AM330 Exam 2

carry forward

(MFA) an exporting country was allowed to borrow from next year's ceiling to apply to the present year's level

carry over

(MFA) an exporting country was allowed to use some of any unused ceiling from one agreement year to apply to the subsequent year's ceiling

swing

(MFA) the ability to use a portion of the unfilled ceiling of one category for another category

copyright

a legal right gained by an author, composer, playwright, publisher, or distributor to exclusive publication, production, sale, or distribution of a literary, musical, dramatic, or artistic work

licensing contract

a means of transferring intellectual property rights; extending the value of a brand without having to produce the product; putting a brand name on a product produced by someone else for a contracted percentage of the sales it includes: - description of merchandising property - definition of the products that can bear the property - time frame for the agreement - responsibilities for the licensor/ licensee - basis of royalty - amount of royalty

primary effect of the MFA

driving apparel production around the world by stimulating search for new production sites in countries with no quotas

intellectual property rights

legal protection for exclusive use by owners of copyrights, trademarks, trade secrets, and semiconductor chips

agreement on textiles and clothing (ATC)

purpose was to phase out MFA in 10 years and reintegrate the textile and clothing sector ito the WTO

outsourcing technical design advantages

- cost

1960s

- entrepreneurism - domestic production, protected trade with textiles and apparel - domestic buying and moving toward international sourcing with retailing

1950s

- entrepreneurism - protected trade, domestic production, and with textiles and apparel - domestic buying with retailing

1990s

- horizontalization/ globalization - mostly domestic production, protection with yarn and fabric forward rules with textiles - free trade, global sourcing, international marketing with apparel and retailing

customs violations

- misrepresentation of country of origin - misclassification of goods - illegal transshipment - undocumented immigrant workers

characteristics of countries for sourcing by level of development

- overall stability and security - bureaucratic efficiency - education - human rights - infrastructure - labor cost

2000s post-quota trade and sourcing

- post-quota trade and sourcing - moving toward international production, protection with yarn and fabric forward rules with textiles - free trade, global sourcing and marketing, social responsibility with apparel and retailing

apparel importers

- private brand retailer - brand manager - apparel sourcing intermediary

1970s

- protectionism - domestic production, protected trade with textiles and apparel - domestic buying and international sourcing, free trade with retailing

2010s

- regionalization/sustainability - combination of domestic and international production, protection with yarn and fabric forward rules with textiles - free trade and fair trade, moving toward transnational sourcing and marketing, emerging pockets of domestic production with apparel and retailing

characteristics of countries for sourcing by geographic location

- shipping cost - shipping time - cultural values and norms - import duties - risk of natural disasters

1980s

- verticalization/internationalization - domestic production, protection with fabric-forward rules with textiles - domestic production, protected trade, and moving toward international sourcing with apparel - international sourcing, free trade with retailing

economic benefits and risks of illegal transshipment

1 some countries may have no quota limitations or duty due on the products - if there is suspicion of transshipment or other violation, goods can be detained

FOB (free on board) vs CIF (cost, insurance, freight)

EU uses CIF, US uses FOB CIF means end product on imported goods costs more with the same markup

trade agreements

GATT, MFA, and WTO

agile manufacturing

an operational strategy focused on inducing velocity and flexibility in a made-to-order production process with minimal changeover time and interruptions

private brand

a brand owned and marketed exclusively by a brand manager or retailer

quality assurance

a commitment to product quality that utilizes the concept of error prevention as integral to the entire product development process

intermediary

a company that has expertise in design, product development, acquisition of materials, logistics, and importing as well as an established network of apparel factories they contract with

vendor

a company that supplies services to other companies

human development index

a composite index measuring average achievement in three basic dimensions of human development; a long and healthy life, knowledge, and a decent dtandard of living

specific tariff

a fixed amount of tax per physical unit of imported product

world trade organization (WTO)

a global organization whose purpose is to improve the operations and efficiency of customs service

customs service

a government agency responsible for monitoring exported and imported goods, assessing and collecting duties, and protecting the country's borders against illegal entry

trading bloc

a group of countries that have created regional trade incentives and that jointly participate in trade negotiations 1. europe and the european union 2. the americas and the caribbean 3. asia and oceania 4. the middle east and africa

letter of credit

a guarantee to the seller that the buyer has the funds to complete the purchase and that they are reserved for the seller

omnichannel retailing

a multichannel approach to sales that seeks to provide a seamless shopping experience to customers whether they are shopping online from a desktop or mobile device, by telephone, or in a brick-and-mortar store

protection subsidy

a negative trade tax; a payment of money from a government to a business to defray costs of making goods and commodities

trade association

a nonprofit organization formed to serve the common needs of its members

government subsidy

a payment from a government to a business to defray business costs

export subsidy

a payment from a government to a firm as a reward for exporting products

consolidator

a person or firm that combines cargo from a number of shippers going to the same destination into one container for the purpose of reducing shipping rates

lean manufacturing

a philosophy of production that emphasizes efficiency and economy of scale

trade policy

a political strategy or program designed to stimulate or control the exchange of goods between nations

free trade zone

a port or other site within a nation designated for duty-free entry of selected goods to be displayed, stored, and/or used for manufacturing

transshipment center

a port where merchandise can be imported and then exported without paying import duties

most favored nation (MFN)

a principle that each country must treat all nations the same in terms of trade restrictions and policies, and no country should have preferential trade agreement

manufacturing control

a process in which expected performance is compared with actual performance

free trade area

a region made up of two or more countries that have a comprehensive free trade agreement eliminating or reducing trade barriers on products traded among the countries

item 807

a ruling that allowed garments cut in the United States to be exported and assembled in Caribbean countries and then imported with tariff based only on value added

voluntary export restraint

a self-imposed limit on the amount of product that one country can export to another country, also known as export tariff restraint agreement

import policy

a set of regulations that determines what products and services can enter the domestic economy from another country and under what conditions

export policy

a set of regulations that determines what products and services can leave a country for another market and under what conditions

countervailing duty

a special tax that increases the price of goods to a competitive level; used against illegal trade activities such as subsidies or dumping

ad valorem tariff

a tax set as a fixed percent of the value of an imported product

pirated

a term used in the US and EU; an imitation of the original, counterfeit

fabric-forward rule

a trade rule that limits tariffs or provides quota-free imports, or both, for garments made of fabrics produced in on of the participating countries

trademark

a word, phrase, logo or other graphic symbol used to distinguish one firm's products ot services from those of other firms

multifiber arrangement (MFA)

an international trade agreement that allowed textile and apparel trade to be regulated through quotas established in bilateral agreements between nations

corruption

abuse of political office for private gains

unfair competition

activities defined by legal rulings and statutes that protect against unethical business practices

bureaucracy

administrative system leading any large institution or government

knockoff

an imitation of an original that does not carry the original brand, made with lower-cost materials and production methods and sold at a lower proce

counterfeit

an imitation of what is genuine, with the intent to defraud the customer

general agreement on tariffs and trade (GATT)

an international framework to establish ground rules for worldwide trade and promote reduction of trade barriers

yarn-forward rule

apparel can be imported tariff- and quota-free if garments are made of yarns and fabrics from one of participating countries

trade regulation

barriers and limits on types and quantities of goods and services that cross political boundaries

cmt vs. package vs. full package factories

cmt- apparel assembly package- acquisition of fabrics, times, and packaging materials, apparel assembly, and delivery of goods on board full package- acquisition of fabrics, trims, and package materials, product development (preproduction), apparel assembly, and delivery of goods on board

intellectual property

copyrights, trademarks, patents, trade secrets, and semiconductor chips; inventions or other discoveries that have been registered with government authorities for the sale and use by their owner

landed duty paid (LDP)

covers the costs of goods, insurance, freight, and import duty in the destination country

rules of origin

criteria used to determine the national source of a product

sourcing

determining the most cost-efficient vendors of services, materials, production, or finished goods, or a combination of these, at a specified quality and service level for delivery within an identifies time frame

non-tariff barriers

exchange rates quotas safeguard measures voluntary export restraint technical barriers to trade government subsidies production subsidies price support programs dumping and countervailing duties

human trafficking

facilitating the emigration of people for monetary gain

the big four

hong kong, japan, korea, and taiwan

cyber crime

illegal activity that uses a computer as a means of commission of a crime and as storage for the evidence of the crime

package factory

in addition to apparel assembly to customer specifications, the factory can source and finance all materials and deliver goods on board; they do not offer and product development services

customer

in the sourcing world, the sourcing company that contracts for delivery of services, materials, product development, or finished goods orrrrr a person or organization that receives or consumes goods or services from a vendor and can choose between different products and vendors

preproduction

includes design, patternmaking, grading, making first production samples, and development of tech packs for materials and production processes

souring agent

individual or firm that provides services to procure and deliver products

undocumented immigrant workers

individuals from foreign countries without legal identification papers

pro forma

invoice an estimate cost of goods or services sent by vendor to customer, no request for payment; includes description of products such as quantity, value, weight, transportation charges, etc that can be used for customs purposes

multilateral trade agreement

involves more than two countries

seconds

irregulars because the are not first quality off the production line

LCL

less than full container load

trade fair

massive, usually regular trade event where producers display products and services to wholesalers and retailers

MFA violations of GATT

most favored nation principle and it used quotas when GATT stated there would be no other trade restrictions other than tariffs

substantial transformation

occurs when the processing of an article results in a new and different article having a distinct name, character, or use; occurs when an HS classification changes

price support program

purchasing and storing products from the market to reduce the supply, relative to demand, to drive up the price

gray market goods

original goods that are sold by unauthorized vendors

vendor compliance

performance standards or rules established by the customer related to things like working conditions, wages, and age of workers that a vendor must follow in order to do business with that customer

unfair non-tariff barriers

price support program subsidies dumping

first quality

product that meets materials, design, and production, appearance, and fit standards

import agent

professional who assists a business in a foreign country and acts as intermediary between the customer and the vendor; is paid on commission basis by the company they represent

cmt factories

provides cutting fabric, sewing garments, and providing trims as a service. everything else (preproduction) is provided by the customer

regionalization

reducing trade barriers in selected geographic regions to facilitate trade

full container load (FCL)

refers to a standard 20 or 40 foot shipping container loaded with merchandise from one consigner; it is a common measure for calculating shipping rtes and typically is less expensive than the same weight of loose cargo

free on board (FOB)

reflects the cost of goods and the cost of loading them on board a vessel at the foreign port of export

cost, insurance freight

reflects the cost of goods as well as shipping and insurance to requested port

private brand retailer

reflects the ownership of an exclusive label by a retailer, it allows retailers to reduce merchandise costs by bypassing the manufacturer or brand manager and sourcing directly with a production contractor for finished apparel products

technical barriers to trade

regulations, standards, and testing and certification procedures that obstruct trade

dumping

selling a product in another country at less than it is sold in the home country or less than it costs to produce why? temporary strategy for establishing or maintaining market share, for of inventory control, or result of government production to provide domestic employment

joint venture

shared ownership of a business or facility by two or more firms

illegal transshipment

shipping goods through a port or country to facilitate the change of country of origin or to avoid quota limitations or import duties, or both in the destination country

tariff barriers

specific tariffs and ad valorem tariffs

export processing zone

tariff-free trade zone that is set up by governments in developing countries to promote export through simplified import and export procedures

nominal tariff

tax rates on imported goods published in each country's tariff schedule

safeguard measures

temporary action to protect an industry from fast and sudden rise of imports

facilitated illegal immigration

term that covers a number of serious different crimes all aimed at assisting, for financial gain, the entry into or residence in a country, in violation of the laws of that country

trademark infringement

the act of misleading the public into believing the items bearing the trademark/brand name are produced and sold by the owner of the trademark, when they are not

seizure

the act of taking control of illegal merchandise, drugs, or other products by CBP officials at border crossings after being legally inspected before being admitted to the US

licensee

the buyer of the right to use a merchandising property

morals

the degree of conformity wwith generally accepted or prescribed standards of goodness or rightness in character or conduct

political strategy

the general approaches used by the governments, firms, other organizations, and individuals in dealing with and manipulating important and powerful components in their environments

licensor

the owner of a merchandising property

espionage

the practice of observing furtively to obtain secret information regarding a business or government

merchandising property

the primary means of product differentiation and a source of customer loyalty

lobbying

the process of influencing the formation of legislation or the administration of rules, regulations, and policies

product life cycle management (PLM)

the process of managing a products life cycle from inception design, development of related materials, manufacturing, delivery, distribution, marketing, sale, and in some cases service and disposal

non-tariff trade barriers

the quota, quality standards, or other regulations or conditions that restrict the flow of goods between countries, not including taxes on imports or exports

free trade

the unrestricted exchange of goods among nations

full package factories

the vendor, in addition to cutting, making, and trimming provides a full range of preproduction and postproduction services

customs compliant

to act in accordance with customs rules and regulations

purpose of trade protection

to prevent domestic companies from having to compete with foreign companies in their own domestic market

transshipment

to transfer or be transferred from one conveyance to another in order to continue shipment

fundamental assumptions of GATT and WTO

trade protection weakens the global economy and freer trade strengthens the global economy

protectionism

use of trade barriers to minimize imports in order to protect domestic industry

evolution of the us textile complex four political perspectives

~ international companies are importers and exporters simply to support domestic operations ~ multinational/multidomestic companies emphasize the differences among national suppliers, markets, and operating environments; they sacrifice efficiency in favor of responsiveness to local environments and customizing their products ad strategies for each individual national market ~ global companies use one common strategy and coordinated image/brand to market their products in different countries, assuming that national tastes and preferences are more similar than different ~ transnational companies are responsive to local needs in multiple countries while retaining the global efficiency; they have a central corporate office but give decision making, R&D, and marketing powers to each individual foreign market