The U.S. apparel industry continued to restructure between 1993 and 1997 as a result of growing competition in the domestic market, reports the U.S. International Trade Commission (ITC) in its Industry & Trade Summary Report: Apparel.

The competitive pressures facing the industry reflect not only the large number of suppliers in the apparel market, but also the confluence of changing consumer preferences, rising import penetration, and growing buying power of large retailers, which have led to considerable downward pressure on prices.

The ITC, an independent, nonpartisan, factfinding federal agency, recently released the report as a part of an ongoing series of reports on thousands of products imported into and exported from the United States. Following are highlights of the report:

• Imports supply just over one-half of the U.S. apparel market and are likely to continue growing as U.S. quotas are phased out under the Uruguay Round Agreement on Textiles and Clothing (ATC), which went into effect as part of the World Trade Organization (WTO) agreements in 1995. The ATC replaced the Multifiber Arrangement system of quotas and provides for the elimination of the quotas over a 10- year transition period ending on January 1, 2005.

• U.S. producers' apparel shipments grew by an annual average of less than 1 percent during 1993-97, the period covered by the report, reaching an estimated $55 billion. Apparel employment declined by 176,000 jobs in the period to 813,000 workers, or 4.4 percent of U.S. manufacturing employment. Preliminary 1997 data show that apparel firms accounted for 9 percent of all business failures (27 percent of total liabilities) in the manufacturing sector.

• Despite the relative decline of the apparel industry overall, several large, publicly held producers or wholesale merchandisers of apparel have posted significant sales growth. From 1993 to 1997, sales of 15 large apparel firms rose by 27 percent to $35 billion. These firms rely heavily on imports for their product mix and have strong brand-name recognition, significant market shares, strategic alliances with major retailers, and quick response manufacturing and distribution systems.

• To stay competitive, many U.S. apparel producers have expanded their use of assembly operations in Mexico and Caribbean countries, facilitated by U.S. programs that provide preferential market access for imports of apparel assembled from fabric made and cut in the United States. Producers have consolidated operations, formed strategic alliances with retailers, and acquired brand names that complement their existing product lines and widen their channels of distribution.

• The U.S. apparel trade deficit widened by $11 billion during 1993-97 to $40 billion as an increase in imports outpaced an increase in exports. Imports during the period grew by $14.6 billion (43 percent), reaching $48.5 billion, while exports grew by $3.6 billion (74 percent) to $8.4 billion. The trade deficit was driven mainly by trade with developing countries in Asia, which accounted for almost 70 percent, or $27.8 billion, of the 1997 trade gap. The largest bilateral trade deficit in apparel in 1997 was with China ($7.4 billion). The combined apparel trade deficit with Mexico and Caribbean countries widened by $4.5 billion during 1993-97, to $7.2 billion.

• U.S. consumer spending on apparel grew by an annual average of 5.5 percent in real terms (adjusted for inflation) during 1993-97, compared with a 2.8 percent gain in consumer spending overall. Favorable economic conditions and demographic trends, coupled with competitive prices, contributed to the growth in apparel spending.

ITC Industry and Trade Summary reports include information on product uses, U.S. and foreign producers, and customs treatment of the product being studied; they analyze the basic factors affecting trends in consumption, production, and trade of the commodities, as well as factors bearing on the competitiveness of the U.S. industry in domestic and foreign markets.

The report will be available on the ITC's Internet server at www.usitc.gov. A printed copy can be requested by calling 202-205-1809 or by writing to the Office of the Secretary, U.S. International Trade Commission, 500 E Street, SW, Washington, DC 20436. Requests may also be made by fax to 202-205-2104.