Bernardo M. Villegas
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How to Save Garments Industry

          Philippine Ambassador to the United States, Jose Cuisia, hit the ground running.  Hardly had he and his family settled in Washington, D.C., this very experienced business executive took the cudgels for the SAVE Our Industries Act that has been filed in both the House of Representatives and the Senate of the U.S. Congress (H.R. 3039 in the lower house and S. 3170 in the Senate).  He lost no time in communicating with the Filipino community and wrote them the following letter:

          "I recently took up my post in Washington and wanted to personally greet you.  I want to listen to your views on how to strengthen relations between the U.S. and the Philippines.  And I look forward to meeting with you soon.

          "You may remember that President Aquino identified the SAVE Our Industries Act as a priority.  The bill was introduced last year by Senator Inouye of Hawaii, Congressman McDermot of Washington and Congressmen Bilbray and Filner of California.  We expect the bill to be reintroduced soon.  And our Government will do all we can to encourage the U.S. Congress to pass it this year.  We hope you will do the same.

          "The SAVE Act will support industry and job creation in both the United States and the Philippines.  The bill will promote U.S. textile exports and Philippine exports of apparel products.  Soon after becoming law, the SAVE Act would provide tens of millions of dollars in new exports for U.S. businesses.  It would save hundreds of thousands of jobs in the Philippines.

          "The Philippine government understands how important this legislation is to our workers and our relationships with the United States.  In September 2010 during his visit to the United States, President Aquino spoke for the SAVE Act and urged that we work together to get it passed.

          "Congressman Manny Paquiao supports the SAVE Act and has visited Washington earlier this year to seek support from U.S. legislators for its passage.

          "Please help support workers in the Philippines and here in the United States.  Visit the SAVE Act website at www.SaveOurIndustriesAct.org.  Sign up to stay informed about the bill's progress.  Share your ideas with us.  Let us know how the SAVE Act campaign can better use your help.  Please use the website to let us know."

          The economic rationale for the Bill, which is not just a political gimmick to strengthen diplomatic relations, is found in Section 2 (a) (7) of H.R. 3039:  "Apparel producers in the Western Hemisphere are excellent at making basic garments such as T-shirts and standard 5-pocket jeans.  However, the needle capability does not exist to make high-fashion, more sophisticated garments such as embroidered T-shirt and fashion jeans with embellishments.  Such apparel manufacturing is done almost exclusively in Asia."  This competitive advantage of Asia in the international garments industry is especially applicable to the Philippines.

          If one were to examine the state of the garments export industry in the Philippines, one would find the disappearance of cheap goods like T-shirts, jeans, and other apparel products that are completely dependent on cheap labor.  These have been practically monopolized by China, Vietnam, and Indonesia where the workers are paid less than in the Philippines.  But the garments exports that have not only survived but actually thrived in the last two decades in the Philippines are such fashion-oriented goods like ladies lingeries and embroidered children's dresses.  The Philippines is highly competitive in those apparel products that require creativity in design and craftsmanship in manufacturing.  The Chinese or the Vietnamese cannot replicate the skills in embroidery and design that have been honed for generations in such traditional towns as Taal in Batangas or Lumbang in Quezon.  That is why the Philippines has continued to be competitive in high-value garments exports.  The epitome of Philippine genius in design is exemplified by the likes of Monique Lhullier, a famous Filipina designer for Hollywood actresses, especially as regards wedding dresses.  The Philippines--in tandem with the excellent textile products of the U.S.--can be the center for fashionable wedding dresses for the rich and famous all over the world.  That can be one of the objectives of the SAVE our Industries Act.

          With Filipino fashion designers using Filipino embroiderers and other skilled garments workers, top-quality U.S textiles can be converted into some of the most coveted fashion products that can sell not only to North American consumers but can be re-exported  by the U.S. to the high-income consumers of other countries in the world, especially Europe  and Latin America.  As is written in Section 2 9a) (8) of H.R. 3039, " A program that provides preferential duty treatment for certain apparel articles of the Philippines will provide a strong incentive for apparel manufacturers to use United States fabrics, which will open new opportunities for the United States textile industry and increase opportunities for United States yarn manufacturers.  At the same time, the United States would be provided a more diverse range of sourcing opportunities." 

          In more concrete terms, the Save Our Industries Act would allow Philippine-manufactured apparel products using U.S.-made fabrics to enter the U.S. duty-free.  This will also create an opportunity for U.S. textile manufacturers to export fabrics to the Philippines, thus creating jobs in the U.S. textile sector.  Philippine apparel exports are expected to reach US$1.3 billion on the second year and US$3 billion on the fifth year.  On the other hand, U.S. textile exports to the Philippines are expected to rise to US$250 million on the second year and to US$500 million on the fifth year.

          The Philippine government expects the bill to revive the domestic garments industry, which is losing out to competition from China.  The Philippines used to export more than US$3 billion worth of apparel products to the U.S. and employed 600,000 garments workers.  Now the industry employs around 150,000 workers.  According to Trade and Industry Undersecretary Cristino Panlilio, "we expect to create about 450,000 additional jobs and these are jobs directly affected by the textile and garments industries.  With the ancillary industries, almost two million jobs in total is expected to come out of this."  For comments, my email address is bvillegas@uap.edu.ph.