Prospects for the Textile and Clothing Industry in Guatemala

PRLog (Press Release) – Feb 14, 2007 – The textile and clothing industry is an important component of Guatemala’s economy. In 2004 it accounted for 37% of its total exports—which include traditional agricultural items such as coffee, sugar and bananas—and for 68% of its non-traditional exports. The industry also accounted for 2.7% of the country’s total labour force and for almost 74% of manufacturing employment. More than 94% of Guatemala’s clothing exports go to the USA, reflecting the importance of preferential trade programmes which provide duty benefits to garments made in the Central American region. In turn, Guatemala is the USA’s tenth largest supplier of clothing in value terms, and its second largest supplier in Central America.

But Guatemala’s textile and clothing industry is still relatively small and depends on imports for most of its yarn and fabric requirements. This is partly due to the fact that locally produced fibres and fabrics are not available in the quality and quantity needed to meet the demands of the garment export industry, and partly because preferential access programmes under the Caribbean Basin Trade Preference Act (CBTPA) encourage the use of US yarns and fabrics. The abolition of all remaining textile and apparel quotas between World Trade Organisation (WTO) members at the beginning of 2005 has led to increased competition from Asian clothing suppliers in the US market. Likewise, delays in implementing the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) have stalled investment in Guatemala’s textile and clothing sector. One small crumb of comfort, however, comes from recent moves by the US Department of Commerce to impose safeguard quotas on certain categories of Chinese clothing imports—several of which are among the top Guatemalan exports to the USA.

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