Approved Free-Trade Agreements to Boost Business
The passage of three free-trade agreements—with Panama, South Korea and Colombia—means that U.S. importers can soon bring in regionally made textiles and apparel from those countries without paying tariffs averaging 13 percent to 16 percent. Synthetic apparel has a 32 percent tariff.
Congress approved the three trade pacts on Oct. 12. Before they can go into effect next year, President Obama must sign them, which was expected to be done soon.
Already, many industry experts were examining the agreements’ benefits, particularly with South Korea, which is the world’s 15th largest economy and a major textile producer.
“I believe it will revitalize the local economy,” said Won Sok Yun, director general in Los Angeles of the Korean Trade Investment Promotion Agency (KOTRA).
Yun was speaking at an Oct. 12 panel organized by the California Fashion Association about the U.S.-Korean Free Trade Agreement. The panel was held during the Los Angeles International Textile Show at the California Market Center.
Yun pointed out that Los Angeles, which has 300,000 Korean residents, has the largest Korean community outside of South Korea, and there are many South Korean apparel manufacturers in the Los Angeles area. One of those sitting in the audience was Bryan Kang, president of Rhapsody Clothing Inc., a Los Angeles company. He is making apparel in the United States and exporting it to South Korea, where he is launching a retail chain called Love Scene. He expects to have nearly 100 shops open by the end of 2012.
Philippe Carballo, director of material research and development at Bebe and a panel member, said his California-based company opened three clothing stores this year in South Korea.
Bebe extensively researched trends, sizes and fashion tastes in South Korea before the stores debuted. Now the company is getting full reports on what Korean consumers want in terms of fabric and styles. “Bebe customers at the South Korean stores can leave comments about the quality of the designs and fabric,” said Carballo, who will be visiting the stores soon. “We need to know where we are going.”
Susan Kohn Ross, an international trade attorney at Mitchell, Silberberg & Knupp LLP, warned that all garments and textiles imported from the free-trade partners must be made of regional yarns to gain duty-free status. Importers also must be able to prove the garments were sewn in factories in those countries. Sometimes that means producing time cards and pay stubs when asked by customs officials. Otherwise, hefty fines can be imposed months after the apparel or textiles are delivered to a customer.“Do you want your order to go south after delivery?” she asked.
Another area to investigate is intellectual-property rights. Exporters should make sure their brand names, labels or company names are not already registered in the countries where their goods are sold. To protect themselves from counterfeiters or knockoff artists, companies need to register their trademarks and copyrights in the countries to which they are exporting, Ross said.
Foreign apparel makers trying to break into the U.S. market need to understand the various seasons and delivery dates followed by retailers, said Sandy Richman, president of buying and trend-forecasting company Directives West. “You must divide each season into four deliveries. The reasons we have this flow of deliveries is because the American retailer today is constantly replenishing inventory. It is all about fast fashion and turn,” she said.
She advised foreign apparel companies to be aware of the various software systems that U.S. retailers are using. In particular, RFID (radio-frequency identification) tags imbedded in clothes are becoming more common. Wal-Mart Stores Inc. and Macy’s are taking the lead on that trend. Macy’s plans to have RFID technology in its 850 stores by the third quarter of 2012.—Deborah Belgum
