Regulating Fashion

If you want to sell products in the largest economy in the world (namely, in the USA), you have got to play by its rules.

Whether it is related to protecting a US industry or the US consumer, there are multiple federal agencies that regulate products sold in the American market. The same goes for the European Union (EU), and an easy example of regulation for the sake of consumer protection is one with respect to restrictions on beef imports in the wake of “mad cow” disease some years ago.

In the context of fashion however, we are not interested in every federal agency but rather a limited number with certain exceptions. We would not, for example, typically need the US Food and Drug Administration (FDA) when importing an apparel article. If the “meat dress” worn by singer Lady Gaga were to be imported however, and therefore arriving in a refrigerated container (aka, a “reefer”) unlike most apparel imports which do not require temperature controlled transport, FDA compliance questions may arise.

This is because the FDA has a 24 hour rule with respect to the declaration of food imports – even though with its primary purpose being an article of apparel, the importer may attempt to classify it as such as opposed to raw meat.

While speaking with another professor at a fashion conference recently, I learned that risk recognition and assessment in the context of the fashion industry is not a subject closely looked at in tandem with importation. As this is an area of law I deal with frequently, I explained to him a number of risks and offered to go down to his school to do a seminar on this topic.

Risks not only arise with the more obvious Consumer Product Safety Commission (CPSC) flammability, lead and other rules, but can also come up in the context of labeling, for issues arising under the Federal Trade Commission’s (FTC) jurisdiction such as those involving the letters “USA” on a product not actually made in the USA.

There is also the US Fish and Wildlife that regulates other products under the fashion umbrella such as an importation of watches with a mother-of-pearl dial.

With US Customs serving as the watchdog at the border for compliance with all US federal agency rules, it is imperative for an importer to have done its regulatory due diligence in order to avoid fines and penalties by one or more of these agencies.

Questions/comments? Post below or email me at clark.deanna@gmail.com

Production to Sales – The Case of Varanasi (India)

Working on the import side of fashion, I tend to think about production to sales as being an activity that requires month’s of time between ordering, sample approval, compliance testing, the production run and of course, the carriage of the merchandise to the United States.

I was reminded however, that there is a strong case for buying locally when I was sitting in clothing store in an ancient city along the Ganges River being shown multiple styles of various women’s and men’s shirts. In the city of Varanasi, India, where I had been, it is common to enter a store and sit on a white padded cloth while the store owner shows you a selection of his products.

I decided on a style I liked, however, the color I wanted was not available in an already-made shirt. I therefore went to the shop’s warehouse so that I could choose a fabric.

It turned out that the warehouse was next to the production floor, which began with a pattern fitting and cutting area, and then a larger room with sewing machines. All of the “seamstresses” as we tend to think of it in the USA, were actually men, and I was informed that it was common in Varanasi that men were the labor force behind clothing manufacturing.

Varanasi is a city of colorful and chaotic streets wherein two-hundred million (200M) people live (yes, that many!). According to the shop owner, Varanasi has 1.2 million sewing machines used for fabricating garments, bedding and other articles.

Fabric is a product heavily made in India that is more often than not dyed with chemicals rather than organic dyes because it is less expensive. With dumping from China of cheap fabrics into the Indian market, staying competitive is becoming increasingly more of a challenge.

Not only was I able to choose the fabrics I wanted, all of which were sourced from Indian manufacturers, I also had an opportunity to purchase a beautifully printed piece of “paper silk” that had once been used as a sari but had been disassembled for re-use. With this fabric, I had three (3) scarves made and received them along with my new shirt the next morning.

Customized personal service, choice of fabric, eco-consciousness, and next day delivery – a very good business model indeed!

Questions/comments? Post below or email me at clark.deanna@gmail.com

Exporting Fashion

The fashion industry is the largest manufacturer of exports out of New York City according to Carmela Mammas, the Director of the New York Export Assistance Center (Center).

Her office, as she explained to my International Business Law students at NYC’s Fashion Institute of Technology, offers export counseling to mainly small and medium-sized businesses, including assistance with:

- finding the right overseas agents and distributors
- bidding on overseas projects, whether for selling a product or providing a service (e.g., architecture design), and
- dealing with unfair trade issues.

The Center further provides a “matchmaking service” in which the office not only identifies potential overseas partners, it also schedules a calendar of appointments with such parties so that all the US exporter has to do is to get on an airplane and follow the business itinerary of meetings arranged by the Center.

Known as the “Gold Key Service,” this can be purchased for a minimal fee ($700/country) by companies that have already developed an export plan, have identified the market potential of the foreign partner country and typically, is a company that is already established in the U.S.

Most of the services and information offered by the Center are free and includes resources such as viewing country profiles through the Center’s market research guide, as well as a series of templates to help a company that is thinking about exporting to identify and assess the potential market, such as through the creation of an export plan, and usage of a recently established official advocacy office in Washington, DC.

The mission of these U.S. export centers, which are not merely in NYC but are all across the country and overseas too, is to create U.S. jobs.

President Obama has launched a national export initiative and recognizes that in order for U.S. businesses to stay in the market and grow a business, a company needs to sell overseas as well.

Hence, his revamping of the export regulations after decades of the status quo.

For more information about Dir. Mammas office, click here.

Questions/comments? Post below or email me at clark.deanna@gmail.com

The African Fashion Industry - Can it Benefit From AGOA?

I am heading to an international fashion conference to present my findings and receive an award for an essay I wrote on the African Fashion Industry and the African Growth and Opportunity Act (AGOA) agreement.

Its relationship to the African fashion industry stems from AGOAs provisions covering textiles and apparel.

In short, it provides duty-free treatment of certain textiles and apparel products so long as it is all originating from AGOA countries, with certain exceptions to this rule for merchandise made in “lesser developed countries.”

Unfortunately, AGOA is set to expire in 2015 and has yet to obtain congressional intent to continue.

Of more urgent concern is that in only 6 months the special provisions for the lesser developed countries will expire as well.

With the unpredictable continuation of AGOA’s provisions, how can buyers plan production runs when the “economics” of sourcing from Africa cannot be determined?

For the U.S. government – and I’m talking about both party lines – to claim to want to encourage business, this lack of action sure does beg the questions as to whether Congress is serious about doing this or not.

Or, perhaps the government has yet to understand the ancillary trade benefits across all sectors that could result from the stimulation of the textiles and apparel sectors of African economies…

In my paper, I posit that between the growing awareness and consumption of African fashion – thanks in large part to technology - in tandem with the benefits flowing from the AGOA agreement, the potential for a “triple win” is possible for

1. African Designers
2. African Economies (through growth of the textile and apparel sectors), and
3. US Purchasers of African Made products

This of course, is dependent upon many factors, including a real commitment on the part of the US as opposed to the unpredictable short-term extensions, along with streamlining protocols for foreign export to US import AGOA compliance records.

This could further be boosted by parallel incentives creation on the part of AGOA countries but again, without a real commitment by the US, why would national banks and other national institutions bother?

For more information on the AGOA agreement, please refer to other articles written in the month of March in this blog International Trade for Everyday People.

Questions/comments? Post below or email me at clark.deanna@gmail.com