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U.S. apparel imports under production-sharing arrangements
totaled an estimated $14.7 billion in 2003, accounting for
nearly one-quarter of all U.S. apparel imports that year. Mexico
and the countries of the Caribbean Basin region accounted for an
estimated 95 percent of all U.S. production-sharing trade in the
apparel sector, whereby U.S.-made fabric is used in foreign
apparel sewing operations. U.S. imports of apparel from
Mexico fell by 7 percent in 2003, to $7.1 billion, representing
a steady decline from a peak of $8.6 billion in 2000. Rising
labor compensation in Mexico has led some U.S. customers to
shift sourcing of apparel to lower labor-cost countries in
Central America and Asia. For remaining customers, however,
Mexico offers lower transportation costs, quicker response time,
and a well developed fabric manufacturing industry to offset the
disadvantage of higher labor costs.
Production of textiles, apparel, and
leather goods recorded the largest decrease among all of
Mexico’s manufacturing sectors in 2003, falling by 8.9 percent.
This contraction of output occurred despite a 6.8-percent
reduction in unit costs per man-hour in this category in 2003.
Although improvements in unit costs typically would attract more
foreign direct investment, anticipated cost increases for labor
and energy have dampened Mexico’s standing as a preferred
production-sharing partner for the U.S. apparel industry.
Concern over the continued shift of apparel production from
Mexico to the Caribbean Basin is not reflected in the trends in
trade in the woven cotton trousers category, which accounted for
36 percent of U.S. apparel imports from Mexico but just 16
percent from the Caribbean Basin region. Denim jeans accounted
for two-thirds of the woven cotton trousers entering from
Mexico, but only 15 percent of such trousers from the Caribbean
Basin region, as trousers producers in the region have focused
on casual slacks. By contrast, U.S. imports of apparel from the
Caribbean Basin region is highly concentrated in knit cotton
apparel (especially sweaters, golf shirts, t-shirts, dress
shirts, trousers, briefs, and socks). Those categories accounted
for 45 percent of total U.S. apparel imports from Caribbean
Basin countries in 2003 compared with just 17 percent from
Mexico...
...Continued
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