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”: S&P thinks over­all gar­ment prices could fall by 15–20%, although the “variance”: 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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