Will China clothe the world?

The Jan. 1 end to global textile and apparel quotas could trigger a massive transfer of wealth and jobs from other developing nations.

American importers are calling it the "big bang" of clothing - the scheduled end of a worldwide system of nation-based quotas on imports of textiles and apparel.

Implications of this change in the global trade system are huge - so big, in fact, that some nations standing to lose from the deal appealed Tuesday to the World Trade Organization (WTO) in Geneva to launch an emergency process to stop or delay the removal of quotas.

The change, slated to take effect Jan. 1, is already spreading something close to panic in dozens of poor countries, especially in the Caribbean, Central America, northern Africa, and Southeast Asia. Millions of workers could be laid off, the bulk of them women who sit before sewing machines hour after hour, stitching together the jeans, the blouses and shirts, the underwear, and other garments bought by Americans and Europeans. In China, perhaps in India as well, millions could win new jobs as their garment business picks up.

The removal of quotas amounts to a massive transfer of jobs and wealth in the developing world over the next few years.

In Bangladesh, concern is especially strong. Some 300,000 to 800,000 garment workers could end up losing their jobs, estimates Fazlul Hoque, president of the Bangladesh Knitwear Manufacturers and Exporters Association.

"We have to face a big problem," he says. Chinese garmentmakers, he charges, are playing "unethical games." So, without the protection of the existing quota system, Bangladeshi firms, including his own, are likely to lose many contracts for the production of clothing.

Domestic concerns

In the United States, domestic textile manufacturers face a similar challenge with the end of quotas and the likelihood of a new flood of inexpensive imports.

Some 600,000 jobs could be lost, reckons Karl Spilhaus, president of the National Textile Association. That's out of the current total of 702,000, a number much reduced in recent decades by foreign competition. Since January 2001, the nation has lost 344,300 textile and apparel workers. Just a year ago, Pillowtex went bankrupt, laying off 4,800 workers in North Carolina.

The "big bang" even has implications for the November elections. Most remaining textile firms are located in North and South Carolina, Tennessee, Georgia, and Virginia, states that President Bush would like to win.

"There is clearly a political element," says Mr. Spilhaus, who hopes to see the end of quotas at least delayed. "We are not shy about using that. It is clearly an issue the Republicans need to address."

Textile firms have been distributing to their employees the positions on trade issues taken by the presidential candidates and their local congressmen - and urging them to register and vote.

Spilhaus accuses China of "unfair and illegal practices" in its textile operations, of blocking some textile imports itself, such as upholstery materials, and of stealing designs and copying them.

On the other side, US importers of foreign textiles relish the end of quotas. At stake is $83 billion of imported textiles and clothing, about $77 billion coming in under a 1974 international agreement called the "Multi-Fiber Arrangement." Under this deal, the US imposes numerical limits on the amount of textile goods Americans can import from each of as many as 58 nations. It covers some 2,400 specific products.

The end of that system "will be a big windfall for American consumers," predicts Laura Jones, executive director of the US Association of Importers of Textiles and Apparel, a trade group for 200 firms, including such retailers as J.C. Penney, Liz Claiborne, the Gap, and the Limited. Clothing prices could fall 11 to 20 percent, she predicts.

Her association's Web page even posts a "countdown" to the end of quotas.

If past is precedent, Chinese garmentmakers could win much of the business that other nations once took away from US apparel companies. Already, some 90 percent of apparel sold in the US is sewn outside the country. The potential change: Instead of seeing "Made in Honduras," "Made in Mexico," "Made in Taiwan," and "Made in Malaysia" on their clothing labels, American consumers may find "Made in China" almost exclusively on everything from jackets to running shoes.

In recent years, the US has lifted quotas on about 1,400 types of products, mostly lower-volume goods or goods not made in America. In these areas, China's share of the US market jumped from about 9 percent on average at the start of 2002 to 65 percent last March. China now provides 95 percent of cotton handkerchiefs, 98 percent of men's silk shirts.

In Bangladesh, Mr. Hoque contends that China's ability to win contracts hangs on a currency that is "45 percent undervalued." This permits China to sell its textiles cheaply. Bangladesh, he says, has wages that are even 20 to 30 percent lower than those in China. However, wage costs are usually only 10 percent of the cost of a garment. So that wage advantage can't overcome the currency disadvantage.

Bangladesh exports about $5.5 billion worth of garments, or 76 percent of its total exports. "There is no second industry" even near that, says Hoque. The textile industry employs 2.5 million people, 80 percent of them women. And they provide economic support for some 30 million Bangladeshis, perhaps even more. His own firm employs 800 in Narayanganj, turning out T-shirts, polo shirts, pajamas, rugby shirts, and underwear.

In the past, when the American textile industry sought to limit imported goods, it was often in conflict with textile and garment producers in developing countries. Now both sides have a common goal - stopping China from taking over the world's textile business, notes Lloyd Wood, spokesman for the American Manufacturing Trade Action Coalition.

More than 100 textile CEOs and their lobbyists last month sought congressional help in persuading the administration to limit the growth in Chinese textile imports. It was said to be the industry's biggest lobbying effort in 15 years.

Parachute for the industry?

Spilhaus holds that the US needs "some kind of industrial base in textiles," just as it does in steel. One help in this is a long-standing congressional requirement, known as the "Berry amendment," that textiles used by the military, for such things as uniforms, parachutes, camouflage material, be made in America.

When the US Army ordered 618,000 berets from China in 2001, congressional criticism forced the military to look for domestic suppliers instead.

The industry has backed an effort to seek a three-year delay in the end of quotas. At the request of Mauritius for an emergency meeting on the quotas, a group of some 30 trade envoys met informally with the WTO's director general, Supachai Panitchpakdi, Tuesday, to see if there was a consensus for such a session. There wasn't, so consideration of the quota issue was put off until Oct. 1 at an already scheduled meeting of a WTO group that deals with quota issues, the Council for Trading Goods.

US trade officials tell the industry they are neither supporting nor standing in the way of the WTO initiative, and that they recognize the seriousness of the issue. But they are concerned about their reputation as advocates of free trade.

Spilhaus - and many of his colleagues around the world - think differently. Without real restraint on China's exports, their industries will be in tatters.

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK