And the world getting smaller, I think, fashion encapsulates it more than any other industry.
Cotton grown in Arizona might be spun into yarn in Pakistan, and then made into fabric
in China, and sewn into apparel in Vietnam, and sold back at a retail store in Arizona.
People don't realize that fashion is truly a global industry.
All around the world, there is fashion being created, and even if it is created in one
of the places that we're more familiar with and we think of as global fashion capitals,
it is likely to be manufactured in many, many other places.
The real-life impact here in the United States is that about 20 years ago, 25 years ago,
we had about one to 1.2 million apparel workers, the vast majority of those jobs went offshore.
I think by far, it was the cost of labor and being able to produce in a cheaper country
that made the textile jobs leave the U.S. for the most part.
So, what happens is labor costs go up, so prices go up.
The industry goes and looks for the next place to develop the industry, where it can get
products at a lower price.
Ninety-eight percent of American fashion, high-end and low-end, is manufactured overseas.
Globalization has resulted in the virtual disappearance of garment manufacturing in
New York City and in most places in the United States.
U.S. workers are frustrated.
They have been the sacrificial lamb on this altar of globalism and unfettered free trade.
Import tariffs or duties fulfill two objectives, at least in theory.
First, is to protect American jobs from imports, American manufacturers.
And the second is to raise money for the U.S. Treasury.
Today, it's not so much the main focus of revenue, 'cause our income tax and other taxes far exceed what's
raised in tariffs, but it still remains a policy to try to protect domestic industry.
A tariff is a tax imposed at the port, at the border when the truck or the ship enters
the United States.
The interest of the consumer is important.
I'm a consumer, I like getting a bargain, but you have to balance with your responsibility
to your workforce and to the betterment of human society overall.
If another country can produce apparel more efficiently than the United States and we
can do other things more efficiently here, it makes sense to allow the American people
to buy clothing at an affordable price and free up their own cash to spend on other things.
And for them to do more jobs that are more suitable to the United States.
And if we're looking to protect an industry or we're looking to help people with retraining
to keep their jobs, then I think we should have retraining programs, rather than the
indirect of saying a high tariff is gonna help someone keep their job in a, a manufacturing plant.
We think that there ought to be reasonable constraints which incentivize U.S. retailers
and brands not to buy product from manufacturers in certain parts of the world who abuse their
labor force, who abuse the environment.
Someone around the world is, generally, making a product for cheaper than what it should
cost to retail to you,
and, therefore, is cutting some corner in order to get to that point, until consumers recognize
that there is a hidden cost to what you buy.
Fashion is made possible by trade.
There are many countries that are using fashion in ways that promote economic development
in some of the least developed countries in the world.
And that's really exciting.
A rational trade policy that says, absolutely, have access to our market, inject competitive
forces and discipline into the system, but not through unacceptable practices.
Not through labor exploitation or government subsidies.
We've not lived under any significant restrictions for quite a while now.
The industry, the globalization has been complete.
The United States has free trade agreements with 15 countries in the world.
The rules for apparel on each free trade agreement are, are different.
The rules are just extremely complicated.
Free trade agreements with individual countries sounds great, but to be honest with you, it's
not as great a deal when we look at it from a company perspective; because when we do
the separate deals, everyone is different, but once you have those differences, it becomes
harder for companies to then do business in multiple free trade agreement areas.
Everybody makes fundamental arguments that, wow, free trade agreements are good.
Everybody wins.
We open our market, they open theirs.
Well, if your market is the size of the state of Kentucky, and that's what you're giving
us, and in return, you get access to 320 million American consumers, who have a gross domestic
product of about $18 trillion a year, that's not a fair deal.
I think virtually everyone would probably agree that trade rules should be simplified.
That it would be good for the economy, good for the fashion sector.
The fashion industry was impacted big-time when President Trump pulled out of the Trans-Pacific
Partnership.
The Trans-Pacific Partnership really offered an opportunity for Vietnam and Malaysia and
other countries to become a part of a free trade agreement with the U.S.; and therefore,
be duty-free to the U.S. market.
We would say, if you truly want to help this hemisphere, you have to be very cautious about
what you do in Asia.
Especially in our sector, because once you give a player in Asia preferences equivalent
to NAFTA or CAFTA, there's going to be damage for the NAFTA and CAFTA countries.
They are competing directly with those counties.
So, NAFTA, the North American Free Trade Agreement, that the free trade agreement that went into
effect in 1994, and it's between the U.S., Canada, and Mexico.
CAFTA is the Central America Free Trade Agreement.
It's the Central American countries and the Dominican Republic that negotiated a free
trade agreement with the U.S.
The Central American countries, collectively, might be the second largest source of apparel,
uh, to the United States and the world.
NAFTA changed everything.
Everything started moving to, to Mexico, 'cause it was cheaper labor.
So, we started doing fabric down in Mexico.
China opened up an entire new world, and it all became price-driven, because no one else
could compete.
We still allow people to buy product in Asia under some fairly abhorrent circumstances,
and that displaces any benefit that would naturally have accrued to Mexico or Central America.
We see the Tazreen factory fire and the collapse of Rana Plaza in Bangladesh that has generated
lots and lots of attention.
The retailer wants their orders and their merchandise when they want it.
They don't care what it takes for me or my customers to get it there, nor should they.
There are going to be, at the super low-cost level, where people are going to the cheapest
factory no matter what and don't have a good system of human rights compliance audits;
then, that risk is certainly gonna take place.
What I think most consumers don't really realize is how global our industry is and how important
it is that we're global.
The trade agreement regime, systems like quota, tariffs, that has more potential than anything
else to impact the industry.
If we're gonna negotiate agreements, let's make them meaningful and not make them so
restrictive that they're not actually useful.
The American consumer has an advantage today that it didn't have 20 years ago, and that's
the vibrancy of the internet and the vibrancy of information and transparency.
Invest some time into understanding the brands.
You need to know whom to trust by doing your homework with respect to looking at the actual
product or knowing your retailer.
Forget what they want you to believe.
Reward the people who are doing the reasonable and acceptable practices, and punish those
who are not.
And there is no greater punishment in the retail sector than to not buy something.
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