September 8, 2006
One aspect of the world of apparel that I struggle to make sense of is exporting and importing. It’s something I never had much of an interest in and I’m now overwhelmed with how big a part things like quotas, tariffs and politics play in the global fashion arena.
On January 1, 2005, quotas on imports from less developed countries were removed in both Canada and the United States. Six months later, after having its market flooded with 800% more imports from China, the USA reinstated quotas on many categories of garments. Which seems odd, considering how the States championed the WTA agreement from the beginning. This means that once the quotas have been filled, an embargo stops shipments from the country in question.
Some devious types try to get around the quotas by a sneaky practice called submarining, or “transhipment”. This is where garments produced offshore are finished or relabelled in a country whose quotas aren’t restricted. Though the USA is targeting other Asian nations suspected of rerouting goods made in China, Canada is not immune to opportunistic relabeling. Not only can the quotas be usurped, but the Made in Canada label holds sufficient cachet that the goods can even receive a higher price with their new labels. With Canada’s market also flooded with imports and the apparel industry suffering, the greedy or desperate go underground, creating temporary relabeling factories to capitalize on the situation.
Relabeling used to be a hack-job, simply chopping off the label and sewing a new one on top, but with the USA increasing surveillance and spending millions of dollars to inspect imported apparel, the submariners have had to take more care – unpicking seams and carefully sewing in new labels so it is not apparent that the product has been altered.
US customs has responded with an even greater degree of investigation and surveillance – even to the point of chemically testing goods to determine their origin and physically investigating factories to determine where the goods were produced. It’s disheartening to realize that despite this great effort the deterrent for submarining is often a nominal fine absorbed as the cost of doing business.
Some fraud is not so involved – there are many cases where goods are just misrepresented on documents. This type of deception is making it more difficult for companies that legitimately manufacture in Canada to export their goods to the United States – which is unfortunate because the United States market is much larger and more lucrative than Canada’s own.
Even the small packages of made-in-Canada apparel that I deal with are getting stuck in the border backlog. For two countries with a “Free Trade Agreement” there is an awful lot of paperwork and as I am no customs broker I worry about making mistakes. As I find myself trying to understand what all of this means I am overwhelmed with the tangles of policies, opinions and documents.
Lots of it (the stuff that applies to me) is soooo boring, and some of it, like submarining, is a little juicier. Often I’m lost in semantics as I couldn’t tell you the difference between duties and tariffs. I wish there was a book written in plain language that could make all of this stuff more interesting. Much of this article was inspired by one of my favourite industry mentors whose rants really bring these topics to life. Beyond the red tape and the incomprehensible charts and graphs the decisions of our governments and the actions of our industry effect everyone’s life – whether it’s your job, your business, or what is available for you to buy.
Are quotas a good thing or a bad thing? What does the US government’s increased monitering of apparel imports mean for the rest of us? I just don’t know… all I’m sure of is that it is “a little bit more complicated than that”.