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| Gross National Product (GNP) |
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| value of an annual output of domestic residents including output produced outside the country. It does not include the output of foreigners within the country |
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| Gross Domestic Product (GDP) |
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| Market value of annual output of products and services produced within a country. This is the most favored system now. |
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| Good shipped to another country |
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| Goods available domestically because of exports of another country |
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| Exports-Imports; + version occurs when the value of exports exceeds the value of imports, - version occurs when the value of exports is less than the value of imports |
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| NAFTA (North American Free Trade Agreement) |
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| Eliminated tariff and quotas among Canada, Mexico and the United States |
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| NAICS (North American Industry Classification System) |
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| Introduced in 1997 to standardize the classification of textiles and apparel for Canada, Mexico and the United States in a manner consistent with the world market. |
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| HTS (Harmonized Tariff Schedule of the United States) |
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| System for assessing duties on imports and exports based on the metric system; replaced Tariff Schedules of the United States (TSUS) in 1989 which was based on the English system. |
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| name commonly used for Harmonized Commodity Code; the global classification system used to describe trade in most goods; international at the six-digit level; country by country at the 10-digit level. |
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| SIC (Standard Industrial Classification System) |
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| Replaced by North American Industrial classification System (NAICS) |
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| SITC (Standard International Trade Classification System) |
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| Used for compiling international trade statistics on all merchandise entering international trade, and to promote international comparability of international trade statistics. |
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| Why did the US Government develop NAICS to replace SIC? |
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| The US government developed NAICS to replace SIC because after the NAFTA, it was hard to keep track of records since the US uses the English system and the other two countries use the metric system so NAICS helped to standardize the identification of textiles and apparels and other products in a manner consistent with the world market. |
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| Classified as Textile Mills- specifically with fiber, yarns and threads |
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| Classified as Textile and Product Mills- furnishings such as carpets, rugs, curtains and linens |
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| Classified as Apparel Manufacturing- clothes, knitting, hosiery, cut and sew, men, women and children |
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| Furniture and Home furnishing stores |
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| Classified as Clothing and Clothing Accessories Stores |
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| General Merchandise Stores |
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| Furniture and Home furnishing stores |
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| Reference Classifications |
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economic and social classifications that are a product of international agreements approved by the UN statistical commission or other agency
ex. WCO (World Customs Organization) |
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based upon reference classifications; prepared either by adopting the reference classification structure and categories, and then possibly providing additional detail; or they may be prepared through re-arrangement or aggregation of items from one or more reference classifications; they are often tailored for use at the national or multi-national level.
Eg. General Industrial Classification of Economic Activities within European Communities (NACE) |
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those that partially refer to reference classifications, or that are associated with the reference classification at specific levels of the structure only.
Eg. Australian and New Zealand Standard Industrial Classification (ANZSIC) |
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| What does the Harmonized Tariff Schedule (HTS) Comprise? |
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| A hierarchial structure for describing all goods in trade for duty, quota, and statistical purposes. |
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| what is the Harmonized Tariff Schedule? |
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| Made effective on January 1, 1989 it replaced the TSUS; it is used specifically for accounting for products that cross international borders. |
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| Trade function of USTR (United States Trade Representative) |
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| Takes care of negociations for any new laws or modification of existing laws before they are approved by the US government; negociations may take a month or a year with the USTR before it is approved with the government. |
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| Trade function of OTEXA (Office of textile and apparel) |
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| Documents trade data, assists firms with exporting, and continuously updates the status of trade agreements. OTEXA is often lobbied to by the U.S. textile complex to influence the formulation and/or administration of trade law. |
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| What does GATT (General Agreement on Tariff and Trade) do? |
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| Multilateral trade agreement whose fundamental purpose was to promote free trade of goods and equalize trade among countries; has been absorbed by the World Trade Organization (WTO) emphasized 1. Reduction of tariff barriers, 2. Reduction of quantitative restrictions, 3. Reduction of subsidies on trade |
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| What does ATC (Agreement on Textiles and Clothing) do? |
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| trade agreement that replaced Multifiber Arrangement (MFA) |
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| What does WTO (World trade Organization) do? |
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| An organization with over 147 countries as members; deals with the global rules of trade among nations |
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| What is the goal of the WTO? |
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| The goal of WTO is to improve the welfare of the people of its member countries, specifically by lowering trade barriers and providing a platform for negotiation of trade |
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| What are the five primary principles of WTO in developing trade policies for the member sof it's countries? |
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| Nondiscrimination, reciprocity, binding and enforceable commitments, transparency, safety valves |
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| Any government policy or regulation that restricts international trade |
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| A schedule of duties imposed by a country on imported goods; it is paid at a border or port of entry to the relevant government to allow a good pass into that government's territory. |
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| Drivers of Apparel International Sourcing/Exporting |
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Customer/Consumer Demand- Customers are becoming more demanding of their suppliers, especially customers in highly competitive markets, they expect more essentially
Suppliers- growing number of new companies/suppliers entering into international markets; seeking out new customers and offering new design and production capabilities
Process characteristics- incentives to use low wage labor, intermediate products with stable attributes can be shipped a long distance
Business, economic, Political Factors- low cost locations can give a competitive advantage, working overseas (China, India), Comparative Advantages like lower cost (China), better quality (Italy) |
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| Enablers of Apparel International Sourcing/Exporting |
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Consumer Attitudes- Acceptance of foreign made products, price sensitive, savvier
Company Capabilities- Technological, management and workforce skills
International Trade Infrastructure- growing economic integration, trade liberalization, financial services, growing legal framework
Technological Change- Improved communications by being less costly, giving higher quality and more info, and being given at a higher speed
Career Aspirations- People becoming more involved with the trade process |
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| Constraints on Apparel International Sourcing/Exporting |
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Ignorance- unaware of alternatives, domestic market nationalism, language/culture problems
Distance- transportation time, transportation costs, travel costs, co-ordination problems
Reliability- Quality assurance, transportation delays
Additional costs/complexity- Financing, taxes, paperwork, inspection procedures, contract terms
Trade barriers
Ethical Concerns- labor, environmental |
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| Three major ethical issues in today's apparel sourcing? |
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| Worker's rights, fair trade, environmental consideration |
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| "Triple Bottom Line" Concept |
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| It means that companies in seeking the goals of their corporate social responsibility often look to three factors: social, environmental and economic or “people, planet, profit”; People pertains to fair and beneficial business practices toward labor and the community and region in which a corporation conducts its business. Planet refers to sustainable environmental practices. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital tied up. Success comes by making all factors work together |
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| System of code or morals of a particular person, group or profession; the application of a system or code to decisions and/or particular problems of conduct |
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| CSR (Corporate social responsibility) |
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| Those actions taken by a firm that are intended to benefit society beyond the requirements of the law and the direct interests of the firm; the process by which business’ negotiate their role in society |
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| A factory, usually in a third world country, where people work for very small wage compared to their first world counterparts, producing variety of products such as clothes, toys, shoes and other consumer goods |
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| What is the objective of the WRAP Apparel Certification Program? |
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| to independently monitor and certify compliance with the specific standards, ensuring that a given factory produces sewn goods under lawful, humane, and ethical conditions. WRAP monitors the factory for compliance with detailed practices and procedures implied by adherence to these standards. |
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| 12 Principles of the WRAP Apparel certification Program |
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1. Compliance with laws and workplace regulations
2. Prohibition of forced labor
3. Prohibition of child labor
4. Prohibition of harassment or abuse
5. Compensation and benefits
6. hours of work
7. Prohibition of discrimination
8. Health and safety
9. Freedom of association and collective bargaining
10. environment- comply with environmental rules, regulations and standards
11. Custom compliance- comply with applicable customs laws
12. security- make sure facilities are monitored so bio-hazardous materials or contraband for example are not shipped out |
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| FTF (Fair Trade Federation) |
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Definition
| is an association of fair trade wholesalers, retailers and producers whose members are committed to the goal of providing fair wages and good employment opportunities to economically disadvantaged artisans and farmers worldwide |
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1. Paying a fair wage in the local context
2. Offering employees opportunities for advancement
3. Engaging in environmental sustainability practices
4. Providing healthy and sage working conditions in the local context
5. Providing equal employment opportunities for all people |
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