Will China dominate the textile market?

Its apparel exports have already increased five times since 1980 and has been No. 1 under MFA -- RICHARD P APPELBAUM: "In the post-quota regime from January 1, global apparel production and distribution will become increasingly concentrated in a small number of giant retail multinationals such as Wal-Mart, and a handful of large, East Asian contracting multinationals. There will likely be consolidation of production into larger factories in a smaller number of locations.

Large retailers characteristically have large volume requirements, leading them to consider only large producers (1,000+ workers) as potential suppliers. Industry sources claim that large US retailers and manufacturers such as Gap, JC Penney, Liz Claiborne and Wal-Mart, that once sourced from 50 or more countries, now source from 30-40. When quotas are eliminated, it is predicted that the number will fall to 10-15. This will greatly increase competition among garment-producing countries, contributing to increased pressure to lower wages and weaken labour standards

Numerous studies have attempted to predict what will happen after January 1. Almost all agree: China, India, and possibly a handful of other countries such as Pakistan and Mexico are expected to be winners; most other countries losers. There are seven countries in which apparel exports constitute half or more of total merchandise exports: Cambodia (82%), Macao (70%), Bangladesh (68%), El Salvador (62%), Mauritius (54%), and Sri Lanka (50%). These countries may literally have the rug pulled out from under them on January 1. Sub-Saharan African countries face a similar situation: thanks to the African Growth and Opportunity Act (AGOA) of 2000 they are beginning to export to the US. These exports are now jeopardised.

China is also taking steps to modernise its textile industry (fibres, yarns, and fabrics), suggesting that even in this more capital-intensive sector, China may well increase its share of global production. China’s apparel exports had already reached $41 billion in 2002, approximately a fifth of the world’s total — nearly a five-fold increase since 1980. Some experts predict that China will account for as much as half of the world market after 2005. Moreover, China’s internal market for clothing is predicted to double from roughly $50 billion in 2000 to around $100 billion in 2010, providing additional impetus to its textile and apparel industries.

Countries close to the major markets, particularly when favoured by trade agreements such as the North American Free Trade Agreement (Nafta) and the Caribbean Basin Trade Partnership Act (CBTPA), may therefore remain somewhat insulated from China’s threat. There are also some possible protections against China’s growing dominance—at least in the short run. China’s accession agreement to the WTO (Section D 16-17) includes a temporary “transitional product-specific safeguard mechanism,” and China has recently indicated it plans to impose tariffs on some textiles to stem the anticipated flow of production to China after January 1, which could result in a trade war with the US and EU. "

The writer is professor of sociology and global & international studies at the University of California, Santa Barbara