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.