Weaving a Fair Trade Policy
The game of global trade became a fairer competition with the new year, as richer nations were forced to lift their 30-year-old quotas on imported textiles and apparel. The United States and European nations should not renege on this commitment by erecting new barriers to trade that amount to phantom quotas that perpetuate inequities.
Beyond their free-trade rhetoric, the policies of rich countries that established the rules amounted to this bottom line: “Let’s have truly free trade for those goods we are really good at making, and in the markets you may have an advantage in, well, not so fast.” Textiles and agriculture have been the prime examples of such markets.
Consumers everywhere should benefit from lower prices with the quotas gone. Potentially millions of new jobs will be created in countries with lower production costs, especially China and India. It is estimated that China’s share of global apparel production -- now under 20% -- could jump to more than 50% in short order.
Trade, however, is not always a two- dimensional, north-versus-south game. The losers in what many are predicting will be among the largest migrations of manufacturing jobs in history will not only be workers in U.S. and European textile industries, but also in impoverished countries in Central America, Africa and Asia, who will find it impossible to compete with China. Ironically, many of these countries that will lose hundreds of thousands of apparel jobs were among the strongest proponents of ending quotas, mistakenly believing they would come away winners.
What no one anticipated when talk of ending the quotas began was dramatic economic growth in China and India. The two countries plan to pair armies of underemployed workers with high-tech apparel machinery to sew circles around competitors that count cheap labor as their only advantage.
As The Times reports today, the quota system didn’t work as planned. Once a country -- China, Cambodia or Mauritius -- hit its quota, manufacturers simply opened another factory elsewhere.
The U.S. textile and apparel industry is a shadow of its former self, but remains more significant than it ought to be in the $300-billion global apparel economy. Yet the industry is continuing its fight to fend off foreign competition. Because of a side deal Washington made with Beijing as part of China’s bid to join the World Trade Organization, the United States is allowed to bring “safeguard” actions through 2008 to protect its industry against dramatic surges in textile imports, and the Bush administration already invoked this right in 2003 against Chinese bras.
Such protectionist measures are an unseemly way of undermining the end of quotas, to the detriment of American consumers. The textile industry is currently pressing for further restrictions on trade, and the Bush administration would be wise to say no. Fortunately, a federal court on Dec. 30 issued an injunction that stalled one apparel industry group’s bid to erect new barriers.
The quota system needed to be dismantled. Washington should not try to resist this inevitability, and should act to lessen the hardship suffered by some as a result of free trade. That means reinvigorating Trade Adjustment Assistance programs for American workers who will migrate toward other industries, as well as development assistance and preferential trade deals for some of the world’s poorest nations that will also be affected. The trick is to find new export markets that will enable workers here and in poor countries to benefit from globalization.
