Two American scholars who have been examining the textile trade predict only minimal immediate change when the system of global quotas for textiles and apparel expires at the end of this year.
The two researchers from Harvard University say there is little evidence to support the view that China and India will quickly dominate the global clothing trade. In a study that was financed by an independent foundation, the scholars conclude that the U.S. textile and apparel industry is not about to die, even though it is likely to shrink.
American manufacturers and exporters in several small countries complain they cannot compete against low-cost producers in India and China.
One of the report's authors, Fred Abernathy, says U.S. and Caribbean Basin Initiative textile producers will survive both because they are in or close to the giant U.S. textile market and are able to quickly adapt to changes in consumer preferences. "Will India and China have a bigger role than they have now? Yes. Will there still be a textile and apparel industry in Mexico and the CBI? We would say yes. Will it be diminished? Yes, a little bit," he says.
Mr. Abernathy does say that developing countries that have production costs higher than China and India and are not located near European or American markets will face the full burden of adjustment. Included in that category, says Mr. Abernathy, are Cambodia and most African textile exporters. "Those countries, I think, are going to have a tough time competing. Look, quotas had a good side. Not that it was ever intended. It allowed under-developed countries to have an industry they otherwise would not have had. And so they started," he says.
Under World Trade Organization rules, on January first all WTO members must abolish the web of quotas that has governed the textile trade for 40 years.
Under the new rules, import tariffs are not being outlawed, but countries will no longer be allowed to set specific limits on textile products coming from other countries.
This week, China, in an effort to ease relations with poor country competitors as well as with the European Union and the United States, said it would impose new export levies to slow its exports, and prevent disruptions to global markets.