US garment makers ready for quota abolition

Standard and Poor has reported on the impact of the agreed abolition of import quota protection for the US garment and textile market at the end of this year. S&P believes that the garment industry is in better shape than the textile industry to handle the changes: bq. “Because most of the apparel companies rated by Standard & Poor’s have already moved their sourcing overseas, creating a balanced mix from different countries, the elimination of the quota system will not have a significant ratings impact on them,” said Standard & Poor’s credit analyst Susan Ding. “In the textile industry, on the other hand, the ratings outlook is more negative, as the elimination of the quota system could exacerbate current challenging industry trends.” (via “Reuters”:http://www.reuters.com/newsArticle.jhtml?storyID=4804467) S&P thinks overall garment prices could fall by 15-20%, although the “variance”:http://www.sysurvey.com/tips/statistics/variance.htm in that estimate must be pretty large. The agency expects the trade to eat the margin, passing no benefits on to the consumer. The USA, Canada, the EC and Swizerland are the only economies still maintaining quotas under the last ‘Multifiber arrangments. of the 1970s. They agreed to replace the quotas with tariff protection by January 2005 in the 1994 WTO Agreement on Textiles and Clothing.

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