Identifier
Created
Classification
Origin
07PANAMA1619
2007-10-02 14:47:00
UNCLASSIFIED
Embassy Panama
Cable title:
PANAMA -TEXTILE AND APPAREL PRODUCTION INFORMATION
how-toVZCZCXRO4436 RR RUEHAG RUEHAP RUEHDE RUEHDF RUEHGI RUEHHM RUEHLZ RUEHMA RUEHMR RUEHPA RUEHPB RUEHRN DE RUEHZP #1619/01 2751447 ZNR UUUUU ZZH R 021447Z OCT 07 FM AMEMBASSY PANAMA TO RUEHC/SECSTATE WASHDC 1249 INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE RUCNWTO/WORLD TRADE ORGANIZATION COLLECTIVE RUCPDOC/DEPT OF COMMERCE WASHDC RUEHC/DEPT OF LABOR WASHDC RUEHGV/USMISSION GENEVA 0287
UNCLAS SECTION 01 OF 02 PANAMA 001619
SIPDIS
SIPDIS
FOR STATE WHA-CEN - TELLO
FOR STATE EEB/TPP/ABT - CLEMENTE
FOR COMMERCE ITA/OTEXA - D'ANDREA
FOR USTR - MILLER
E.O. 12958: N/A
TAGS: ECON ETRD KTEX
SUBJECT: PANAMA -TEXTILE AND APPAREL PRODUCTION INFORMATION
REF: STATE 114799
UNCLAS SECTION 01 OF 02 PANAMA 001619
SIPDIS
SIPDIS
FOR STATE WHA-CEN - TELLO
FOR STATE EEB/TPP/ABT - CLEMENTE
FOR COMMERCE ITA/OTEXA - D'ANDREA
FOR USTR - MILLER
E.O. 12958: N/A
TAGS: ECON ETRD KTEX
SUBJECT: PANAMA -TEXTILE AND APPAREL PRODUCTION INFORMATION
REF: STATE 114799
1. (U) Total industrial production in USD value:
$1,066,600,000 (2006; in 1996 USD); $277,400,000 (first
quarter 2007; in 1996 USD).
Total textile and apparel production in USD value: $6,555,343
(2006); $3,144,986 (first quarter 2007).
Textile/apparel share of host country imports and exports:
0.7% (2006); 1.0% (first quarter 2007).
Exports in textile and apparel to the U.S. in USD value:
$1,587,386 (2006); $858,472 (first quarter 2007).
Total manufacturing employment: 44,406 (2006); 45,378 (first
quarter 2007).
Total textiles and total apparel employment: 1,866 (2006);
1,933 (first quarter 2007);
All figures are from the GOP's Comptroller General's Office.
Textile production and employment (manufacturing and
textile/apparel) figures based on an estimate of firms having
5 or more employees derived from a 2002 census; industry
contact told Post he believes there are less than 1,000
people employed in the textile industry)
2. (U) Q. Are host country producers receiving lower prices
due to heightened international competition?
A. While there are no official GOP statistics on this
question, textile industry contacts have told EmbOff that
Panamanian producers are not receiving lower prices due to
heightened international competition.
3. (U) Q. Have manufacturers received more, less, or the
same number of orders as in years past?
A. Industry contacts have told EmbOff that they are receiving
approximately the same number of orders as in past years.
The industry contacts said that the number of orders has not
significantly varied over the past few years due to specific
quality and "designer type" clothing (such as the traditional
shirt, the guayabera) manufactured in Panama. However,
according to data from 1997 through 2006 from the GOP's
Controller General's Office, Panamanian textile exports
reached a high of $3,316,732 during 2004. Such exports have
since fallen to $2,358,520 during 2005 and $1,618,409 during
2006; the drop is almost exclusively related to declines in
the dollar value of T-shirts and undershirt exports.
4. (U) Q. Have foreign investors, particularly, Asian
investors, closed factories or otherwise pulled out of local
production?
A. No. According to industry contacts, there are no Asian
investors of any noticeable size in the Panamanian textile
industry.
5. (U) Q. Have U.S. and EU restrictions on certain exports
of textiles and apparel from China, effective through
2007/2008, affected export prospects for host country
manufacturers?
A. According to industry contacts, such restrictions have
adversely affected those Panamanian manufacturers who import
very inexpensive apparel from Asia, then add value and
re-export to other countries. There are no reliable GOP
statistics or industry contact estimates quantifying this
adverse effect.
6. (U) Q. Has the host government implemented, or is it
considering implementing, safeguards or other measures to
reduce growth of imports of Chinese textile and apparel
products into the host country?
A. According to the GOP's Ministry of Industry and Commerce
(MICI) and industry contacts, the GOP has not implemented,
nor is it planning on implementing, any such measures.
7. (U) Does the host have policies or programs in place to
deal with any dislocated workers in the sector resulting from
increased competition?
PANAMA 00001619 002 OF 002
A. According to the MICI and industry contacts, there are no
policies or programs specifically designed to address the
needs of such dislocated workers.
8. (U) Has increased global competition affected local labor
conditions by causing employers to reduce wages, seek
flexibility from government required minimum wages, or
adversely affected union organizing?
A. According to industry contacts, textile manufacturers have
been forced to lower wages as a result of Chinese
competition. Such contacts said that union organization has
not been affected and the wage demands of such unions have
resulted in closures of various textile companies.
9. (U) Has the host government or private industry taken
action to increase the country's competitiveness, such as
improving infrastructure, reducing bureaucratic requirements,
developing the textiles (fabric production) industry, moving
to higher value-added goods, or identifying niche markets?
Does post think that the host government or private
industry's strategy will be successful?
A. Neither the GOP nor private industry has undertaken any
action to specifically improve the competitiveness of
Panama's textile industry. The GOP has engaged in various
programs to improve the country's overall competitiveness,
such as allocating $88 million to worker training programs,
establishing a one-stop online process to register new
businesses replacing the prior multi-step, multi-agency
registration process (Panama Emprende),and establishing
on-line government procurement processes to facilitate access
to government contracts (Panama Compra). Industry contacts
have complained to Post that Panama's rigid labor code
eliminates a free market in labor, making it impossible to
hire and terminate workers to accommodate the seasonal demand
shifts for apparel. As a result, producers are
disincentivized from expanding production or hiring
additional workers.
10. (U) If your host government is a partner in a free trade
agreement or a beneficiary of a preference program such as
AGOA, CBTPA, CAFTA or ATPDEA, what impact does the program
have on local sector industry competitiveness?
A. Panama is a beneficiary under CBTPA, which benefits are
scheduled to expire in September 2008. According to one
industry source, the benefits CBTPA allow to the textile
industry to flourish during the 1980s. However, as the U.S.
reduced or eliminated quotas and tariffs on textiles entering
the U.S. from other countries, the value of the CBTPA
benefits declined, as did exports to the U.S. According to
this source, NAFTA dealt a severe blow to the Panamanian
textile exports to the U.S. because Mexico offered lower
wage, energy and transportation costs, and Mexican exports
paid no import tax unlike Panamanian textile exports. Panama
and the U.S. have signed a Trade Promotion Agreement (TPA)
which is awaiting U.S. Congressional approval. Panama's
National Assembly ratified the TPA in July 2007. Panama is
not a party to CAFTA-DR.
11. (U) Q. Overall, if not already addressed, does post think
that host country can be competitive in textiles and apparel
exports given heightened global competition?
A. No. Panama's economy 75% service-based. The country has
only 15 textile manufacturers, principally producing work and
school uniforms, and certain designer type clothing, such as
the guayabera. Due to the small domestic market (only 3.2
million residents),neither the GOP nor the private sector
appear eager, willing or incentivized to make large scale
investment to upgrade or expand textile production facilities.
EATON
SIPDIS
SIPDIS
FOR STATE WHA-CEN - TELLO
FOR STATE EEB/TPP/ABT - CLEMENTE
FOR COMMERCE ITA/OTEXA - D'ANDREA
FOR USTR - MILLER
E.O. 12958: N/A
TAGS: ECON ETRD KTEX
SUBJECT: PANAMA -TEXTILE AND APPAREL PRODUCTION INFORMATION
REF: STATE 114799
1. (U) Total industrial production in USD value:
$1,066,600,000 (2006; in 1996 USD); $277,400,000 (first
quarter 2007; in 1996 USD).
Total textile and apparel production in USD value: $6,555,343
(2006); $3,144,986 (first quarter 2007).
Textile/apparel share of host country imports and exports:
0.7% (2006); 1.0% (first quarter 2007).
Exports in textile and apparel to the U.S. in USD value:
$1,587,386 (2006); $858,472 (first quarter 2007).
Total manufacturing employment: 44,406 (2006); 45,378 (first
quarter 2007).
Total textiles and total apparel employment: 1,866 (2006);
1,933 (first quarter 2007);
All figures are from the GOP's Comptroller General's Office.
Textile production and employment (manufacturing and
textile/apparel) figures based on an estimate of firms having
5 or more employees derived from a 2002 census; industry
contact told Post he believes there are less than 1,000
people employed in the textile industry)
2. (U) Q. Are host country producers receiving lower prices
due to heightened international competition?
A. While there are no official GOP statistics on this
question, textile industry contacts have told EmbOff that
Panamanian producers are not receiving lower prices due to
heightened international competition.
3. (U) Q. Have manufacturers received more, less, or the
same number of orders as in years past?
A. Industry contacts have told EmbOff that they are receiving
approximately the same number of orders as in past years.
The industry contacts said that the number of orders has not
significantly varied over the past few years due to specific
quality and "designer type" clothing (such as the traditional
shirt, the guayabera) manufactured in Panama. However,
according to data from 1997 through 2006 from the GOP's
Controller General's Office, Panamanian textile exports
reached a high of $3,316,732 during 2004. Such exports have
since fallen to $2,358,520 during 2005 and $1,618,409 during
2006; the drop is almost exclusively related to declines in
the dollar value of T-shirts and undershirt exports.
4. (U) Q. Have foreign investors, particularly, Asian
investors, closed factories or otherwise pulled out of local
production?
A. No. According to industry contacts, there are no Asian
investors of any noticeable size in the Panamanian textile
industry.
5. (U) Q. Have U.S. and EU restrictions on certain exports
of textiles and apparel from China, effective through
2007/2008, affected export prospects for host country
manufacturers?
A. According to industry contacts, such restrictions have
adversely affected those Panamanian manufacturers who import
very inexpensive apparel from Asia, then add value and
re-export to other countries. There are no reliable GOP
statistics or industry contact estimates quantifying this
adverse effect.
6. (U) Q. Has the host government implemented, or is it
considering implementing, safeguards or other measures to
reduce growth of imports of Chinese textile and apparel
products into the host country?
A. According to the GOP's Ministry of Industry and Commerce
(MICI) and industry contacts, the GOP has not implemented,
nor is it planning on implementing, any such measures.
7. (U) Does the host have policies or programs in place to
deal with any dislocated workers in the sector resulting from
increased competition?
PANAMA 00001619 002 OF 002
A. According to the MICI and industry contacts, there are no
policies or programs specifically designed to address the
needs of such dislocated workers.
8. (U) Has increased global competition affected local labor
conditions by causing employers to reduce wages, seek
flexibility from government required minimum wages, or
adversely affected union organizing?
A. According to industry contacts, textile manufacturers have
been forced to lower wages as a result of Chinese
competition. Such contacts said that union organization has
not been affected and the wage demands of such unions have
resulted in closures of various textile companies.
9. (U) Has the host government or private industry taken
action to increase the country's competitiveness, such as
improving infrastructure, reducing bureaucratic requirements,
developing the textiles (fabric production) industry, moving
to higher value-added goods, or identifying niche markets?
Does post think that the host government or private
industry's strategy will be successful?
A. Neither the GOP nor private industry has undertaken any
action to specifically improve the competitiveness of
Panama's textile industry. The GOP has engaged in various
programs to improve the country's overall competitiveness,
such as allocating $88 million to worker training programs,
establishing a one-stop online process to register new
businesses replacing the prior multi-step, multi-agency
registration process (Panama Emprende),and establishing
on-line government procurement processes to facilitate access
to government contracts (Panama Compra). Industry contacts
have complained to Post that Panama's rigid labor code
eliminates a free market in labor, making it impossible to
hire and terminate workers to accommodate the seasonal demand
shifts for apparel. As a result, producers are
disincentivized from expanding production or hiring
additional workers.
10. (U) If your host government is a partner in a free trade
agreement or a beneficiary of a preference program such as
AGOA, CBTPA, CAFTA or ATPDEA, what impact does the program
have on local sector industry competitiveness?
A. Panama is a beneficiary under CBTPA, which benefits are
scheduled to expire in September 2008. According to one
industry source, the benefits CBTPA allow to the textile
industry to flourish during the 1980s. However, as the U.S.
reduced or eliminated quotas and tariffs on textiles entering
the U.S. from other countries, the value of the CBTPA
benefits declined, as did exports to the U.S. According to
this source, NAFTA dealt a severe blow to the Panamanian
textile exports to the U.S. because Mexico offered lower
wage, energy and transportation costs, and Mexican exports
paid no import tax unlike Panamanian textile exports. Panama
and the U.S. have signed a Trade Promotion Agreement (TPA)
which is awaiting U.S. Congressional approval. Panama's
National Assembly ratified the TPA in July 2007. Panama is
not a party to CAFTA-DR.
11. (U) Q. Overall, if not already addressed, does post think
that host country can be competitive in textiles and apparel
exports given heightened global competition?
A. No. Panama's economy 75% service-based. The country has
only 15 textile manufacturers, principally producing work and
school uniforms, and certain designer type clothing, such as
the guayabera. Due to the small domestic market (only 3.2
million residents),neither the GOP nor the private sector
appear eager, willing or incentivized to make large scale
investment to upgrade or expand textile production facilities.
EATON