Identifier
Created
Classification
Origin
05LIMA4184
2005-09-27 13:56:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Lima
Cable title:
PERU: UPDATED TEXTILE AND APPAREL INFORMATION
how-toThis record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 LIMA 004184
SIPDIS
SENSITIVE
DEPT FOR WHA/AND, EB/TPP/ABT - E HEARTNEY
COMMERCE FOR ITA/OTEXA/MARIA D'ANDREA
USTR FOR B. HARMAN and A. HEYLIGER
E.O. 12958: N/A
TAGS: KTEX ETRD ECON EINV PE
SUBJECT: PERU: UPDATED TEXTILE AND APPAREL INFORMATION
REF: A) STATE 146213 B) LIMA 68 C) 04 LIMA 5445
UNCLAS SECTION 01 OF 02 LIMA 004184
SIPDIS
SENSITIVE
DEPT FOR WHA/AND, EB/TPP/ABT - E HEARTNEY
COMMERCE FOR ITA/OTEXA/MARIA D'ANDREA
USTR FOR B. HARMAN and A. HEYLIGER
E.O. 12958: N/A
TAGS: KTEX ETRD ECON EINV PE
SUBJECT: PERU: UPDATED TEXTILE AND APPAREL INFORMATION
REF: A) STATE 146213 B) LIMA 68 C) 04 LIMA 5445
1. (SBU) Summary. Peru's textile and apparel sectors have
grown rapidly in the past few years, due primarily to
benefits under the Andean Trade Promotion and Drug
Eradication Act (ATPDEA). While textile and apparel exports
values increased from $823 million in 2003 to $1.09 billion
in 2004, this sector accounts for less than 12 percent of
Peru's overall exports. Peru's textile sector faces severe
competition from cheaper Chinese imports, which undermines
the ability of local producers to sell domestically. Peru
lifted its safeguards on Chinese textiles in May, but the
GOP is currently negotiating with the Chinese government to
apply "self-imposed" limitations on Chinese exports to Peru.
The key to the competitiveness of Peru's textile sector is
ATPDEA, which will expire in December 2006. Without a free
trade agreement (FTA) to replace ATPDEA, Peru's textile and
apparel production would decline and products would be less
competitive on the world market. End Summary.
Production
--------------
2. (U) According to the Central Bank, manufacturing and
industrial production in 2004 totaled $10.5 billion, an
increase from 2003 level of $9.2 billion. Textile and
apparel production accounts for a small portion of Peru's
total industrial production. The Central Bank reports that
Peru's 2004 textile and apparel production reached $1.5
billion, an increase from $1.4 billion in 2003.
Imports and Exports
--------------
3. (U) Peruvian total imports increased from $8.25 billion
in 2003 to $9.8 billion in 2004. Textile and apparel
imports comprised approximately 3.6 percent of this total.
According to the Central Bank, Peruvian imports of textiles
and apparel totaled $358 million in 2004, increasing from
$314 million in 2003.
4. (U) The Central Bank also reported that Peru's total
exports in 2004 reached $12.6 billion, a dramatic increase
from $9.1 billion in 2003. As a percentage of exports,
textiles and apparels accounted for only 8.7 percent of
exports in 2004, a slight decrease from 9.1 percent in 2003.
Although textile and apparel exports account for a small
portion of total exports, these exports grew at a rate of
25% from 2003 to 2004, from $823 million to $1.1 billion.
The majority of Peruvian textile and apparel exports include
manufactured cotton garments and basic textile products
(spun and woven cotton and wool). Textile industry
representatives indicate that the substantial increase in
Peruvian exports, particularly of textiles and apparel, is
directly linked to ATPDEA, which expanded benefits to
include Peruvian apparel products.
-------------- --------------
Peruvian Import and Export Levels, 2003-2004
-------------- --------------
USD, millions Percent Share
2003 2004 2003 2004
-------------- --------------
Exports
Textiles 165.0 218.0 1.5 1.7
Apparel 654.0 874.0 7.6 7.0
Textile/Apparel 823.0 1092.0 9.1 8.7
Total Exports 9091.0 12617.0 100.0 100.0
Imports
Textiles 207.2 238.0 2.5 2.4
Apparel 107.6 120.0 1.3 1.2
Textiles/Apparel 314.8 358.0 3.8 3.6
Total Imports 8254.5 9824.0 100.0 100.0
-------------- --------------
Source: INEI (Statistics Bureau),Central Bank
5. (SBU) While official statistics on 2005 textile exports
are not yet available, local industry officials informed us
that approximately 65 percent of Peruvian apparel was
shipped to the United States during the first six months of
the year. According to the Lima Chamber of Commerce,
textile and apparel exports totaled $390.4 million through
June 2005, an increase of 17 percent year/year. The Lima
Chamber of Commerce emphasized that USG limitations on
certain Chinese textile and apparel products enables
Peruvian products to compete for the U.S. market.
Employment
--------------
6. (U) The Peruvian Census Bureau estimates that there are
currently close to 14 million people in the labor force,
with 10 percent working in the manufacturing sector. Of
these, the Ministry of Trade and Tourism (Mincetur)
estimates that in 2004, approximately 130,000 individuals
were gainfully employed in the textile and apparel industry,
accounting for less than 3 percent of total employment.
Much of the employment in the textile industry, however, is
informal and these statistics do not accurately reflect true
employment patterns.
-------------- --------------
Total Manufacturing and Textiles/Apparel Employment
2002-2003
-------------- --------------
Percent Share
2002 2003 2002 2003
Total Manufacturing 1,173,260 1,164,086 9.7 8.9
Textiles 353,943 354,140 2.9 2.7
Total employment 12,070,072 13,013,298 100.0 100.0
-------------- --------------
Source: Unpublished data from Peruvian Department of Labor
No Safeguards on Chinese Products
--------------
7. (U) Peru was one of the few countries that imposed
safeguards on Chinese textiles before the elimination of the
WTO's Multi-Fiber Agreement (MFA) (ref B). In October 2004,
the GOP established temporary safeguards on 20 sensitive
textile products; these protections expired on May 1. After
conducting a review of the textile industry from October
2004-March 2005, the GOP decided not to extend these
safeguards. To appease the opponents, the GOP passed new
customs regulations calling for "special attention" on 36
different imported items, including 13 sensitive textile
products, stating that if not monitored, these products
could harm local industry. The new regulations also gave
Customs the power to place additional tariffs on these 36
products if it detects that importers are engaging in
fraudulent behavior, such as dumping.
8. (U) Despite new regulations, local industry and several
export societies continue to demand that the GOP reinstate
textile safeguards. Instead of bowing to public pressure,
the Ministry of Production began negotiations with China in
August to encourage China to place a "self-imposed"
limitation on Chinese textile exports to Peru. Although the
Ministry of Production claims that GOP officials made
significant advances during the last round of negotiations
with China in early September, the GOP is unable to specify
when the negotiations will end.
Comment
--------------
9. (SBU) Peru's small but vibrant textile sector benefits
greatly from ATPDEA, which is set to expire at the end of
2006. Without ATPDEA, or a free trade agreement to replace
ATPDEA, Peruvian apparel would be unable to compete with
Chinese products and products from countries that have
preferential trade agreements (such as the Central American
countries). The Peruvian Government remains committed to
concluding FTA negotiations by November 2005; the government
recognizes that the economic benefits of trade are too good
to pass up.
STRUBLE
SIPDIS
SENSITIVE
DEPT FOR WHA/AND, EB/TPP/ABT - E HEARTNEY
COMMERCE FOR ITA/OTEXA/MARIA D'ANDREA
USTR FOR B. HARMAN and A. HEYLIGER
E.O. 12958: N/A
TAGS: KTEX ETRD ECON EINV PE
SUBJECT: PERU: UPDATED TEXTILE AND APPAREL INFORMATION
REF: A) STATE 146213 B) LIMA 68 C) 04 LIMA 5445
1. (SBU) Summary. Peru's textile and apparel sectors have
grown rapidly in the past few years, due primarily to
benefits under the Andean Trade Promotion and Drug
Eradication Act (ATPDEA). While textile and apparel exports
values increased from $823 million in 2003 to $1.09 billion
in 2004, this sector accounts for less than 12 percent of
Peru's overall exports. Peru's textile sector faces severe
competition from cheaper Chinese imports, which undermines
the ability of local producers to sell domestically. Peru
lifted its safeguards on Chinese textiles in May, but the
GOP is currently negotiating with the Chinese government to
apply "self-imposed" limitations on Chinese exports to Peru.
The key to the competitiveness of Peru's textile sector is
ATPDEA, which will expire in December 2006. Without a free
trade agreement (FTA) to replace ATPDEA, Peru's textile and
apparel production would decline and products would be less
competitive on the world market. End Summary.
Production
--------------
2. (U) According to the Central Bank, manufacturing and
industrial production in 2004 totaled $10.5 billion, an
increase from 2003 level of $9.2 billion. Textile and
apparel production accounts for a small portion of Peru's
total industrial production. The Central Bank reports that
Peru's 2004 textile and apparel production reached $1.5
billion, an increase from $1.4 billion in 2003.
Imports and Exports
--------------
3. (U) Peruvian total imports increased from $8.25 billion
in 2003 to $9.8 billion in 2004. Textile and apparel
imports comprised approximately 3.6 percent of this total.
According to the Central Bank, Peruvian imports of textiles
and apparel totaled $358 million in 2004, increasing from
$314 million in 2003.
4. (U) The Central Bank also reported that Peru's total
exports in 2004 reached $12.6 billion, a dramatic increase
from $9.1 billion in 2003. As a percentage of exports,
textiles and apparels accounted for only 8.7 percent of
exports in 2004, a slight decrease from 9.1 percent in 2003.
Although textile and apparel exports account for a small
portion of total exports, these exports grew at a rate of
25% from 2003 to 2004, from $823 million to $1.1 billion.
The majority of Peruvian textile and apparel exports include
manufactured cotton garments and basic textile products
(spun and woven cotton and wool). Textile industry
representatives indicate that the substantial increase in
Peruvian exports, particularly of textiles and apparel, is
directly linked to ATPDEA, which expanded benefits to
include Peruvian apparel products.
-------------- --------------
Peruvian Import and Export Levels, 2003-2004
-------------- --------------
USD, millions Percent Share
2003 2004 2003 2004
-------------- --------------
Exports
Textiles 165.0 218.0 1.5 1.7
Apparel 654.0 874.0 7.6 7.0
Textile/Apparel 823.0 1092.0 9.1 8.7
Total Exports 9091.0 12617.0 100.0 100.0
Imports
Textiles 207.2 238.0 2.5 2.4
Apparel 107.6 120.0 1.3 1.2
Textiles/Apparel 314.8 358.0 3.8 3.6
Total Imports 8254.5 9824.0 100.0 100.0
-------------- --------------
Source: INEI (Statistics Bureau),Central Bank
5. (SBU) While official statistics on 2005 textile exports
are not yet available, local industry officials informed us
that approximately 65 percent of Peruvian apparel was
shipped to the United States during the first six months of
the year. According to the Lima Chamber of Commerce,
textile and apparel exports totaled $390.4 million through
June 2005, an increase of 17 percent year/year. The Lima
Chamber of Commerce emphasized that USG limitations on
certain Chinese textile and apparel products enables
Peruvian products to compete for the U.S. market.
Employment
--------------
6. (U) The Peruvian Census Bureau estimates that there are
currently close to 14 million people in the labor force,
with 10 percent working in the manufacturing sector. Of
these, the Ministry of Trade and Tourism (Mincetur)
estimates that in 2004, approximately 130,000 individuals
were gainfully employed in the textile and apparel industry,
accounting for less than 3 percent of total employment.
Much of the employment in the textile industry, however, is
informal and these statistics do not accurately reflect true
employment patterns.
-------------- --------------
Total Manufacturing and Textiles/Apparel Employment
2002-2003
-------------- --------------
Percent Share
2002 2003 2002 2003
Total Manufacturing 1,173,260 1,164,086 9.7 8.9
Textiles 353,943 354,140 2.9 2.7
Total employment 12,070,072 13,013,298 100.0 100.0
-------------- --------------
Source: Unpublished data from Peruvian Department of Labor
No Safeguards on Chinese Products
--------------
7. (U) Peru was one of the few countries that imposed
safeguards on Chinese textiles before the elimination of the
WTO's Multi-Fiber Agreement (MFA) (ref B). In October 2004,
the GOP established temporary safeguards on 20 sensitive
textile products; these protections expired on May 1. After
conducting a review of the textile industry from October
2004-March 2005, the GOP decided not to extend these
safeguards. To appease the opponents, the GOP passed new
customs regulations calling for "special attention" on 36
different imported items, including 13 sensitive textile
products, stating that if not monitored, these products
could harm local industry. The new regulations also gave
Customs the power to place additional tariffs on these 36
products if it detects that importers are engaging in
fraudulent behavior, such as dumping.
8. (U) Despite new regulations, local industry and several
export societies continue to demand that the GOP reinstate
textile safeguards. Instead of bowing to public pressure,
the Ministry of Production began negotiations with China in
August to encourage China to place a "self-imposed"
limitation on Chinese textile exports to Peru. Although the
Ministry of Production claims that GOP officials made
significant advances during the last round of negotiations
with China in early September, the GOP is unable to specify
when the negotiations will end.
Comment
--------------
9. (SBU) Peru's small but vibrant textile sector benefits
greatly from ATPDEA, which is set to expire at the end of
2006. Without ATPDEA, or a free trade agreement to replace
ATPDEA, Peruvian apparel would be unable to compete with
Chinese products and products from countries that have
preferential trade agreements (such as the Central American
countries). The Peruvian Government remains committed to
concluding FTA negotiations by November 2005; the government
recognizes that the economic benefits of trade are too good
to pass up.
STRUBLE