USTR, AAFA to promote greater near-shoring of apparel production

The office of the United States Trade Representative (USTR) has expressed its commitment to work with the American Apparel and Footwear Association (AAFA) and other stakeholders to promote greater reshoring and near-shoring of apparel production and to do so in a way that strengthens the North American supply chain for textiles and apparel.

This commitment was expressed during a roundtable discussion this week with senior representatives of AAFA to discuss how US apparel brands and retailers can support new economic opportunities in Central America, especially in El Salvador, Guatemala, and Honduras, under the Dominican Republic-Central America-US Free Trade Agreement (CAFTA-DR).

The roundtable was co-chaired by deputy US trade representatives Sarah Bianchi and Jayme White. Michael Pyle, Chief Economic Advisor to the Vice President, also participated.

The participants discussed recent shifts in global sourcing of apparel and related opportunities to expand sourcing of apparel for the US market from the Western Hemisphere, including Central America.

Senior executives of AAFA member companies shared their ideas for how US trade policy can promote US textile and apparel investment and incentivise production of a greater scale and variety of apparel products in the CAFTA-DR region.

Ambassadors White and Bianchi underscored the importance of the agreement’s rules of origin (RoO) in promoting investment in textile production and supporting manufacturing jobs in both Central America and the United States.

The roundtable acquires significance as AAFA represents more than 1,000 world famous name brands, retailers, and manufacturers who together contribute more than $350 billion in annual US retail sales. Their decision to promote near-shoring will have implications on apparel manufacturing and exports in traditional supplier countries/regions.

Reflecting the near-shoring trend, US apparel imports from Honduras, El Salvador and Guatemala increased by 56.27 per cent, 54.97 per cent, and 38.68 per cent respectively during January-September 2021, according to data from the Office of Textiles and Apparel (OTEXA). These countries together accounted for 7.73 per cent share of all US apparel imports during the period. If Mexico, another neighbouring country of US, too is included, then the share rises to 11.28 per cent or $6.608 billion of over $58 billion of clothing imports made by the US.

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