It’s an iron law of not just physics but also commodities - for every action there is an equal and opposite reaction.
Last year, in the early days of the globalising Covid-19 pandemic, the governments of many countries imposed "lockdowns" on their citizens.
One consequence, says the International Labour Organisation (ILO), is that 2020 saw a 27%-30% decline in revenues for the global garment industry. Many global apparel sellers halted purchase from suppliers, defaulted on payments and issued "force majeure" notices as a defence for their actions.
Garment makers suffered as a result, with millions losing jobs and income. They don’t intend being caught out again. So nine Asian, Middle Eastern and North African countries have joined forces to press for better terms from global clothing retailers. They claim to represent almost 70% of the world’s apparel exports.
These countries have now drafted a document to be presented to global clothing retailers demanding better contract terms, with the aim they say of obtaining purchasing practises which "do not cross the boundary of misuse of buying power to the obvious and avoidable detriment of the manufacturer."
This document will be legally unenforceable but if the garment manufacturers remain a solid alliance it will certainly up their ability to exercise pressure - and they can rely on support from a growing range of NGOs (non-governmental organisations).
US and UK law stipulate that retailers declining to take delivery of orders because it would be "commercially impracticable" must demonstrate this. The consultancy McKinsey estimates that the value of global unsold clothing stocks is $168-$192bn - more than double normal levels.
Garment makers have yet to recover from last year’s blitzed clothing sales; in Bangladesh, the second biggest clothing exporter after China, some factories are operating at 25% capacity and fear they will not survive.
Prices are bound to rise
As the garment makers try to weld together their own union - and precisely how they might press their case is as yet unclear - the world is heading for its second successive year of cotton consumption exceeding production.
According to a March USDA report global cotton stocks in 2021-22 are likely to fall by 3.2m bales. Global consumption it said is "expected to grow by 4.1%, substantially above the long-term average rate of 1.7%. The report said that China in 2021-22 will import 11m bales, flat year-on-year.
The widespread boycott of Chinese cotton produced in the Xinjiang region, from where some 80% of China’s cotton derives, has turned into a political hot potato. It’s reckoned that some 20% of the world’s garments contain Xinjiang cotton. The import ban imposed by the US against Xinjiang cotton is therefore proving difficult to enforce; China meanwhile has resorted to social media to organise a campaign to boycott Western brands believed to back the ban on Xinjiang cotton.
Cotton is caught in a West/China trade war and could now face an (understandable) concerted garment manufacturer effort to secure better terms of trading; if they succeed, clothing retailers are likely to pass any higher costs onto consumers.
So the era of cheap imported clothing from Asian sweatshops could be ending; international cotton prices are likely to end this year higher than they started, given that the world’s gets back to some semblance of "normal".