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End of textile quota may leave poorer countries hanging by thread
Since 2003, Mauritius has lost some 20,000 apparel jobs, a trend exacerbated by the termination on Jan. 1, 2005, of all global textile and apparel quotas. In place since the early 1970s, the quotas, collectively known as the Multifiber Agreement (MFA), primarily served to limit the volume of exports to protect the domestic industries of the importing country. U.S. textiles and apparel companies in particular feared increased competition from abroad, but the quotas have, turned out to benefit nations with large, unskilled workforces, acting almost like an affirmative action program for poorer nations. The elimination of the quotas for all categories of textiles and apparel culminates a 10-year phase out established by the General Agreement on Tariffs and Trade talks of 1992-94, known as the Uruguay Round. The phase-out program began in 1995 under the World Trade Organisation (WTO). In international trade lingo, the end of quotas is known as the post-MFA period. Ironically, the countries that led the drive to end quotas now may suffer the most. These include Indonesia, Pakistan, Bangladesh, Colombia and others whose economies are heavily based on textile exports. It was anticipated that without quotas, these nations would have greater access to the U.S. and European markets for their exports. But at the time, China was little more than a speck on the horizon. Today, because of its ability to under price its competitors, China is becoming the dominant global exporter of textiles and apparel, threatening to severely disrupt, if not wipe out, the textile sector of many emerging world nations, such as Mauritius. The impact of the end of the quotas was felt in Sri Lanka even before the final termination date. Sri Lanka's apparel industry is the nation's largest, directly or indirectly employing some one million workers. In factories that New York Times columnist Thomas Friedman has called "so clean you can eat off them," a highly skilled and educated workforce produces high-end lingerie for world-class labels, including Victoria's Secret. Sri Lanka also specialises in outerwear and sportswear in an industry that has become vertically integrated, from the production of fabric all the way to the end product. Working conditions and benefits for workers are the envy of the rest of the world, and industrial facilities are well integrated with schools, parks, transportation and other elements of the community. Given the high quality of its products and the sophistication of its manufacturing and corporate structures, it is not surprising that the Sri Lankan textile and apparel industry has been thriving since the early 1980s, and the quotas have been a driving force in this spectacular growth, according to Sri Lankan Ambassador Devinda Subasinghe. "The quotas allowed us to grow by guaranteeing access to world markets," said Subasinghe. As to the impact of the quota termination, "The jury is still out," but he said the textile and apparel industry "is very, very concerned" about the dramatic increase in Chinese exports, particularly since 2001. For instance, Chinese exports in man-made fiber bras increased 18 times between 2001 and 2004, according to the U.S. Department of Commerce's Office of Textiles and Apparel. So what's the answer? "The solution is to level the playing field and continue to ensure access to the world markets by all apparel exporting nations," Subasinghe said. Unlike China and other large exporting nations, Sri Lanka has a market economy and the national government has very few options to prop up its private industries. "We are also reviewing options with the United States to reduce the $250 million we pay in tariffs," explained Subasinghe. "These tariffs increase our costs by 16 percent and are considerably higher than those imposed on some other nations." |
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