Apparel sector's comparative advantage: Pakistan envoy testifies before US International Trade Commission

• Masood Khan says apparel sector undergoing transformation.
• ITC makes report on export competitiveness of apparel industries.
• Textiles, apparel contribute 60% to national exports, he says. 

WASHINGTON: Pakistan Ambassador to the United States, Masood Khan, testified about the comparative advantage of the apparel sector before the US International Trade Commission (ITC), saying it is undergoing profound transformation and positioning itself for robust export growth.

Ambassador Khan made these remarks during a public hearing on Monday by the ITC on the export competitiveness of the apparel industries in the South Asian countries including Bangladesh, Cambodia, India, Indonesia and Pakistan in the US market.

“Individual companies in Pakistan are adopting advanced traceability technologies to consciously champion supply chain transparency in alignment with global requirements,” he said.

The envoy said that under the Net Zero Pakistan initiative, leading apparel companies are committed to accelerating the transition to sustainability and delivering the Net Zero goal by 2050.

The investigation is being conducted by the ITC at the request of the US trade representative and the commission is required to submit its report by August 30, 2024.

The ITC report would make a comparison of market share by these five suppliers and would analyse changing patterns in market share. The report would also take into account major factors of competitiveness, including trade, industry structure, price and costs, product differentiation, and reliability.

'Textiles contribute 60% to exports'

Highlighting that the textiles and apparel contributed around 60% to national exports and 24% to industrial value-addition, the ambassador pointed out that the sector has a unique distinction of having mature, intensive backward and forward linkages which translate into a vertically integrated value chain.

He informed the participants that textiles and apparel were generating 40% of the total industrial employment and a significant employment generator for the Pakistani female workforce.

Ambassador Khan also pointed out that Pakistan’s strength in the textiles and apparel sector was anchored in the local supply of major input materials, availability of a skilled and competitive workforce, industrial integration, vibrant and dynamic entrepreneurship and commitment to meeting quality and Environment, Social and Governance (ESG) standards. 

“These factors are underpinned by the government’s aggressive measures to improve efficiency, regulatory environment and ease of doing business," he added. 

'US largest export destination for Pakistan'

Khan also highlighted that the US was the largest export destination for Pakistan. “Textiles and apparel constitute around 85% of Pakistan’s total exports to the US,” he said.

“Pakistan has a 3.3% share of the US market in the textiles and apparel segment, however, all the exports of apparel products are subject to applicable MFN tariffs of up to 38.3% as Pakistan does not enjoy preferential access to the US market,” he added.

He pointed out that Pakistan was the fifth largest cotton producer in the world.

“Pakistan is the third largest producer of Better Cotton globally and promotes the cultivation of organic cotton to reduce greenhouse gas emissions,” he said.

Pakistan was making concerted endeavours to increase cotton productivity and transition towards sustainable development, the ambassador added.

'Pakistan in recovery mode'

Highlighting the resilience of the sector, especially in the wake of COVID-19, Khan pointed out that Pakistan recorded textiles and apparel exports of $19.3 billion in FY 2021-22, up by 54.4% as compared to $12.5 billion in FY 2019-20. This growth, he said, was driven by apparel exports which increased by 69% to $9.03 billion in FY22 from $ 5.35 billion in FY20.

“Because of massive disruption in supply chains in last two years, Pakistan like other leading exporters of apparel witnessed a declining trend. However, right now, we are in the recovery mode of rapid growth,” said the ambassador.

He also pointed out that Pakistan followed a liberal investment regime that offered a conducive environment to attract foreign and local investors. He said that Pakistan attracted high-value-added, export-oriented, and resource-efficient investments through increased integration with global value chains.

During the last few years, the sector has attracted approximately $5 billion of fresh local investment for the expansion of the textiles and apparel manufacturing chain, including imports of around $2.2 billion worth of new machinery from 2019 to 2023. The sector, therefore, has the capacity to ramp up the scale of apparel manufacturing further.

Prominent US retailers sourcing products from Pakistan

Ambassador Khan said Pakistan’s customer base was diverse, and many prominent US enterprises and retailers, most of them Fortune 500, were already sourcing their products from Pakistan.

“Pakistani apparel exporters look forward to reinforcing the strong historical trade relations between the two countries,” concluded the ambassador.