Although difficulties currently faced by El Salvador are not a surprise, the decrease in sales to the United States is much more significant than expected.
US apparel imports from El Salvador were down nearly 30% in volume terms in November after already sliding 22% in October, compared with the same months of 2003.
The November result is in sharp contrast with an overall increase of 22% in US apparel imports in the same month.
El Salvador's share of total US apparel imports fell from 4.54% in volume terms in 2003 down to 3.89% in the first eleven months of 2004, as a result.
Cotton apparel down 13%
Although December data were not yet released, exports of Salvadoran apparel plants were expected declining in 2004 from a record level of US$1.881 billion reached in 2003.
A category-based analysis gives a first clue to the difficulties faced by the small country.
US cotton apparel imports from El Salvador were down more than 13% in volume terms in the January-November period of 2004.
Double-digit declines were recorded for categories 336 (cotton dresses), 340/341 (cotton woven shirts), or 342 (cotton skirts).
The most alarming decrease was reported in category 352 (cotton underwear) with a 20% fall in US apparel imports from El Salvador in January-November 2004.
Category 352 is the second largest export category for domestic producers after 338/339 (cotton knit shirts).
El Salvador's share of US imports in category 352 fell from 18.40% in 2003 down to 16.86% in January-November 2004.
El Salvador is the largest supplier of cotton underwear on the US market.
Sales were harmed by a fall in the market but also by a surge in shipments from Asia at the same time.
These data confirm that El Salvador is directly threatened by the removal in quotas, effective from 1 January 2005.
Salvadoran exporters may wait for a US decision to re-impose quotas on imports from China.
They would obviously prefer taking advantage of the free trade agreement concluded with the US by the end of 2003 and which is still waiting for its approval by the US Congress.
The CAFTA would actually relax rules of origin imposed to Salvadoran apparel exporters.
As a clear sign that impact of current trade preferences is fading, US duty-free imports from El Salvador are now declining.
Entries under the Trade and Development Act of 2000 fell from US$1 billion in January-November 2003 down to US$899 million in the same period of 2004.
US imports entering as 807 (US cut fabrics) rose from US$249 million to US$338 million at the same time, nevertheless.
Other suppliers in Central America did not share similar difficulties, although US imports from Honduras fell nearly 5% in the January-November period.
