North American Free Trade: Issues and Recommendations

By Gary Clyde Hufbauer; Jeffrey J. Schott | Go to book overview

13
Textiles and Apparel

The prospective liberalization of textiles and apparel trade within North America has provoked intense opposition in the United States, both from organized labor and from a solid core of textile and apparel manufacturers, even though Mexico currently accounts for only 2 percent oil total US imports of textiles and apparel. The US textile and apparel industry has a long history of protection from developing-country goods (see Cline 1990). US and Canadian producers fear that lower trade barriers will prompt the industry to relocate on a grand scale to take advantage of low Mexican labor costs, and thus convert Mexico into an export platform for huge shipments to the United States and Canada.

The US textile and apparel industries do not, however, speak with a single voice on these matters. A number of firms claim that increased imports are inevitable as the US and Canadian industries adjust to the realities of world competition. They predict that production will gradually shift to other low-wage countries—in East Asia, South Asia, or the Caribbean—if North American trade is not liberalized. Textile producers such as Du Pont and apparel makers such as Warnaco argue that a nafta will enable US makers of clothing and other textile products to achieve the same economies as their Asian-based rivals, who prosper by taking advantage of differences in wage rates and skill levels in neighboring countries ( Washington Post, 12 May 1991, H8).

Furthermore, US textile and apparel trade with Mexico is not a one-way street, as it is with many Asian producers. In 1990 Mexico accounted for 15 percent of US apparel exports and 14.2 percent of US textile exports (tables 13.1 and 13.2). Although much of that is reexported back to the United States after additional processing in maquiladora plants, the United States now runs a small textile and apparel trade surplus with Mexico.

Canadian textile and apparel producers are likely to pay close attention to the nafta agreement because of the importance to Canada of the United States as a market and as a supplier.1 The US market accounts for 60 percent and 81 percent

Rosa M. Moreira and Martin Cohen helped draft this chapter.

____________________
1
The Canada-US fta is estimated to have generated more than $126 million in additional Mexican exports of apparel, while diverting $36 million in Mexican textiles exports ( Mexico,

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North American Free Trade: Issues and Recommendations
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Preface xi
  • Board of Directors xiv
  • Acknowledgments xv
  • I - The Political Eonomy of a NAFTA 1
  • 1 - Nafta: Overview and National Objectives 3
  • 2 - The Substantive Agenda and Implications for Nonmember Countries 23
  • II - Economic Implications 45
  • 3 - Trade Effects of a Nafta: a Survey 47
  • 4 - Investment 71
  • 5 - The Maquiladora Phenomenon 91
  • 6 - Labor Issues 107
  • 7 - Environmental Questions 131
  • 8 - Rules of Origin 155
  • 9 - Intellectual Property Issues 173
  • III - Sectoral Analyses 183
  • 10 - Energy 185
  • 11 - Automobiles 209
  • Appendix - Motor Vehicle and Parts Manufacturers in Mexico 234
  • 12 - Steel 243
  • 13 - Textiles and Apparel 263
  • 14 - Agriculture 279
  • 15 - The Mexican Financial System 305
  • IV - Summary and Conclusions 327
  • 16 - Summary and Conclusions 329
  • References 345
  • Index 361
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