The US Market for Imported Apparel & Pakistan
Though Pakistan is included in the list of the top 10 global textile exporters, its share in world textile and...
Though Pakistan is included in the list of the top 10 global textile exporters, its share in world textile and clothing exports in 2022 was only 2.2%.
The global apparel market comprises of every kind of clothing, from sportswear to business attire, from value clothing to statement luxury pieces.
For the purpose of this Study, the apparel market is defined as comprising of tariff lines under HS-61: Articles of apparel and clothing accessories, knitted or crocheted, and HS-62: Articles of apparel and clothing accessories, not knitted or crocheted.
Source: ITC Trade Map
Revenue was forecast to increase in 2023, to more than $ 1.7 trillion USD increasing further to $ 1.95 trillion USD in 2026. In 2022, China led the rankings for global apparel exporters. The US was second only to the EU in the value of apparel imports.
The US Apparel Import Trends
Imported apparel accounts for a significant portion of the US market reflecting the nation’s reliance on global supply chains. Countries like China, Vietnam, and Bangladesh have traditionally been major contributors to US apparel imports.
As mentioned previously, apparel in this report will cover tariff lines under HS Code 61 – Articles of apparel and clothing accessories, knitted or crocheted and HS Code 62 – Articles of apparel and clothing accessories, not knitted or crocheted.
By 2026 the value of US imports of apparel is forecast to grow from $ 105.0 billion USD in 2022 to $ 117.52 billion USD.
Source: ITC Trade Map
Major US Apparel Import Partners
The major import partners for the US for apparel are China, Vietnam, Bangladesh, and India. These countries are regional and direct competitors for Pakistan in exports of apparel including to the US. China, Vietnam, and Bangladesh have traditionally been major contributors to US apparel imports, not only do these countries export more than Pakistan to the US, their price per unit for each product is higher than what Pakistan’s exports fetch.
In 2022, China exported apparel worth $ 23.65 billion USD, Vietnam $ 18.87 billion USD, Bangladesh $ 9.83 billion USD, India $ 6.0 billion USD and Pakistan $ 2.98 billion USD to the US. The forecasted growth in apparel imports into the US shows that as China and Vietnam’s exports slow, Bangladesh, India, and Pakistan’s exports in apparel categories to the US will grow. At the current trends in exports, it is forecast that in 2026 Pakistan’s apparel exports to the US will be worth $ 4.50 billion USD.
The US imports of apparel from Pakistan
Pakistan ranks as the 10th largest import partner for HS Code 61 and the 9th largest import partner for HS Code 62 for the US. Although it is in the top 10 rankings for both HS-61 & HS-62, current exports are well below potential.
This Study provides a comparison between the top products of HS Code 61 and HS Code 62 imported by the US from its trading partners including Pakistan. The study relies primarily on secondary data supplemented with interviews with Pakistani apparel exporters to the US. The study aims to show how Pakistan is competing with other countries supplying the US with apparel.
The recent trend in apparel is shifting to blended clothing (Synthetic fibers). China and Vietnam are top trading partners for the US for those products, each holding a large market share. Pakistan can also potentially increase its share in US market if Pakistan diversifies its product mix and focuses on products that are in high demand and have been projected to have high growth rates in the coming years.
Key findings of the Study:
In 2022, the US’s total imports for HS Code 61 (Articles of apparel and clothing accessories, knitted or crocheted) and HS Code 62 (Articles of apparel and clothing accessories, not knitted or crocheted) amounted to $105.4 billion USD. The top exporting partners for apparel for US in 2022 were China, Vietnam, Bangladesh, and India.
US Imports of Apparel by Percentage Share:
- China: 22.6%
- Vietnam: 18.0%
- India: 5.7%
- Bangladesh: 9.3%
- Pakistan: 2.9%
Pakistan’s Per Unit Price Advantage – but not translating into increasing market share:
From a per unit price perspective, Pakistan’s per unit price has been consistently lower for almost all products in both HS Code 61 and HS Code 62. In both HS-61 and HS-62, India, China and Bangladesh perform consistently better than Pakistan on a per unit price comparison. For HS-61, Vietnam dominates, while for HS-62 Bangladesh consistently remains in the top 3 exporters for nearly all significant tariff lines. India, which like Bangladesh is a regional competitor for Pakistan, in both HS-61 and HS-62, performs better than Pakistan even though Pakistan’s per unit price is lower than both India’s and Bangladesh’s. As expected, China is in the top 3 exporters for major lines in both HS-61 and HS-62 with a higher per unit price as compared to Pakistan.
Increasing Use of Alternate Fiber in Apparel
The synthetic fiber which is currently most used for manufacturing apparel is polyester. Its demand overtook that of cotton in 2002, and since then, it has increased much more rapidly than any other type of fiber. Of the top 20 apparel products imported by the US under HS Code 61, 50.0% of the products were made of synthetic fiber valued at $ 17.7 billion USD while at least 25.0% of the tariff lines imported under HS Code 62 were made out of synthetic fiber valued at $ 12.6 billion USD in 2022.
An analysis of tariff lines of HS-61 & HS-62 with annual imports into the US of $ 50.0 million USD and more, shows that imports of apparel made from synthetic fiber were valued at $ 23.7 billion USD in 2022 whereas for HS Code 62 the corresponding number was $ 17.5 billion USD. The total imports of the US under HS-61 & HS-62 was $ 105.0 billion USD. In 2022, the US’s total imports of apparel from Pakistan were worth just $ 2.9 billion USD.
For imports from Pakistan, a total of 10 apparel tariff lines had values of more than $ 50.0 million USD. Out of these, 7 were in HS-61 with total imports of $ 1.4 billion USD while there were 3 tariff lines in HS-62 which had imports greater than $ 50.0 million USD with total imports of $ 1.0 billion USD.
For apparel using MMF, there is only one tariff line from Pakistan with imports greater than $50.0 million USD; 611596 – (Full-length or knee-length stockings, socks and other hosiery, incl. footwear without applied soles, of synthetic fibres, knitted or crocheted (excl. graduated compression hosiery, pantyhose and tights, women’s full-length or knee-length stockings, measuring per single yarn < 67 decitex, and hosiery for babies) with imports of $ 93.8 million USD in 2022.
There are no tariff lines in HS-62 made from synthetic fibre with annual imports of more than USD $ 50.0 million to the US from Pakistan.
There is thus a disconnect between what the US imports and what Pakistan has to offer in both HS-61 & HS-62, especially when it comes to apparel using synthetic fibers. China and Vietnam are major players for products under HS Code 61 while under HS Code 62, China, Vietnam, and Bangladesh are the top importing partners for the US.
Global Trend is Shifting in Apparel
Global demand trends show that man-made fiber apparel has been gaining popularity. The reasons for this include an increase in athleisure, durability, price, and the perception that these are better for the environment. Synthetic textiles are now softer, hang better, and even have a superior ability to absorb moisture as compared to cotton. They also fulfil international safety and protection standards. This trend is clearly visible in imports of apparel by the US and other major markets for Pakistan.
Pakistan, thus, cannot ignore the potential that the global markets and especially the US market offers for import of apparel (HS-61 & HS-62) made using synthetic fibers.
Recommendations
Need to develop a consensus among various stakeholders:
A consensus needs to be developed between the various industry players; i.e., the apparel manufacturers and the local industry involved in the production of synthetic/polyester fiber. For synthetic/polyester apparel exports to increase, the local apparel industry must have access to raw material at comparable prices to their international competitors. At the same time a considerable amount of investment has been made by the polyester industry in plants which will need to be safeguarded.
Correct Customs classification of raw materials:
Most of the new synthetic yarns/fabrics developed in the past 10 to 15 years are not classified separately by the Pakistan Customs. In the absence of an updated classification, these new materials are subjected to tariffs which have been imposed to protect domestic industry which does not exist for most of these materials. It is therefore important that proper HS-codes be allotted to these products.
Facilitate Pakistan becoming an apparel manufacturing hub:
The government needs to have in place a policy which encourages manufacturers to import for export duty free all raw materials including yarn, fabric, accessories, packing material used in the manufacture of apparel.
Promote JVs in the apparel sector:
JVs in the apparel sector need to be promoted, in addition to ease of issuance of work visa for technical and managerial staff, tax holidays for the units and zero or very low-income tax rates for expatriate staff need to be offered. In addition, there should be on restrictions on repatriation of profits or salaries of expat staff.
Upskilling of Manpower:
A comprehensive plan needs to be implemented for upskilling manpower. Though some processes are common, others need to be learnt.
Industry Standards Need to be Mandated:
Industry standards need to be mandated to ensure that locally produced MMF apparel meets international standards, not just of the fabric but also the apparel.
Incentivize apparel made from Synthetic fiber/MMF
Government incentives for the apparel sector need to be focused on apparel made from synthetic or man-made fiber.
Special Economic Zones for Apparel
Special Economic Zones (SEZ) for apparel are needed to promote the sector, clustering will help the sector grow at a faster rate. However, the size of the plots in the SEZ need to reflect the demands of the sector.
In-dept Global Market Research
Better information is needed by the apparel sector regarding trends in the global synthetic apparel sector. Government & industry need to work to identify the key markets and the marketing strategies for each.
Trade delegations to promote exports
Industry needs to have greater exposure through visits to the key markets and through industry specific exhibitions in the key markets.
Promote sustainability & eco-friendly practices:
Industry will need to embrace sustainability and eco-friendly practices including carbon footprint.
The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 96) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk
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