Identifier
Created
Classification
Origin
06LAPAZ2622
2006-09-28 18:49:00
UNCLASSIFIED
Embassy La Paz
Cable title:  

TEXTILES AND APPAREL: CONTINUED RELIANCE ON ATPDEA

Tags:  ETRD ECON KTEX BL 
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RUEHMN/AMEMBASSY MONTEVIDEO 4041
RUEHQT/AMEMBASSY QUITO 4463
RUEHSG/AMEMBASSY SANTIAGO 9037
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS LA PAZ 002622 

SIPDIS

SIPDIS

STATE FOR EB/TPP/ABT TLERSTEN AND WHA/AND LPETRONI
COMMERCE FOR ITA/OTEXA MDANDREA AND JANGLIN
STATE PASS TO USTR FOR AHEYLIGER

E.O. 12958: N/A
TAGS: ETRD ECON KTEX BL
SUBJECT: TEXTILES AND APPAREL: CONTINUED RELIANCE ON ATPDEA
PREFERENCES

REF: STATE 138090

UNCLAS LA PAZ 002622

SIPDIS

SIPDIS

STATE FOR EB/TPP/ABT TLERSTEN AND WHA/AND LPETRONI
COMMERCE FOR ITA/OTEXA MDANDREA AND JANGLIN
STATE PASS TO USTR FOR AHEYLIGER

E.O. 12958: N/A
TAGS: ETRD ECON KTEX BL
SUBJECT: TEXTILES AND APPAREL: CONTINUED RELIANCE ON ATPDEA
PREFERENCES

REF: STATE 138090


1. (U) Summary: While the expiration of global textile and
apparel quotas may have adversely affected small Bolivian
producers, large manufacturers' exports will likely remain
strong, at least as long as they benefit from Andean Trade
Promotion and Drug Eradication Act (ATPDEA) preferences. If
these disappear, say exporters, Bolivian producers will find
themselves unable to compete with cheaper products from China
and other Asian nations. That said, with greater political
and economic certainty, flexible labor laws, and access to
financing, industry representatives believe Bolivian textile
and apparel manufacturers can compete even in a tough global
environment. End summary.


2. (U) Anecdotal evidence suggests that the expiration of
global textile and apparel quotas and related increases in
relatively inexpensive imports has pushed some Bolivian firms
out of business, particularly those operating in the informal
sector and producing primarily for domestic markets. Many
small businesses have found their products undercut not only
by cheaper imports from China and other Asian countries, but
also by rapidly increasing used clothing imports (allowed
until April 2007). For many family-owned enterprises, the
latter seems to be a greater threat.


3. (U) Large manufacturers say their exports will likely
remain strong, at least as long as they benefit from Andean
Trade Promotion and Drug Eradication Act (ATPDEA)
preferences, which provide a 17-22 percent price advantage
over competitors subject to U.S. textile and apparel tariffs.
Bolivia's largest apparel manufacturer, Ametex, exports
approximately 750,000 units of clothing to U.S. markets every
month, all of them under ATPDEA trade preferences. Another
firm, Mitsuba, exports on a much smaller scale (approximately
9,000 units of clothing per month) but also relies heavily on
existing trade benefits. In the absence of duty-free access
to U.S. markets, say company representatives, firms would
find it difficult, if not impossible, to compete.


4. (U) According to Ametex President Marcos Iberkleid, the
potential expiration of ATPDEA trade preferences is of far
greater concern than the end last year of global textile and
apparel quotas or increased competition from China and other
Asian nations. The firm's export volume is up 19 percent,
thanks largely to product diversification, new markets, and
greater flexibility in responding to clients' needs, but the
firm has lost at least one major U.S. client to uncertainty
over continued ATPDEA benefits. Mitsuba executive Henry
Casana worries that his exports may also be affected - a
particularly grave concern for a firm that sends 95 percent
of its products to the United States.


5. (U) In a general sense, increased global competition has
forced some manufacturers to lower prices and improve
efficiency. Iberkleid reports that he has consolidated
manufacturing facilities and streamlined operations,
dismissing some mid- and senior-level employees and making
significant operational changes. In the short-term, ATPDEA
trade preferences may be sufficient to allow Bolivian textile
and apparel manufacturers to remain competitive, but
Iberkleid and others say they prefer a long-term trade
agreement and accompanying stability. With this, and with
greater political and economic certainty, flexible labor
laws, and access to financing, industry representatives
believe Bolivian textile and apparel manufacturers can
compete even in a tough global environment.


6. (U) Bolivian textile and apparel exports accounted for
approximately 2 percent ($51.6 million) of total exports of
$2.7 billion in 2005; textile and apparel exports to the
United States totaled an estimated $34 million. Textile and
apparel imports accounted for approximately 2 percent ($50.2
million) of total imports of $2.4 billion in 2005.
Industrial/manufacturing exports totaled $932 million in

2005. Textile and apparel employment figures are
unavailable, but industry executives estimate that between


10,000 and 20,000 people are involved in the sector in some
capacity.
URS