Ladies and Gentleman, It is a pleasure to be here with you this evening. I understand that you just elected a new board for the following year so let me congratulate the new board. I always appreciate the opportunity to speak to the Garment Buying Offices Association and the companies represented here tonight. You are a vital element of the textile and apparel industry in Sri Lanka. You represent companies from around the globe, but ultimately a significant amount of the products your members purchase end up in the United States, giving American consumers low-cost high quality goods that Sri Lanka can be proud of.

Your new board takes office at a critical time as the next twelve months will mark a period of substantial change and challenge for Sri Lanka and the industry. Some of those changes will inevitably be influenced by decisions and circumstances outside of your control. Three of those factors are the status of the EU's GSP+ benefits, the strength of the U.S. economy, and the lapse of China safeguards in the US in 2009. I know that Julian will speak shortly on GSP+, and how that may affect your industry. I would like to say a few words tonight about the U.S. economy and the lapse of China safeguards in the U.S. in 2009 that your industry should prepare for.

First, a few words about the U.S. economy. The often alarming news recently about the U.S. economy is surely on your minds. Doomsday headlines, such as "How Deep is the Economic Abyss?" are everywhere. Everyone, both in the U.S. and globally, is talking about the possibility of the dreaded "r" word - recession and the impact this might have on countries like Sri Lanka for whom exports to the U.S. comprise a significant slice of GDP and jobs.

America is without a doubt facing some serious economic challenges.

	The U.S. economy has been hurt by the sub-prime loan crisis. Financial and housing markets are still unsettled by the revaluation of risk that is now taking place.
	The U.S. economy shed 63,000 jobs in February and recent reports from the Department of Labor on rising unemployment suggest further job losses in March.
	Oil prices have reached historic highs, and the value of the dollar is down. Last week the dollar fell to its lowest level against the Euro since trading began in 1999.
	The housing and manufacturing sectors have been weak so far this year.
	Consumers, cautious about a recession and what it might mean for household incomes, appear to be spending less.
	And there are concerns that inflation could be on the rise.
	So, we have had a very tough quarter. Nevertheless, our long-term economic fundamentals remain sound, and the current downturn follows on the heels of solid, robust performance in recent years.

I'll highlight some aspects of that strong performance:

	The United States has experienced stable economic growth continuously throughout the past six years. From 2001 to 2007, the economy grew at an average of 2.7 percent a year. That may not sound like a lot by Sri Lankan standards, as your annual growth has been 6-7 percent recently, but it is a very healthy level for a large developed economy.
	Through the end of 2007, we had 52 straight months of job growth -- our longest period of uninterrupted employment growth ever. During that period America added over 8 million new jobs, more than all other major industrialized nations combined. As a result, even with recent job losses, unemployment remains low, below 5%.
	The U.S. is the largest economy in the world; our GDP has swelled to over 14 trillion dollars. To put that into perspective, the U.S. economy is 3.5 times Japan, 4.5 times China and more than 12 times larger than your neighbor to the north, India. The 27 EU countries combined have a GDP of approximately 16.5 trillion dollars.
	Inflation has remained under control: Core consumer prices (excluding energy and food) have risen 2.3 percent over the past 12 months, lower than the average rate for the 1990s.
	Since late 2001, corporate profits have risen at an annual rate of over 12 percent, and are now near record levels as a share of GDP.
	Similarly, in terms of per capita income, the U.S. is exceptionally strong. Our per capita income is about $45,000 -- about $10,000 higher than that of the EU or Japan. That extra $10,000 per head is what makes the U.S. the world's largest importer, in addition to a significant source of investment and remittances.
	So, with the economy resilient, and its fundamentals sound, there is no doubt that the United States will easily weather the current rough patch. The OECD and many economic experts expect any downturn to be relatively mild and probably short-lived.

To ensure that is the case, the U.S. government and the Federal Reserve are taking proactive measures to restore economic momentum. President Bush acknowledged both domestic and international concerns earlier this month when he said: "I know this is a difficult time for our economy, but we recognized the problem early, and provided the economy with a booster shot. We will begin to see the impact over the coming months. And in the long run, we can have confidence that so long as we pursue pro-growth, low-tax policies that put faith in the American people, our economy will prosper."

The booster shot President Bush referred to is actually a package of actions. It includes a one-time tax relief package that provides temporary tax incentives for businesses as well as tax relief for individuals, including checks that will provide approximately $600 to each individual tax payer. The U.S. Federal Reserve has taken aggressive action to help support the economy by cutting key interest rates drastically and providing additional liquidity. The Fed expects cheaper credit to both stimulate business activity and aid strapped financial institutions. The President's Working Group on Financial Markets is also looking at ways to strengthen market discipline, enhance risk management, and improve the efficiency and stability of capital markets.

We are already seeing some positive results to these actions. Data released earlier this week showed an increase in the sales of existing homes in the month of February. Gold and oil prices have dropped. Stock prices have recovered somewhat.

While the U.S. works through this economic slowdown, I'm happy to report that our export sector has been a bright spot, giving an important boost to the economy. In 2007, U.S. exports increased by over 13% -- twice as fast as imports -- narrowing the United States trade deficit for the first time since 1995. This trend has continued into 2008, with our exports of goods and services up almost 17 percent in January 2008. Imports were also up 12 percent.

The U.S.'s continued commitment to free trade and open investment is also key to helping promote our economy through international trade and investment. We seek free and fair trade across the globe to further expand opportunities for U.S. exporters.

We also hope that importers across the globe, including here in Sri Lanka, will look for opportunities in the cheaper dollar to source products from the United States. Now is a great time to reach out to new suppliers in the U.S.

Of course, I fully realize that the softer dollar and slower U.S. economy are of great concern to Sri Lankan exporters. But I think you will find that U.S. consumers will not stop buying goods from Sri Lanka -- the economy would have to get a lot worse to really stop American shoppers from going to the Gap or Victoria's Secret.

However, there is another serious change pending for Sri Lankan garment exports: Safeguards, which now cap certain Chinese garment exports to the U.S., are scheduled to expire at the end of 2008. This will mean opportunities for U.S. buyers to source more garments from China, perhaps at the expense of Sri Lanka. While some – both within the U.S. and in third countries – are hoping for an extension of the safeguards, that is not something you can count on. In all likelihood, Sri Lankan garment producers will increasingly need to compete head to head with Chinese producers.

You know as well as I do what a challenge this will be. Fortunately, the industry here constantly strives to improve productivity, quality and backward integration. I am confident these steps will help Sri Lanka stay competitive in the niche markets it has found.

However, to do so, you as the garment buyers association and the industry as a whole must aggressively highlight Sri Lanka's superior labor and environmental practices. You will have to help your head offices understand the benefits of buying goods that are produced ethically. You will have to get that message through to consumers, too.

I personally know that Sri Lanka's garment sector is a leader due to its high ethical production standards. I have had the pleasure to visit several local garment factories. I walk away from each and every visit impressed by the world class facilities, good working conditions, and sound environmental practices, as well as the benefits - such as computer training and health services - that are provided for the workers.

You will also have to work quietly with our friends in Government to urge an improvement in the human rights situation in Sri Lanka. Right now, the negative human rights developments here eclipse in the U.S. Congress and the American public the positive message you have on your high ethical, environmental and labor standards.

Progress on human rights and your industry's aggressive promotion of Sri Lanka's ethical production standards, both through the Garments Without Guilt campaign and through your personal interactions with head offices, can make a difference. It is hard to make safe predictions about the rapidly changing global economy, but here are two that I feel confident in making: Markets for ethical goods are increasing, and as the U.S. returns to stronger economic times, the buyers will be there.