Osman Sampil imports the brightly hued bolts of cloth that fill his small West 35th Street fabric store from all over the world: China, India, even the Netherlands. But the fabric he gets from one nation in particular — South Korea — may get slightly cheaper soon, thanks to a new free trade agreement with the country passed by Congress earlier this month.
The agreement will eliminate the duties paid at the border on most goods imported from South Korea, including textiles. But exactly how it will affect the businesses of the Garment District, from large wholesalers to small stores like Sampil’s, isn’t clear.
“From our point of view, it’s theoretically good news,” said Elliot Glantz, the president of the Preview Textile Group, an importer and wholesaler on West 37th Street.
Glantz imports about 50 percent of his fabric from South Korea, though much of it is silk, on which the tariff had already been phased out. But Glantz paid a double-digit percentage in tariffs to import fabrics like wool and polyester, and those duties will be eliminated immediately.
“Certainly prices will be driven down,” said Felix Berenstein, the vice president and one of the owners of Berenstein Textiles on West 39th Street. “There’s no question about that.”
The question, however, is whether the trade agreement will benefit the American garment manufacturers in Florida, California and Texas who buy fabric from wholesalers like Glantz. “That’s the big unknown right now,” Glantz said.
If the free trade agreement makes South Korean fabric significantly cheaper for American garment makers, be said, those manufacturers might be able to compete with China — but it’s not clear the savings will be enough to make a difference. “I think it might be cheaper just to produce it in China,” he said.
A memorandum issued by a Senate subcommittee in January found the deal with South Korea had “the potential to create” 280,000 net new positions across the economy. (Congress approved free trade agreements with Colombia and Panama at the same time earlier this month.)
But in the textile industry, it’s more likely the agreement will cost jobs than create them, said Ruth A. Stephens, the executive director of the United States Industrial Fabric Institute, a trade group that represents domestic textile producers. Competition from South Korea, where labor costs are lower, could slash as many as 40,000 jobs, she said.
Still, the agreement may benefit importers like Glantz and Berenstein. “Retailers think this is going to help their bottom lines, and I can’t argue with that,” Stephens said. “I think it will.”
In theory, cheaper fabric for importers will mean savings for retailers and, ultimately, customers. Any savings at the border, Glantz said, will be passed on to retailers like Ali Shaikh, who owns Fabric House, a small store on West 39th Street, and sometimes buys fabric from Glantz.
But the trade agreement may have unexpected consequences, too. Berenstein, for instance, is not sure that cheaper South Korean fabric will help his business. The fabric he imports from South Korea is primarily polyester, which he sells to high-end designers — think Oscar de la Renta rather than J.C. Penney, he said. Berenstein doesn’t mind paying a duty on the fabric, he said, because it serves as a barrier to entry for rival firms. Without the tariff in place, the cheaper fabric may make it easier for other wholesalers to compete with him.
The trade agreement may affect retailers that do not stock much South Korean fabric as well, like Mood Designers Fabric on West 37th Street.
Mood, well known for its role on the television show “Project Runway,” gets most of its wool from Mexico, said Philip Sauma, whose family owns the store. Mexican wool is exempt from tariffs under the North American Free Trade Agreement.
With the passage of the new trade agreement, though, Mood may decide to buy wool from South Korea instead. “I’d like to buy from Korea,” Sauma said, “because the quality’s a tad better,” and the prices before import duties are roughly the same.