From the Editor's Page

The NAFTA - finally recognised success: on January 10 this year, a group of US and Mexican high ranking trade officials met in Mexico City to discuss the North American Free Trade Agreement (NAFTA), which came into force on January 1. Mark E. Keenum, the US under secretary for farm and foreign agricultural services, said the purpose of this meeting was to ensure that full implementation of NAFTA "continues to move smoothly."

The accord, he said, "has been a positive force for our respective agricultural sectors, creating not only dramatic growth in two-way agricultural trade, but providing our farmers, ranchers and processors with the potential to take advantage of new export opportunities, while providing a clear and certain path to enhanced trade."

Other officials who attended the celebration were: James M. Murphy, assistant US trade representative for agricultural affairs; USDA's under secretary for marketing and regulatory programs, Bruce Knight; and under secretary for food safety, Richard Raymond.

"We noted that full elimination of all duties in our bilateral trade is a reason to celebrate and to look forward to more successes," said Mr Murphy. "We agreed we should not look backwards and risk all we have accomplished. At a time when we see rising prices for many commodities, open trade between Mexico and the United States also provides benefits for our consumers," he added.

Earlier, on August 14, last year, the NAFTA Commission had held a meeting in Vancouver, Canada, where Canada's minister of international trade, David Emerson; Mexico's secretary of economy, Eduardo Sojo; and, the US trade representative, Susan C. Schwab, released the following joint statement:

"The NAFTA - now in its 14th year - has been a remarkable success story for all three partners. It has contributed to significant increases in trade and investment flows between Canada, the United States and Mexico, and has contributed to economic growth and job creation throughout North America.

"A strong, modern and flexible NAFTA is essential for the continent to maintain its competitive edge in an increasingly complex, fast-paced and connected global marketplace.

"As the NAFTA concludes the complete elimination of duties within North America, we must look for new and creative ways of further promoting trade and new business opportunities. We must build upon our initial success, and continue to strengthen our regional competitiveness with a view not only of intra-NAFTA trade, but considering other regions as potential destinations for our exports and an important source of imports.

"In keeping with our collective commitment to increasing market efficiencies, economic growth, prosperity and innovation in all three countries for the benefit of our citizens, we engaged in a constructive discussion of what we can do to achieve these goals. Thus, we have agreed to:

"develop a work plan to respond to the ever increasing pressures on North American competitiveness. The plan - which will address the key issues that impact our trade and identify the most effective means to facilitate it - will be presented for review at our next meeting so we can develop a strong and competitive North American platform that increases the welfare and the prosperity of all our citizens;

"facilitate trade in specific sectors in order to foster stronger more competitive North American value chains. To this end, we have instructed officials to move ahead on the following sectors: swine, steel, consumer electronics, and chemicals. We also tasked our officials to identify a second set of sectors. We look for ward to receiving progress reports on the first set of sectors, as well as reviewing work plans for the second set of sectors, at our next FTC meeting; and

"conduct an analysis of the free trade agreements that each country has negotiated subsequent to the NAFTA, beginning with those in the western hemisphere. This work will focus on identifying specific, meaningful differences between agreements, especially those related to trade facilitation and transparency.

"In 2006, we also instructed our officials to review the mandates of the NAFTA working groups and committees. Armed with this analysis, the working groups must identify potential improvements and ensure that the NAFTA work programs reflect current realities and challenges, including work that is taking place in parallel initiatives. We have directed officials to examine how this work can be used to support the new sectoral initiatives and other initiatives discussed today, including the review of FTAs.

"We also reaffirmed our commitment to cooperate in other regional and global fora:

"We are committed to multilateral trade liberalisation and to successfully concluding the WTO Doha Round of negotiations. We urge all WTO members to demonstrate renewed energy and flexibility in the negotiations based on the Chairs' texts in agriculture and non-agricultural market access, and put the Doha Development Agenda on a path toward a balanced and ambitious overall outcome that results in meaningful improvements in global trading conditions.

"At the same time, we reaffirm our commitments un-dertaken at our last meeting of APEC ministers responsible for trade, held in July 2007 in Cairns, Australia. To this end, we reiterated our commitment to examine the prospect of Free Trade Area of the Asia-Pacific (FTAAP).

"We are also pleased with significant progress on rules of origin. In 2003, the NAFTA Working Group on Rules of Origin set out to liberalise the requirements for obtaining NAFTA duty-free treatment.

"The first set of changes - affecting approximately US 20 billion in annual trilateral trade - was implemented in 2005.

"A second set of changes - affecting an estimated US 15 billion in trilateral trade - was implemented in 2006.

"We have now agreed to a third set of changes - affecting an estimated US 100 billion in trilateral trade. These changes will be implemented in 2008.

"These efforts confirm NAFTA's ability to adapt to ever-changing competitive conditions including new sourcing patterns and production methods. In this context, we asked the Working Group on Rules of Origin to continue its work to pursue further liberalization opportunities.

"We also commend our officials for having completed the technical rectifications to align the NAFTA rules of origin with the Parties' updated tariff schedules resulting from the World Customs Organization's amendments to the nomenclature of the Harmonized Commodity Description and Coding System that came into force on January 1, 2007. We are pleased to note that the NAFTA Working Group on Rules of Origin will soon consult with officials from Chile to share experiences with issues of common interest.

"We recognise the concept of cumulation of origin as an important mechanism for creating new business opportunities by strengthening the competitiveness of North American products globally. The Commission intends to instruct the Working Group on Rules of Origin to study further appropriate opportunities for cumulation.

"We take note of the agreement reached by the Chapter 19 Operation Working Group on proposed amendments to the NAFTA Chapter 19 Rules of Procedure. We commend the Working Group for its efforts to improve the functioning of Chapter 19 panels. We refer the proposals developed by the Working Group to the State Parties to complete any internal review procedures, with a view to having the Commission adopt an agreed package of amendments to the Rules of Procedure by November 15, 2007.

"We are pleased to accept the Mutual Recognition Agreement that has been signed by the architecture professions of Canada, Mexico and the United States. We hereby encourage our respective competent authorities to implement it in a manner consistent with the NAFTA. This agreement will facilitate the recognition of credentials within the three NAFTA countries. By facilitating the cross-border trade in services, this type of agreement contributes to achieving the objectives of NAFTA, and we encourage other bodies of professionals to complete the agreements that are being negotiated to develop mutually acceptable standards and criteria for licensing and certification of professional service providers.

"We agreed that regional cooperation has provided significant benefits for economic growth and job-creation in each of our countries. We further agreed to pursue opportunities, wherever practical, to promote further cooperation for the benefit of our producers and consumers. Finally, we agreed that the United States will host the next NAFTA Commission meeting, at the Ministerial level, in 2008."

The NAFTA sectoral approach

The global business and trade environment is becoming increasingly complex and competitive, fuelled by rapidly changing patterns of global value chains, the rise of new economic powers, the intense pursuit of bilateral liberalisation agendas and new security dynamics.

For Canada, the United States and Mexico, the NAFTA is an important component of their economic success and prosperity. As such, it provides the primary platform for the three countries to compete in the global context.

To stay competitive, the three countries must continue working together to build on NAFTA's success by harnessing the region's strengths, bringing down any remaining trade barriers and ensuring that the business sectors have the freedom, tools and market access they need to compete, in a co-ordinated fashion, in the global context.

At the March 2006 NAFTA Commission meeting, ministers committed to continue building a more competitive North American business platform that will ease the flow of goods, services, and capital between the three NAFTA countries in key sectors.

Today, NAFTA ministers approved focused sectoral work in four sectors: swine/hogs, steel, consumer electronics, and chemicals.

SWINE: Despite the high degree of co-operation and cross-border trade in this sector, some market access issues remain among the three NAFTA countries, which can increase costs for producers and consumers alike. These include potential border delays, regulatory differences and competitive pressures from emerging players in the North American market.

To help North America's swine sector compete more effectively, NAFTA ministers agreed to work co-operatively to lower barriers to trade in swine. This includes developing coordinated approaches to standards, regulations and performance objectives, preventing border delays and sharing research. Ministers also agreed to explore the possibility of developing protocols to ensure a predictable, co-ordinated response within North America in the event of an outbreak of swine-related diseases.

STEEL: The North American steel market is highly integrated, and the industry in all three NAFTA countries share common interests and concerns.

Through the work of the North American Steel Trade Committee, NAFTA partners are undertaking a comprehensive analysis of trade barriers in this industry. Once the analysis is complete, partners will make recommendations - including in the areas of country-of-origin and permit requirements - that will make North America's steel industry more competitive.

CONSUMER ELECTRONICS: Rapid and dramatic technological advances over the years have created a huge global market for consumer electronics. These advances have also led to increased, low-cost competition and a shortened product lifespan that finds older products ending up in landfills more rapidly.

NAFTA ministers agreed to work together to lower trade barriers to ensure that this industry has the tools and market access it needs to succeed in all three countries. Ministers also agreed to work with the trilateral Commission of Environmental Co-operation to explore ways to address the environmental impacts of the lifespan and disposal of consumer electronics.

CHEMICALS: The chemicals industry is a large and important industry to all three NAFTA partners, providing jobs, consumer products and inputs for a wide range of sectors, including the medical, automotive, textile, electronics, construction and food industries. NAFTA ministers have agreed to review recommendations provided to the three governments to facilitate trade in this sector - including customs and rules-of-origin requirements and how to make this industry more competitive and cost-effective in the global context.

To promote safety and environmentally friendly standards, Ministers also agreed to explore work that will assist current efforts towards common standards and requirements for the labelling and transportation of hazardous chemicals.

Kayser Sung

Forum

• Future direction for Prime Source: Prime Source Forum, a platform for specialists interested in global apparel buying and selling to exchange views and knowledge with particular emphasis on the procurement of merchandise was held in Hong Kong in April 2008. Organised by APLF, it was sponsored or endorsed by a many powerful associations specialising in textiles and apparel. A number of business and industry leaders as well as other professional from across the world came to it to debate a series of specific issues. They included, from China: the president of the China Textile Information Center and China Textiles Development Center, Sun Rui Zhe; from Hong Kong: the group managing director of Li & Fung, William K.L. Fung; the chairman of Hong Kong's Textile Council, Harry N.S. Lee; the vice chairman and CEO of the Esquel Group of Companies, John Cheh; the president and CEO of the Fenix Group, Anthony P.S. Keung; a former secretary for environment, transport and works bureau in the government of the Hong Kong Special Administrative Region, Sarah S.T. Liao; from Belgium: the secretary general of the country's Foreign Trade Association, Jan A Eggert; fom India: the chairman of the country's Apparel Export Promotion Council, Rakesh Vaid; the chief executive of Third Eyesight, Devangshu Dutta; from Italy: the vice president for International Promotion at the Italian Federation of Textiles and Fashion, Carlo Rivetti; from Sweden: the director of the Textile Importers Association, Ake Weyler; from the US: the president and CEO of the American Apparel & Footwear Association, Kevin M Burke; the senior vice president of the United States Association of Importers of Textiles and Apparel, Julia K. Hughes; and many more from several other parts of the world including Rufus H Yerxa, the deputy director-general of the World Trade Organization and Britton Russel of Kurt Salmon Associates, a leading global management consulting firm and solution provider to consumer products and retailing.

  Among the topics discussed were the changing retail scene in the Western world and the potential in emerging countries; how to define social responsibility; sourcing and logistics and the changing elements in the supply chain; capacity building and career progression; the advantages of technical knowledge; etc.

  Delivering a special address at the Forum, Hong Kong's secretary for commerce and economic development Frederick Ma spoke of the territory's pre-eminence as an international conference and exhibition destination, noting particularly that Prime Source Forum was being held in Hong Kong for the third time successively. He particularly emphasised that the territory's government is stepping up its marketing effort "to continue to build up Hong Kong's events calendar with prestigious events like the Prime Source Forum." Turing to Hong Kong's place in the global textile and garments industry, Mr Ma said: "The textile and clothing business is central to Hong Kong's economy, accounting for 39% of our domestic exports and 11% of our re-exports among all merchandise in 2007, and Prime Source Forum brings to us some of the most influential players on the global scene." While quota restrictions affecting international trade in textiles and clothing are largely gone since 2005, high tariffs and other forms of trade barriers, he said, continue to dog the textile and clothing industry and "these will continue to be the subject of negotiations under the World Trade Organization."

  The following day, WTO's deputy director general Rufus H. Yerxa addressing the forum by telecast from his office, described the textile and clothing industry as "one of the engines of trade" and extremely important to members of the WTO. He then went on to explain why the WTO system is important. Most of the trading relationship in the world he said was governed by WTO rules rather than any bilateral trade agreements. "Think of, for example, between China and North America, or China and Europe…between Europe and the United States, between the US and Japan," all of these depend on "a sound system of multi-lateral rules". The progress made in quota protection, in reducing tariffs worldwide, in imposing a more uniform rules in such areas as anti-dumping, import licensing, customs valuation, rules or origin, etc based on WTO rules, he said, have become extremely influential in determining the practice of governance. Emphasising that today there is not only a significant framework of rules, but there is also a mechanism that is effective; Mr. Yerxa stressed "the existing system is worth defending and worth protecting, particularly at times of economic uncertainty or financial turmoil in global markets."

  The vice chairman and CEO of the Esquel Group focused his speech on the situation in China. He said establishing a textile and apparel committee in China's Foreign Investors Association in 2003, with Esquel as a founding chair, was timely as it came "at a critical time when China was dealing with its WTO membership, dealing with the end of quotas…special safeguard actions." Foreign investment in China he pointed out now accounts for over 40% of textile and garment production. "For the first time, foreign investors had a voice to express their views, their concerns, make their suggestions, with frequent interactions with the other two industry associations, and with the Chinese government, particularly the Ministry of Commerce." He went on to say that the Foreign Investors Association argued for transparency, for equity, for transferability for value-based rather than quantity based export performance credit to encourage export of higher-end higher value-added products. Finally, rules were by and large adopted.

  The entire event was lively and inspiring, and the consensus in the end was that Prime Source has established itself as a high level forum, a 'must do' appointment for executives and a platform for debating issues best addressed amongst peers.

  The next Forum will take place in 2009, by which time some of the predictions of relevance to fair-or-free trade may have proven to be accurate.

By Gail Taylor

Special Reports

• Colombia: A production base for China?: China is the second largest exporter to Columbia, a fast emerging market of 44 million people. Recently, Araújo Ibarra & Asociados, a Colombian trade consultant firm, conducted a study to find out that which products Chinese companies could manufacture in Colombia and export to the United States. Apparel, it concluded, is surely one of them. The main reason that Araújo Ibarra quoted for a foreign company to locate production facilities in Columbia is the zero-duty market access the country presently enjoys under the Andean Trade Promotion and Drug Eradication Act, and will (hopefully) continue to enjoy under the Free Trade Agreement with the US. There are also several other reasons, as explained by the Colombian export promotion institute Proexport and other organisations.

  Unlike the Andean Trade Promotion and Drug Eradication Act, a unilateral and temporary act that expired on February 29, 2008, the FTA with the US will be bilateral and permanent. Among other advantages negotiated with the US, under this FTA Colombian garment makers will enjoy the extended accumulation of origin for raw materials originating from NAFTA and CAFTA-countries as well as Chile and for nylon originating from Mexico, Canada and Israel. The FTA has already been signed and is waiting in Congress for ratification.

  Meanwhile, last year, Proexport Colombia and Colombia's foreign affairs ministry jointly mounted two trade missions to China to lure Chinese investors. Until now, Proexport could not announce any Chinese investment initiative in the Colombian textile and clothing sector. The reason most probably could be that the Chinese want to see that the Colombia-US FTA is ratified. In the meantime they have time to examine what Colombia could offer them.

  Unlike Guatemala or Honduras whose role in international apparel trade is mainly based on their subcontracting (maquila) performance, Colombia boasts an authentic, well developed design and fashion industry. The city of Medellín doesn't hide its ambition to become 'the Milan of Latin America'.

  From Jozef De Coster, in Medellín

• Is Bangladesh heading for a disaster?: On February 15, 2008, the EU Commission published a "Notice to Importers" in its Official Journal, the C series (2008/C 41/06). It read: "The European Commission informs Community operators that there is reasonable doubt as to the origin of textile products of HS Chapters 61 and 62 from Bangladesh, for which the benefit of GSP preferential tariff treatment is claimed. "Within the framework of a Community administrative and investigative cooperation mission carried out in Bangladesh with the assistance of the local authorities, it was found that a significant proportion of Form A origin certificates were ether false or issued on the basis of fraudulent information. "Community operators declaring and/or presenting documentary evidence of origin for imports of textile products of HS Chapters 61 and 62 from Bangladesh are therefore advised to take all the necessary precautions, since the release of the goods in question to free circulation may give rise to customs dept and lead to fraud against the Community financial interests. "This notice replaces the Notice …"

  To me the notice sounded like a knock out blow. Find out yourself:

  In EU we have been aware, for quite some time now, of the investigation the Commission is referring to. And man to man we have questioned what is Bangladesh doing? How can it risk losing the GSP status? Bangladesh can only hurt by itself not sticking to the rules.

  Then, this is not the first time that Bangladesh is facing this sort of situation. Not so many years ago the same thing happened over knitwear. At that time three transformations were necessary for knitted products to achieve preferential origin status - spinning of yarn, knitting that into fabrics and stitching or linking the fabric into a garment. Bangladesh being a least developed country could not have enough spinning capacity. So it was obvious that the scandal that came to be known as the Bangladeshi Incident should occur.

  An importer at the time could claim good faith in a document produced by an authority in a country. Then eventually - meaning after a very long process - some companies got the duties reimbursed. But step two was that importers were forced to pay as they presented the Form A as step one. The same sort of conditions the Commission now writes about in its present notice. They are useless, false or issued on false grounds.

  The main outcome of the Bangladeshi Incident was a new rule that importers should not be able to refer to good faith in the event a warning was published in the Official Journal, which is exactly the purpose of the latest notice. No importer can say after February 15 that in good faith he trusted a document - in this case, the Form A issued by an authority in Bangladesh. Instead, the importer must confirm that the Form A is not false and that the underlying documents - invoices proving that the fabrics is of Bangladeshi origin - are not false or tampered with. How on earth would an importer be able to prove that?

  When he cannot, he cannot present a Form A and be allowed to import the garment duty free into the EU. This means, from a practical point of view, there is not a system for duty free import from Bangladesh any more. The GSP does not work in the case of Bangladesh.

  I am very concerned that in a case like this the party under investigation, the EPB, feels rather relaxed about the investigation and thinks that everything will be sorted out as it was foreign villains that made up the fraud. I do not believe the EPB's argument that when importing from Bangladesh the Form A certificates were issued on the basis of fraudulent or misleading information in a country other than Bangladesh. But let us hope that EPB is right in its wishful thinking that Bangladesh will not loose its GSP privilege. However, one cannot rely on EPB to avoid the same thing happening again tomorrow. The system must be adjusted to accept the actual situation with one single transformation, and adjusted to the level that Bangladesh as a well known corrupt society can handle. To achieve that, Bangladesh must start to think of the millions in the clothing industry and stop favouring the elite owners of the textile industry. Bangladesh has to apply for an exemption from the present transformation requirements for preferential origin and get it reduced from two transformations to one, preferably without any value added threshold. But do it now, otherwise a new scandal will be in the mail again soon.

  Importers must of course look for other suppliers; they can not at all be sure that Bangladesh will apply for slacker origin requirements. Importers must act so that they will not be in a useless "good faith" predicament, but will be able to show really that they have done everything in their power to ensure that the Form A they present to the Custom is neither false nor "issued on the basis of fraudulent or misleading information."

  Exactly what that means is hard to say; but a certificate from the supplier that he only used fabrics knitted or woven in Bangladesh - with corresponding invoices showing that - would most certainly be a part of the package of measures all importers of clothing from Bangladesh must take now to be able to import duty-free from Bangladesh. It will certainly be interesting times for Bangladesh trying to avoid a disaster for its export. Hopefully the pressure from import companies in the EU will make the government of Bangladesh act fast and in the right way to secure its clothing export and avoid a disaster.

  From Åke Weyler, Stockholm

• EU-China trade mechanism in sight: An understanding reached between China and the European Union just five months ago is now coming to fruition. The high level economic and trade mechanism they plan to establish could take effect as early as April.

  The understanding for creating the economic and trade mechanism emerged at the 10th China-EU summit held in Beijing on November 28, 2007. During their talks the president of the European Council (Prime Minister Jose Socrates of Portugal), the European Commission president Jose Manuel Barroso, and Chinese premier, Wen Jiabao, had reached a common ground to pave the way for creating the high level economic and trade mechanism that could tackle issues affecting bilateral trade strategies. Their concern covered a wide area - trade imbalance, market access, intellectual property rights, high technology, energy, environment, and so on. Three months later, in late February, the EU trade commissioner, Peter Mandelson, and China's minister of commerce, Chen Deming, held a series of working level meetings in Beijing to iron out specifics of how the mechanism should work. And they have agreed about the basis for an EU-China trade agenda. Both sides recognise that the high level mechanism is no quick-fix. It could however map out the long term strategic direction for economic and trade relationship and how to tackle issues of current concern and others that will crop up in due course.

  As the Mandelson-Chen dialogue on how the mechanism should work focused mainly on three key issues - what should be included in the agenda, how the mechanism will help arbitrate disagreements and what the time scale would be for first results -putting the system in place by April was their common goal. A key concern that this forum will tackle in its early phase is the trade gap that is continually widening in favour of China.

• US apparel market in slow growth: US market for imported apparel, though expanded by 3% in 2007, showed clear signs of declining consumer demand. Imports had climbed by over 9% in the first quarter; then the growth rate started sliding and by the last quarter of 2007 fell 1% below the last quarter of 2006. Over the year, 14 out of America's top 25 textile trade partners suffered market reduction.

  US imports of woven and knit apparel set a new record in 2007 with the value of imports climbing by 3% to $75.564 billion. Import quantity also increased by a similar margin to 24.776 billion garments. Market momentum, however, has slowed, with most of 2007 gains occurring during the first quarter of the year and progressively weakening in each subsequent quarter. The value of imports in the fourth quarter was one per cent lower than the corresponding quarter of 2006, reflecting the slowing of consumer spending in the country. The year was marked by China and Vietnam making large gains in their share of the US market and the value of knit apparel imports exceeding the value of woven apparel imports for the first time.

  China ended the year with total sales of $23.970 billion, an increase of 20.6% over 2006. The quantity of garments coming from China was 23.3% higher at 6.809 million pieces. Market share based on value climbed from 26.8% to 31.7%. The corresponding shares for number of garments imported rose from 23.3% to 27.8%. China's share in the US import of woven apparel increased from 31.3% to 35.7%. The value of Chinese woven apparel increased by 13.1% to $13.407 billion, even as the total value of woven apparel imports fell by 0.7% to $37.604 billion. Import quantity climbed by 15.8% to 2.515 billion garments, pushing up Chinese market share from 30.1% to 34.8% of import units.

  By Douglas Smith, Columbia, SC

• Cotton price hits 11-year high: Rising price of grains and soybeans is making cotton a relatively less attractive crop to grow, thus taking some 1.2 million hectares of land away from cotton-growing - mostly in the US. And world cotton stock which is estimated to fall 9% to 11.5 million tons in the current season could continue to reduce and keep pushing price up.

  The Cotlook A Index averaged 70 US cents per pound during the first seven months of 2007-08, or 11 cents higher than during the same period last season, according to the International Cotton Advisory Committee. The average 2007-08 Cotlook A Index at the end of February 2008, ICAC points out in its March 3 report, was the highest since 1997-98 and equalled the 30-year average recorded between 1973-74 and 2002-03. World cotton production, it says, is estimated at 26 million tons in 2007-08, thus 3% lower than last season's output. This drop is due to the contraction of cotton plantation across the world by 1.2 million hectares to 33.6 million hectares. The reduction was mostly in the United States because of sharp increases in prices for competing commodities. According to ICAC, cotton area in the US is projected to decline by a further 18% in 2008-09 as a result of the continuing surge in prices of grains and oilseeds.

  During the first half of 2007-08, the Cotlook A Index averaged 17% higher than the average in 2006-07. US average prices for wheat and soybeans, and corn increased by 61%, 48% and 47% respectively, making cotton a relatively less attractive crop to grow. As a result of the gap between world production and consumption, world cotton ending stocks are projected to decline during 2007-08 by 1.1 million tons (9%) to 11.5 million tons. World mill use, says ICAC, is projected to exceed production again in 2008-09, and a further reduction in world ending stocks could take place to an estimated 10.7 million tons (-7%). The ending stocks to mill use ratio in the world-less-China (Mainland), according to ICAC, is projected to decline from 58% in 2006-07 to 56% in 2007-08 and to 52% in 2008-09.

  The ICAC secretariat's Price Model 2007, forecasts a season-average Cotlook A Index of 66 cents per pound in 2007-08 (the 95% confidence interval is between 63 and 70 cents per pound). The main variables in this model, ICAC points out, are the stocks-to-mill use ratio in the world-less-China (Mainland) and the stocks-to-mill use ratio in China (Mainland), while the projected price increase in 2007-08 is the result of the decrease in the stocks-to-mill use ratio in the world-less-China (Mainland) between 2006-07 and 2007-08. This price forecast, says ICAC, takes into account the average Cotlook A Index between August 2007 and January 2008.

  Meanwhile, the difference between the Cotlook quote for American Pima and the Cotlook A Index declined from an average of 58 cents per pound in 2006-07 to 40 cents per pound in the first seven months of 2007-08. This is the lowest average premium since 2002-03. The decrease in this price premium, says ICAC, is due in large part to a significant increase in upland cotton prices and to a lesser extent to a decline in extra-fine cotton prices (supplies of extra-fine cotton increased for the second consecutive season). The average ratio of prices between the Cotlook quote for American Pima and the Cotlook A Index declined from 1.98 in 2006-07 to 1.56 in the first seven months of 2007-08.

  Cotton contamination remains unabated: Foreign matter, stickiness and seed-coat fragments in raw cotton continue to be serious challenges to the cotton spinning industry, according to the latest biennial industry survey of the International Textile Manufacturers Federation (ITMF). The Cotton Contamination Survey 2007, released in February, covered 114 spinning mills in 23 countries and evaluated 72 cotton growths.

  The level of modest or serious cotton contamination, as perceived by the mills, did not change from the 22% reported by the previous survey in 2005; the level was constant also in each category - 7% serious and 15% moderate. The results for individual contaminants also remained unchanged - tar 5%, and organic matter like leaves, feathers, paper, leather, etc 40%. However, the degree of contamination through "organic matter" increased due to the fact that more cottons were affected seriously (13% in 2007 against 8% in 2005) and less moderately (27% in 2007 against 32% in 2005). Other serious contaminants are fabrics made of plastic film or cotton (30% each) and strings made of plastic film or jute/hessian (29% each).

  The most contaminated cottons were in India, Togo, Turkey, Mali and Uzbekistan while very clean were produced in the USA (Memphis, Texas High Plains, Others, South Eastern, California, Pima), Australia, Israel, Brazil and Cameroon.

• US cotton exports suffer sharp fall: Increased competition from India's cotton exports and diminished demand from China have made a telling impact on American cotton exports in February. US exports during the month fell 1.2 million bales (approx 261,296 metric tons) behind previously anticipated level, according to Cotton Incorporated.

  Cotton Inc says in its March 11 Economic Letter: "With anticipated supply unchanged and demand lower from last month, US ending stocks jumped 1.2 million bales to 9.4 million bales (2.05 million metric tons), by far the highest forecasted level this year." The prospects for March also were grim. With no change in supply and with demand forecasts lower from last month, both domestic and world fundamentals eroded from February estimates, it added.

  In the US, old-crop production, according to Cotton Inc, remains unchanged at 19 million bales (4.14 million metric tons). Mill demand also remained flat at 4.6 million bales.

  Changes in world fundamentals, Cotton Inc says, mirror changes in the US. Projected global supply is flat from February, as slightly higher beginning stocks offset a small decrease in forecasted production. The recent rapid rise in cotton prices, Cotton Inc points out, stalled the anticipated growth in global cotton demand. Consumption estimates fell 1.9 million bales (413,676.17 metric tons) from last month, the largest monthly decline in six years. The lower revised demand is owing to declines in China (one million bales or 217,724.30 metric tons), India (600,000 bales or 130,634.58 metric tons), and Turkey (300,000 bales or 65,317.29 metric tons).

ITMA survey

Survey 9

• Drying, setting and humidity control: A.C.C. Machine Electric-Electronic Co. (ACC) displayed the stenter for finishing process of woven and knitted fabrics. It is also capable of providing dimensional stability and anti-shrinking. The stenter has three different heating options - natural gas heated, hot oil heated and steam heated. ACC also offers weft straightener with roller width varying from 1600mm to 4000mm.

  The tensionless dryer and tension dryer and fixation is the only machine that is developed for the finishing process of knitted, woven, open width and tubular fabrics. The machine designed for high capacity, high quality finishing operates at low cost.

  Other exhibitors in this field include: Biancalani, Alea, Arioli, Beneks Machines, Biella Shrunk Process, Hale Makina, Carel, Corino Macchine, Costfer, Dettin, Dornier, Effedue, Emil Muhlmann, F.L.Y. Machinery, Harish, Inox Machinery, Jiangsu Red Flag Printing & Dyeing Machinery, JS Humidifiers, A. Monforts Textilmaschinen, RF Systems, Rousselet Robatel, Stalam, Strayfield, Tacome, Tung Yang Machine Industry, Unitech Textile Machinery, Wumag Texroll, ZhengZhou Textile machinery, Zonco, Icomatex, Burckner, Fleissner, Goller Textilmachinen, Moenus Textilmaschinen.

  By C.W. Kan and C.W.M. Yuen, both of the Institute of Textiles and Clothing, Hong Kong Polytechnic University.

• Survey 10: Coating, Laminating and Flocking: Coating, laminating and flocking processes represent only a small part of the total textile processing industry. Nonetheless they are extremely important, particularly for value addition. Thus they make a rapidly growing sector with arguably the greatest growth potential in the entire textile technology. This survey covers the machinery for coating, laminating and flocking exhibited at ITMA 2007.

  AIGLE presented different flocking machines. In flock patterning for rotary printing line, the Flocking Unit for Rotary Printing mod. TC2 is placed on the shoulders of a rotary screening printing machine. In the point where fabric and conveyor belt split, a suction blade for preliminary cleaning is located; final cleaning is performed by the brushing machine located at oven outlet. The Glitter Distribution Unit mod. TDP consists of one hopper containing glitter with an inverter-controlled dosing cylinder of adjustable speed placed at its base. A doctor blade opposed to the cylinder adjusts glitter output. A rotating brush is mounted opposed to the cylinder and is used to remove glitter and distribute it on the fabric underneath. Brush speed is variable and controlled by inverter. The unit can be inspected through Plexiglas panels.

  Other exhibitors in this field include: Coatema Coating machinery, Flomak Textile Machinery, F.L.Y. Machinery, HIP-MITSU, ICS, JWS, Lacom, Matex, Menzel, MP Engineering, S-Line AG Coating and Laminating Systems, Web Processing, Bruckner Plant Technologies, Icomatex.

  By C.W. Kan and C.W.M. Yuen, both of the Institute of Textiles and Clothing, Hong Kong Polytechnic University.

  ITMA Survey 11:

• The many options of dyeing: The new REACH law for dye works and equipment in Europe will result in substantial changes in dye formulas and process engineering. With the increasing influence of textile chemicals in the pre-treatment, dyeing and finishing processes, exhibitions of these products at ITMA have become especially interesting. Textile mechanical engineers are working closely with manufacturers of dyers and chemicals to use water and textile auxiliary materials more effectively.

  At ITMA '07, the exhibitors in this field included: Vario Line, Maino, MCS, Intertrad Group, Memnun, H.t.P. Unitex, Fong's, Dogus, Brongo & Laip, Sonotic, Dyetec, Inox, Obermaier, Sclavos, Brazzoli, Then, ATYC, Bruckner, Bloris Bellini.

  By C.W. Kan and C.W.M. Yuen, both of the Institute of Textiles and Clothing, Hong Kong Polytechnic University.

Exhibitions and Conferences

• Interstoff Asia marks 21st year: Interstoff Asia, now in its 21st year attracted more than 220 exhibitors with products ranging from fashion fabrics to garments and accessories. Over 8,000 buyers from 50 countries and regions visited the event.

  The exhibition was divided into zones with two major pavilions, Premium Korea and Amazing Taiwan supplying the cross section of fashion and function fabrics. Display platforms included the trend forum, eco textiles, and 21st century wardrobe. Firms from China and Hong Kong together totalling 152 booths made the majority followed by Hong Korea (26) Taiwan (25) and Japan (5).

  The exhibition was complemented by a series of seminars which regularly attract 500 or more people, targeting topics from trends to certification. High on the list were presentations from the trend bureaux, vendors of organic cotton products, and service suppliers.

  The organisers of the event had returned to the successful trends, business, technology formula for the twice-yearly event and for this, early birds with a penchant for aesthetics could breathe a sigh of relief. Having set the tone for the trend directions, led the related committee in demonstrating Spring and Summer themes, then subsequently having drafted the guidelines for the presentation of fabrics in the forum Ornella Bignami, the founder of Elementi Moda was well positioned to talk on the subject of future fashion fabric collections.

  By Gail Taylor

• China's techtextil show in October: China's biennial trade show focusing on technical textiles and non-woven industries will be held from October 20 to 22 at the Shanghai New International Expo Centre. Now in its eighth year and considered as the only trade fair of its kind in Asia, Cinte Techtextil China is co-organised by leading nonwovens and technical textile industry associations across China, including CNITA (China Nonwovens & Industrial Textiles Association), the sub-council of textile industry in CCPIT (China Council for the Promotion of International Trade) and Messe Frankfurt (HK) Ltd.

  This expanding demand reflects in the way in which Cinte Techtextil has developed over the years. Since 2000, the show's size has grown 283% and the number of visitors attending has grown 170% - with more than 7,000 buyers from 59 countries and regions at the last show.

  In planning the exhibition area, the organisers have paid special attention to help buyers navigate through the vast array of products. Displays will be grouped as 12 easily recognisable application areas, according to the concept of the Techtextil brand. The show will also offer a variety of educational symposiums and product presentations to help attendees stay abreast of developments in the application areas and to exchange information and research.

• Middle East's top textile fair: The next Motexha which is regarded as the largest exhibition of garments, textiles, leather and fashion accessories in the Middle East is scheduled to take place in Dubai, the United Arab Emirates, from March 31 to April 2, at the Dubai International Exhibition Centre.

• INDEX 08: Innovation in nonwoven materials will be the highlight of the INDEX 08 exhibition to be held on April 15-18, 2008 in Geneva. The organiser, EDANA, says that three key FP6 projects will be in focus: Eco-efficient activation for hyper functional surfaces, intelligent multi-reactive textiles, and stretchable electronics for large area applications.

• Textile chemists and colourists confab: The American Association of Textile Chemists & Colorists (AATCC) will hold its 2009 international conference from March 10 to 12, 2009, at the Hilton Myrtle Beach Resort in Myrtle Beach, S.C. USA.

  AATCC is inviting papers and posters on a variety of topics from members of AATCC and offering awards ranging from US$125 to $1,000. Official entry forms can be downloaded from the AATCC website.

• Igedo in July: The Igedo Fashion Fairs Düsseldorf will be held from July 27 to 29 this year. The previous Igedo held on Feb 10-12 maintained the upward trend and consolidated Igedo's position as one of the most important fashion fairs in Europe. Some. 33,500 specialist buyers from 59 countries attended it.

• Munich Fabric Start set for Sept: The next Munich Fabric Start fair will take place on Sept 3-5, 2008. The last Munich Fabric - Pre-collections (Feb. 6-8, 2008) had attracted, according to its organiser, 14,200 trade visitors and 731 exhibitors, one-third of them coming from the neighbouring countries - Austria, Italy, Switzerland and the Eastern European nations. Both Munich Fabric Start Veranstaltungen and its partner, the children's aid organisation Terre des Hommes, were positive in assessing their "fair for kids" initiative. 70% of the exhibitors supported the project.

• Interior trend show: The 2008 edition of Japantex which is said to be Japan's largest trade show and exposition for interior decorations and home furnishing textiles will open on November 19 at Tokyo Big Sight. Japantex, organised by Nippon Interior Fabrics Association is held every year.

• Tirupur concludes Knit Tex show: The knitting industry trade fair held in the southern Indian textile city of Tirupur from February 22 to 25 is said to have attracted more than 200 participants. This 3rd Knit Tex attracted some 200 participants.

• Textile conf in Mauritius: The Zurich-based International Textile Manufacturers Federation will hold its 2008 annual conference in October in Mauritius. The general theme of the conference is "challenges for a greener and more sustainable textile industry." As the members of the International Textile Manufacturers Federation cover many sectors related to the textile industry, the conference will focus on varied topics such as fibre trends, the global textile market situation, retail trends in the world of fashion and supply chain management. Special workshops that will address specific issues are also part of the conference.

• Man-made fibre congress: The Dornbirn Man-made fibre congress, which is considered to be a platform for the international textile industry, will hold its 47th edition in Austria from September 17 to 19 this year. Organised by Austria's Man-made Fibre Institute, it is expected to attract some 700 participants from 30 countries. Sustainability will be the main theme of the congress with 10 lectures focusing on the topic. Development in fibres which is the lasting concern of the Man-made Fibre Institute will be discussed over 22 lectures, apart from many other lectures.

  A presentation from the USA will deal with health, safety and environmental aspects of nanotechnology while another from the UK will discuss market developments for fibres.

Technical Features

• Nanofibres: A novel material for filtration: Nonwovens composed of electrospun nanofibres is an exciting new class of textile material with unique characteristics that make them suitable for a wide range of filtration applications.

  Over the past decade significant attention is being paid in designing and the development of filter fabrics. New raw materials have been found, and many new designs differing in construction have been developed. Presently nonwoven textiles composed of electrospun nanofibres have been successfully used in a variety of filtration applications. Each application has specific requirements that often require different materials to accomplish the task. Electrospun nanofibrous media possess unique properties that can be used by the filter design engineer to meet expectations of the end user. It is expected that continued technical development would lead to the use of nanofibre filter media in several new filtration applications in the years to come.

  By S.Viju of the Department of Textile Technology, SSM College of Engineering, Komarapalayam, Tamil Nadu, India.

• Moisture control for cotton active-wear: In its continuing effort to promote cotton above all other fibres, Cotton Incorporated, the research and marketing company for US cotton growers and importers, made a case for cotton active-wear at the Outdoor Retailers Winter Market trade show held in Salt Lake City in late January. Under the umbrella of "Natural Performance," Cotton Inc presented technologies applicable to the active-wear market. It included the WICKING WINDOWS technology for moisture management.

  Outdoor industry is a $289-billion-a-year business; and the Outdoor Retailers Winter Market show is where hundreds of companies announce thousands of new products. A survey conducted by Cotton Inc's Lifestyle Monitor found that 76% of consumers think that purchasing an athletic apparel product made from an environment-friendly brand or material is important to them.

  "Our enhancing technologies build on the natural attributes of cotton to deliver garments that have the feel and performance that consumers want, and that provide a natural alternative to synthetics," says Cotton Inc's managing director for Product Development & Implementation, Mike Tyndall.

  Canadian sportswear apparel brand Sublock tested the effectiveness of WICKING WINDOWS technology on a very discerning panel. Jason Paradine of Corbett's Source for Sports, who tried out SubLock's active cotton shirt, found it doesn't have the slippery feel against the skin, unlike others, and it doesn't retain any odour even after using it a few times without a wash or a rinse. "You have redefined performance wear for me," he said.

• Fabric as drainage filter: Designing geotextiles for the filtering system in agricultural drainage presents a peculiar challenge. The fabric must be tight enough to capture suspended soil particles in the water, but at the same time offer large pores for water to pass through easily. This study examines these qualities in different media used for filtration.

  By M.H. Elshakankery of the textile department at the National Research Centre, Egypt, and M. M. Mourad of the faculty of education, Helwan University, Egypt.

Management Features

• China's new rules for customs clearance: The Hong Kong General Chamber of Commerce organised a luncheon meeting in mid-March with the senior tax manager of Deloitte Touche Tolumatsu, Daniel Tian, as a speaker. He discussed China's rules for customs clearance.

  China Customs now uses the WTO harmonised system. That means, in theory, one product has only one correct HS (harmonised system) code; but in reality they may have multiple functions and multiple components because products nowadays are getting more and more complex. Mr. Tian had previously spent seven yers with China Customs and according to him, HS code classification is becoming more and more important in China for the reason that the code not only determines the duty value for the importer but it also determines the export refund rate.

  Lawrence Cheung, the Shenzhen tax managing partner of Deloitte who also spoke at the luncheon, pointed out that "a lot of attention has been given to the changes of the regulations over the past two years, especially changes in the VAT rate in relation to import processing arrangement or contract processing arrangement." According to his experience, many other changes also took place over the past ten years including a a valuation policy in relation to import and export value of goods coming into force since 2002.

  About customs valuation, Mr Tian said that after the issuance of the valuation policy, customs officials began looking at different areas of a company in China. Nowadays, they would like to know if there is any cost or expense incurred outside China that is not included in the goods' price; is there any intangibles - like royalty, patent, trademarks, things like that - which should be deemed as part of the good's value and therefore subject to customs duty. They would also like to focus on inter-company transactions.

  According to Mr Cheung, under different accounting gaps, it could be arguable, or it is allowable, to treat different types of expenses under different categories rather than incorporating them into the cost assessable for the goods. But the customs might view it entirely differently.

  By C.K. Chow

• Credit risk management in China: Open account payment terms will continue to remain popular in China, according to a high-ranking executive of the French company Coface that offers credit insurance and credit management services worldwide with branch offices and subsidiaries in 60 countries.

  Late last year, Coface conducted its fifth annual survey of corporate risk management in China. According to its findings, more than 80% of the respondents were granting up to 60 days as standard payment terms, and more than 70% stretching the credit terms up to 120 days. This seems to reflect the market's growing appetite for longer payment terms as buyers prefer to use supplier's credit to finance their operations or, even worse, their investments.

  C.K. Chow

Asia Spotlight

• Asia takes 69% of US apparel market: Asia's apparel exports to the United States last year expanded at more than three times the rate of the US market expansion. Asian suppliers filled not only the rising market demand but they also took an amazingly large share of the US market that previously held by non-Asian suppliers.

  US imports of apparel in 2007 increased by over $2.17 billion or almost 3% from $73.39 billion in 2006 to $75.57 billion in 2007. Asian apparel exports to the US in that period climbed by $4.6 billion which was nearly 112% greater than the net growth in US apparel imports.

  Non-Asian suppliers losing a significant portion of their US market in 2007 included Mexico, Dominican Republic, Canada, Guatemala, Jordan and Peru.

  The battle for market was not confined strictly between Asians and non-Asians. Asian suppliers have fought against each other too. Hong Kong, India, Macau, Malaysia, Philippines, Sri Lanka, Taiwan and Thailand lost a portion of their share in the US market while the global garment leader China and up and coming apparel manufacturers like Bangladesh, Cambodia, Indonesia, Pakistan and Vietnam striving harder to promote their garment exports made deeper inroads in the US market.

• Mixed fortunes for Australian wool producers: A joint development initiative between Australian Wool Innovations (AWI) and one of the