Change, Challenge, and China: an Analysis of Competition in the North American Textile and Apparel Industries
Keywords: free trade, China, textiles, apparel, North American Free Trade Agreement, NAFTA, Agreement on Textiles and Clothing, ATC, trade liberalization, World Trade Organization, WTO
AbstractMedia, manufacturers, and politicians are blaming China for intensified competition, downward pressure on prices and job loss in the U.S. manufacturing sector. A brief history of textile and apparel trade suggests that people over-reacted to a surge of Chinese imports in 2005 because of a historical focus on defining single countries as threats to domestic markets. Approaching trade policy from a broader perspective reveals that bilateral thinking overstates China as a threat. A broader approach studies how trade policies interact to create changes in market prices rather than a single country. To illustrate these effects, an economic analysis of the North American Free Trade Agreement first explains how this regional trade policy bolstered higher prices and demand for North American textile and apparel products. Economic models then explain how a global policy that liberalized trade, Agreement on Textiles and Clothing, undermined NAFTA's benefits and enhanced the competitive pressure perceived by these manufacturers. The article concludes that as one of many countries liberalized by the ATC, China plays a smaller role than the public assumes in diminishing NAFTA's benefits as perceived by North American textile and apparel manufacturers.