegood at the Los Angeles Chamber of Commerce on identifying new export opportunities as we continue to work towards resolution of this trade barrier between US-made denim and European consumers.
The key take-away from this panel was a simple but complicated thought: There are many export opportunities for US manufacturers, but determining a particular path forward requires necessary support. Finding the right partner is tough. AAFA and others are eager to assist US manufacturers identifying key markets.
There is a lot of interest in supporting Made in America, both for US consumption and selling around the world. The Tradegood platform offers retailers and brands valuable resources to pursue a wide variety of Made in USA initiatives. As an AAFA member, you have free access to this platform, and I encourage you to log on and begin meeting potential partners today.
As Trans-Pacific Partnership talks continue and the Trans-Atlantic Trade and Investment Partnership negotiations begin, we are aggressively working everyday to encourage policymakers to pursue trade policy that easily enables US exports. We believe Made in USA is a viable option for any company, and our job is to make it as easy to source and sell product across the ocean as it is across the street.
By Kevin M. Burke
Kevin M. Burke is the President and Chief Executive Officer of the American Apparel & Footwear Association (AAFA), headquartered in Arlington, Virginia.Since he joined AAFA in June 2001, AAFA has grown its membership base, its member programs, its financial position, and its standing on Capitol Hill. Burke currently serves as chairman of Kids In Distressed Situations (K.I.D.S.), and sits on the board of the AAFA Education Foundation, the Bryce Harlow Foundation, the Canadian American Business Council, and the U.S. Chamber of Commerce’s National Chamber Foundation. He is also a member of various political and trade association CEO groups in the Washington, D.C. area. Get connected with him email@example.com.