The global textile industry is huge. It was worth morethan $400 billion in the year 2012, and is continuously expanding. People aregetting fashion conscious day by day, and the sale of clothing and textile isincreasing along with the same. Today, people are no longer restricted to thepreset notions of fashion. Levi Strauss jeans, Brazilian bikinis, clothesmanufactured in China, and many other kinds of apparel can be found all overthe world. Apparel that looks good, feels comfortable, and is acceptable up toa certain extent is worn and appreciated by people around the world.
Globalization is at its peak and expected to developfurther. Under these circumstances, it was but natural for the concept of freetrade to develop. Today, a number of countries indulge in free trade agreementsfor easier trade. Organizations that promote this concept among different partsof the world have come up in large numbers. World Trade Organization (WTO), forexample, is a premier organization that promotes free trade among countries.Its member nations have to abide by strict rules that favor liberalized traderelations.
Free trade pacts all over the world have made headlines inthe past. The most talked about of all pacts is the Trans Pacific Partnership(TPP) pact. This pact is still under negotiations and its details are hardlyrevealed in public. But it is believed to involve a number of countriesincluding USA, Vietnam, Australia, New Zealand, Brunei Darussalam, Chile,Malaysia, and others. This pact has invoked debates all over the world. Theparticipating countries have received mixed responses towards this pact fromtheir masses.
Protests were carried out in large numbers in countrieslike USA, New Zealand, and Australia against the TPP pact. People feared thatit may lead to immense job losses in the participating developed economies. Itmight give undue advantages to corporate giants of these countries who may gettheir work done for an extremely cheap rate in developing countries likeVietnam, Brunei Darussalam, and others. It may also result in exploitation inthe developing countries.
Though TPP pact may have its risks, it is largely expectedto benefit the global textile industry. Free trade between these countries mayhelp countries to exchange ideas in terms of textile manufacturing andretailing. Consumers may get better quality products for a cheaper rate. Itmight help the developing economies to earn more export revenue and generatejobs in their country. Measly payment and job losses can be prevented byputting in the right conditions at the time of negotiation. It has beenobserved in the past that free trade of any kind generally benefits the overalleconomy of a country. The same is expected out of this pact.
Trade amongst privatebodies without government intervention is something that corporate businesshouses generally seek. It helps them carry out trade on their own conditions.This ultimately leads to higher profit. The ASEAN (Association of South EastAsian Nations) free trade area requires all the ten member countries to havefree trade relations among themselves. This pact has helped them establishthemselves as a competitive manufacturing and production area in the globaltextile market. It has also helped them in attracting immense foreign investment.
Free flow of goods in the ASEAN region has made way for several advantages. It helps each of the member nations to obtain goods easily that would otherwise prove to be difficult to secure, which ultimately helps in the manufacturing process. It increases competition among the local manufacturers and compels them to deliver better quality for a cheaper price. Human right issues have been reported in the past. But this pact has done more good than harm to the overall economy. Today, ASEAN region is fast progressing as a textile hub and is giving a competition to India and China (the traditional textile markets) in many fields.
North American Free Trade Agreement (NAFTA) is another of such widely popular free trade agreements. It has increased trade among the member nations, i.e. USA, Canada, and Mexico. It has been observed that Mexicos Gross Domestic Product (GDP) has increased by 40 percent owing to this pact. There is an unemployment rate of mere 5 percent in the country now! Besides, the free trade agreement has led Mexican firms to manufacture products that are of a globalized nature. This will ensure that Mexican firms are able to survive in the international market, as well.
A general belief among the critics of free trade is that it only benefits the developing economies. But this is not true. NAFTA has proved to be successful to the economy of USA and Canada immensely. USA is rich in technology and innovations. Canada is full of natural resources and energy. And Mexico has a pool of low cost labor. Free trade has enabled these countries to integrate their strengths and create high profile textile products. As far as the job losses are concerned, restrictions on trade would not have stopped them in any case.
If an economy has liberal trade policies, it can go a long way. Government interference in terms of trade is advisable only up to a certain extent, especially in democracies. Free trade has proved to be beneficial in several cases. Many economists believe that at times governments announce free trade policies considering the benefit of a certain elite group. Such a step may only help a particular group and not serve the overall economy. There is no doubt to the fact that corporate enterprises are the biggest beneficiaries of free trade. If governments make laws under the influence of these giant entities, it may not do any good to the economy.
USA is indulging in free trade agreements with many countries. But there is hardly any talk about free trade agreements between China and USA. There can be several reasons to it. Many economists believe that it is because of the growing might of China and the fear of Chinese economy overtaking US economy in the long run. But a free trade between the two countries may actually benefit both the economies. Cross investments will help the two economies boom.
Of course, there are times when it is good to impose restrictions on trade. For example, if a country A is into exporting goods to country B that are hazardous to the health of the citizens of B, it becomes mandatory for it to restrict the import of those goods. But such cases are rare in the textile business. Free trade is largely beneficial in the global textile industry.
Free trade encourages globalization. The much talked about concept of 'globalization' will receive a boost if this policy is implemented everywhere. Technological innovation in communication and transportation industry has made the Earth a smaller place. Today, it is easy to secure textile products manufactured in far away locations. In fact, any piece of clothing travels to a number of places before it gets converted into the actual product. Globalization is the need of the hour in modern times.
In a report released by WTO, the 20 big economies of the world have introduced 124 new restrictive policies to their existing trade policies. The European Union has also reported an increase in protectionist trade policies. Protectionist behaviors, however, are not appreciated all over the world. There are dangers of retaliatory actions by other countries. WTO and other such major organizations do not encourage these actions.
The global textile industry is waking up to this fact. Countries are getting into free trade agreements with other countries in order to get more business. Though there have been critics of free trade and they have had valid points in this regard, economies are realizing the value of a free trade environment. The concept of free trade is expanding continuously. The global textile market has become open to free trade and the potential benefits that can be reaped out of the same.
References:
1. Vastratex.com
2. Globalissues.org
3. Tppinfo.org
4. Wikipedia.org
5. Businessweek.com
6. Washingtontimes.com
7. Nytimes.com
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- 4.bp.blogspot.com
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