CBI & AGOA a Year Later: Developments and Issues |
In October 2000, the Trade and Development Act of 2000 went into effect, granting preferential textile trade benefits to countries of sub-Saharan Africa, in the African Growth and Opportunity Act (AGOA), and the Caribbean Basin, in the Caribbean Basin Trade Partnership Act, more commonly known as the Caribbean Basin Initiative (CBI). This article examines how the CBI and AGOA legislation has affected cotton textile trade in the first full calendar year since its implementation. Trade data are from Werner Infotex.
Reflecting the slowdown in the U.S. economy and a decline in retail sales growth during much of 2001, the dollar value of world imports of cotton apparel into the United States slid 1.1% from last year, from $32.0 billion to $31.6 billion, its first annual drop since 1988. Accordingly, many countries around the globe saw cotton apparel shipments to the United States sag from record levels set in 2000. Shipments from the largest U.S. supplier, Mexico, were off 8.5% from 2000, while imports were down 7.2% from Hong Kong and 5.5% from India. The Caribbean Basin felt an unexpected decline, as its U.S. exports fell 3.5%, to $6.2 billion. Many analysts attribute the slowdown in CBI-region imports not only to slower U.S. consumer demand but also to unclear interim rules in place from the U.S. Customs Service and Congress, which have left CBI-region manufacturers unsure about products’ eligibility for duty free access.
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The dollar-volume decline in cotton apparel imports has not been felt evenly throughout the CBI region. The Dominican Republic bore the brunt of the decline, with shipments sliding over $200 million from 2000, while Guatemala realized the largest gain, with shipments rising over $100 million.
The decline in the dollar volume of U.S. imports from the CBI region is evident in lower shipments of several primary cotton apparel products. Particularly hard hit were imports of underwear, pants, and men’s and boys’ knit and woven shirts. These categories accounted for 80% of total cotton apparel imported from the region during the 1990s, but their share declined to 71% in 2001, as imports of females’ shirts, hosiery,and coats surged to record levels. The dollar value of cotton apparel imports from the CBI region climbed throughout the 1990s, with year-over-year growth never dipping below 11%. The largest product categories, males’ knit shirts and underwear, enjoyed annual growth of imports into the United States of at least 14% and 10%, respectively, over the decade. But in 2001, as total cotton apparel imports from the CBI region shrank in both dollars and units, the import volume of these primary products declined in step, slipping 5.8% and 10.7%, respectively.
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Sourcing for certain key cotton apparel products within the Caribbean Basin clearly has shifted since 2000, perhaps indicating cost-driven switches among suppliers within the region. In the cases of three primary suppliers—Guatemala, Nicaragua, and the Dominican Republic—this theory seems plausible, as prices per square meter equivalent (SME) of the primary cotton products from these nations differed substantially over the last few years. In the Dominican Republic, the average price for all cotton apparel products shipped to the United States rose from $2.50 in 1999 to $2.75 in 2000 to $2.91 in 2001, a 16.4% increase. Meanwhile, total imports of cotton apparel products from the country sank 14.3% from 2000. Conversely, the total SME volume of cotton apparel shipped to the United States from Nicaragua rose 11.4% from 2000, while prices per SME slid 3.7%. A similar trend was evident in Guatemala, where SME exports of women’s and girls’ cotton knit shirts and blouses to the United States rose 21.7%, while prices declined from $6.71 in 2000 to $6.28 in 2001, a drop of 6.4%. Some analysts view the Dominican Republic as relatively expensive for the region, since tourism and agriculture flourish there, while Nicaragua and Guatemala have stayed competitive as low-cost suppliers.
 Top
Percent Change in U.S. Cotton Apparel Imports,
2000—01, by Source |
| |
Guatemala |
Nicaragua |
Dominican
Republic |
|
| All products |
10.6 |
11.4 |
-14.3 |
| Females' knit shirts/blouses |
21.7 |
18.8 |
-14.8 |
| Males' knit shirts |
8.1 |
-10.2 |
-25.7 |
| Males' pants/shorts |
34.2 |
14.4 |
-5.2 |
| Females' pants/shorts |
-11.3 |
13.9 |
-19.9 |
| Hosiery |
142.6 |
N/A |
-35.9 |
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