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Central American countries hope to increase T-shirt exports to the US

With the elimination of world quotas this year, T-shirt shipments to the US increased during the first half of 2005

The surge from China is due to be halted by embargoes whilst neighbouring Asian countries battle it out with Latin America for T-shirt supremacy. The Central American countries are hoping in the long term to be boosted by CAFTA.

World shipments of T-shirts to the US market grew by nearly 12 per cent in the first half of 2005, compared to the same period in 2004.

Post quota surge

Profiting from the end of quotas in January 2005, Asian textile producers China, India, Bangladesh and Pakistan marked significant increases in shipments of T-shirts to the US in the first part of the year.

Chinese shipments to the US rose by over one thousand per cent whilst those for Bangladesh and neighbouring India rose by 374 and 270 per cent respectively.

US imports of Pakistani T-shirts increased 72 per cent during the same period. However, with an embargo now effective on category 338/339 (knit shirts, including T-shirts), the surge in Chinese shipments should grind to a halt.

Latin America

The leading source of US imported T-shirts remains Mexico although shipments continue to decline. In volume terms, imports from Mexico dropped 13 per cent in the first half of 2005 in comparison to the same period of 2004.

Honduras, currently second largest US supplier in this category, has also seen exports to the US decline by just over 7 per cent. This is disappointing for the country seeing a reversal of an increase for the first half of 2004.

Central American countries, with the exception of Honduras and the Dominican Republic, all performed well during January-June 2005.

El Salvador, third largest US supplier, turned around a first half 2004 decline in shipments to an 11 per cent increase for the same period this year. Haiti increased shipments by 56 per cent. In South America, Peru benefited from a relaxation in Rules Of Origin and boosted shipments by 70 per cent.

CAFTA to the rescue

With many Central American countries increasing exports to the US, they have already used up their 2004-2005 quota for a duty-free entry to the US market.

Statistics for July show just over 99 per cent of the allocation has been absorbed by the various partner nations of the Caribbean Basin Trade Partnership Act (CBTPA).

The next quota period is due to start on 1 October so these countries will have to enter the US territory under the MFN tariff of 16.50% until then. However, the passage last month of CAFTA (Central American Free Trade Agreement) into law will bring added relief to these countries although they will have to wait until it is implemented on 1 January 2006.

Prices continue to fall

The total value of T-shirt imports absorbed by the US represented an increase of 6.25 per cent for the first half of 2005 in comparison to 2004. Shipments for the first half of the year thus totalled over US$1 billion. The increase is again split between the Asian and Latin American competitors with China having reaped big gains.

The unit value of shipments correspondingly fell during the first half of 2005 thanks largely to the removal of quota costs and declining world cotton prices this year.

Overall for January-June 2005, prices fell by 5 per cent to $20.95 per dozen. China significantly slashed prices by over 44 per cent. India also cut prices by 46 per cent but the cost of Indian T-shirts amounted to $30.92 per dozen compared to China's $17.85 per dozen.

El Salvador was able to increase shipments thanks partly to a 3.97 per cent decrease in its unit value falling to $15.96 per dozen - one of the cheapest sources available.