WASHINGTON — A new world has dawned in textiles and apparel trade. Now the fallout begins.
As the third day of commerce begins in a post-quota world, questions continue to rage about the ultimate impact of the removal of quota limits on textile and apparel trade among the 148 countries belonging to the World Trade Organization. Gone are most of the mechanisms that protected nations’ domestic industries for more than 30 years, and the major issue ahead is whether China will come to dominate the global industry and decimate every other one in its path.
Even the WTO estimates that China will be producing more than half of the world’s apparel and textiles within three years, up from 17 percent in 2003. The array of potential scenarios that could play out this year alone as a result of China’s growth is dizzying, and there seem to be more questions than answers. Among them:
Will imports from China flood the globe in the absence of any restrictions?
Will millions of apparel and textile workers around the world be displaced in the global $330 billion industry, causing economic and social upheaval from Bangladesh to Guatemala?
Will the Bush administration move to restrict China’s apparel and textile exports, causing other nations to do the same?
Will China retaliate with its own punitive tariffs or challenge U.S. and other nations’ actions at the WTO?
How much of the cost savings will manufacturers and retailers pass on to consumers, or will the lower prices resulting from the removal of quotas be used to rebuild their profit margins after years of price deflation?
The U.S. alone peeled off the majority of its remaining 850 quotas Saturday, liberalizing everything from cotton trousers to bras. The U.S. will not eliminate all of its import limits because non-WTO countries such as Vietnam will remain under quota and there is a China safeguard quota on imports of socks.
The value of apparel and textile trade controlled by quotas from WTO member countries was $33.6 billion for the year ended Oct. 31, according to the U.S. Department of Commerce. That means a little less than half of the $81.03 billion worth of apparel and textiles imported into the U.S. for that 12-month period was controlled by quotas.
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