Magazine article The American Prospect

Clothes Call: At Midnight on December 31, WTO Rules Regulating the International Trade in Apparel Are Set to Expire. If You Think China Is Dominant Now

Magazine article The American Prospect

Clothes Call: At Midnight on December 31, WTO Rules Regulating the International Trade in Apparel Are Set to Expire. If You Think China Is Dominant Now

Article excerpt

AT MIDNIGHT ON DECEMBER 31, AMERICANS will toast the new year with a drunken round of "Auld Lang Syne." On the other side of the globe, China will be celebrating by opening new facto ties more than 3,000 new textile and apparel factories that will begin their work as decade old quotas are lifted on China's access to the lucrative American marketplace. Thousands of Chinese workers will file into position and fire up brand-new spinning, weaving, and sewing machines. Within hours, blouses, pants, towels, and bedding will be ready for shipment to U.S. stores like Wal-Mart and Target.

Though it's music to the ears of the Chinese government, the din of the new mills could be a death knell for beleaguered manufacturers in the United States and other foreign markets. According to rules set when creating the World Trade Organization (WTO) in 1993, quotas limiting foreign-manufactured textiles and apparel from entering the United States will disappear starting in 2005. Then the market will become a free for all, one in which China is set to dominate. The only power to stop this lies with the Bush administration, whose decision is very much up for grabs. Unless trade advocates can persuade George W. Bush to extend the quotas, 2005 will mark the beginning of the end for textiles in places like Turkey, Bangladesh, Mexico-and the United States.

On November 3, the U.S. government accepted for consideration five separate petitions for China safeguards, the Bush administration's only tool for extending the quotas, on some of the most lucrative products still restricted by quotas, including non cotton shirts and trousers. These came from the American Manufacturing Trade Action Coalition (AMTAC) in Washington, five other U.S. apparel-, textile-, and fiber-producing trade associations, and the labor union UNITE HERE in an effort to stall China's takeover of the global apparel market and give lawmakers time to lobby the WTO for a permanent solution. The Bush administration has 90 days to decide whether to enact the safeguards--and, in so doing, draw the ire of Chinese manufacturers.

Countries around the world have joined the call for safeguard quotas. The stakes are high: Once quotas are lifted, China will take over $220 billion in world garment trade one of the biggest short-term transfers of wealth ever. If China captures its anticipated new market share including an estimated 50 percent of the U.S. market--30 million textile and apparel-manufacturing jobs will disappear worldwide, including an estimated 650,000 in the United States. To date, 52 countries, including Turkey and Mexico, have signed on to the Istanbul Declaration, which calls for governments worldwide to pressure the WTO to convene an emergency meeting on the issue.

The quotas date back 30 years. Under a 1974 global agreement called the Multi-Fiber Arrangement (M FA), 47 nations receive a share of the European and U.S. markets for apparel and textiles. Though the MFA's original intent was to protect declining textile industries in the United States and Europe, it also encouraged less-developed nations like Sri Lanka suddenly guaranteed a market to grow their textile capacities. (Apparel is a low capital, high labor industry, which makes it a good fit for the cheaper labor so abundant in developing countries.) These efforts were largely successful, resulting in millions of new jobs in countries desperate for the stability a manufacturing sector brings. Smaller nations like Cambodia and Bangladesh even began to grow a modest middle class. At the time, China's was a closed communist system, and no one anticipated the economic reforms of the last 15 years.

Then, as part of the 1993 deal that created the WTO, the United States and Europe each agreed to a 10 year phase-out of MFA quotas on clothing and textiles beginning in 1995. The idea was to help developing countries that 20 years earlier had been boosted by the quota system but that had long since complained that those quotas were impeding their development. …

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