She specializes in international business, finance, and social issues in business, since 1983. She is the author of International Business and has been published in numerous academic journals, including the Journal of International Business Studies, the Journal of Business Ethics, Business Ethics Quarterly, and the Journal of Money, Credit and Banking.
What situation do you forecast for the US textile industry, 10 years from now?
"I would expect that the declines in apparel production will continue and accelerate, as will the production in most yarns, knits and wovens, though at a slower pace. Much depends, of course, on how trade rules evolve.Many US brands have significant ""brand equity"" in global markets - examples are Fruit of the Loom and Polartec, but this value is derived from marketing rather than production. Brand equity can continue to grow even as production shifts to other countries. And aggressive US firms are realizing that a prerequisite for success can derive from both advanced R&D and from diversifying production to Asia. Examples are industry leaders such as Standard Textile and Invista. So US firms that are smart about protecting and developing brand equity, about international diversification, and about leading edge R&D can do well."
Have the global textile quotas really benefited world economy?
Though the quotas were originally designed to protect rich county producers, with hindsight it is clear that their most striking effect was as foreign aid for smaller developing countries. Because the quotas constrained imports from the large competitive producers such as India and China, the quotas preserved a share of the US and European markets for smaller countries such as Sri Lanka and Mauritius. And by preserving a piece of the market for these countries, the quotas contributed to economic development. That said, the quotas were also quite distorting, and worked against poor countries in aggregate. In summary, the quotas enhanced the fortunes of smaller developing countries, constrained the fortunes of China and India, and did little to protect the US and European industries.
What reasons do you attribute to the current state of the American Textile Industry?
Well, first of all the U.S. industry is not in as bad shape as many say it is. Of course there have been significant job losses, particularly in apparel sewing, and this can largely be attributed to the American wage rates. Textile and apparel jobs in the US have been reduced by about 75% since shortly after World War II. But even though employment has been falling more or less continuously, for many of these years production was growing rapidly because of advances in automation and technology. Even in recent years, production of textiles in the US has been quite steady. At the same time, however, we continue to have plant closings and consolidations. American firms face challenges not only in competing with other countries wage rates but also in accessing capital. The US financial markets have not been kind to the textile industry.
Do you foresee China, India and other Asian entities to be a force to reckon with, in the changed global textile scenario?
Well, I agree with almost all observers, who predict that China and India will be the big winners in the post-quota world. They will win not so much at the expense of US firms, where adjustment has been taking place for decades, but at the expense of smaller countries who had come to rely on quota for market share. The surges and price drops we are seeing from China right now are quite amazing. T-shirts, the garment that I research in my book, are showed an increase in imports from China over 1200% during the first 2 months of 2005 over the same period in 2004, with price drops in the neighbourhood of 30%. So, yes, that is a force to reckon with. And I think that there will be some constraints on China, both externally and internally imposed, that will strengthen India's position as well. India and just a handful of other countries seem able to take on China in many textile and apparel categories.
Do you expect the textile regime to return?
"I do not see the regime coming back, but I do expect to see very aggressive use of the China safeguard. Under China's WTO accession agreement, these safeguards-which are really just extensions of the quotas-can be applied until 2008. So for categories where we are seeing these big surges from China I do expect the safeguards to be applied aggressively, especially by the US and EU.Also, we should remember that protective tariffs are quite high on textiles and apparel in the US - close to 17% for apparel on average and up to 30% for some categories. So even though these tariffs are not technically part of the MFA regime, they do represent trade barriers. I do expect a lot of pressure to maintain these tariff barriers, now that the quotas are gone."
Have the farm subsidies, particularly for large cotton growers, proved really beneficial or no, and at what cost to the US?
"The subsidies have certainly been beneficial to the US farmers, but at substantial cost to American taxpayers. The cost of subsides to US cotton farmers has been about $4 billion per year recently. Of course, these subsidies are at the center of discussion right now at the WTO, where the US is charged with violating trade rules through these subsidies. And it was cotton subsidies more than any other factor that led to the breakdown of world trade talks in Cancun in 2003.While the subsidies certainly put a lot of money in the American growers' pockets, the effects on poor country producers are not that clear because the majority of the subsides have been ""delinked"" from production. In other words, the farmers receive the subsidies even when they do not produce cotton. As a result, the effects of the subsidies on world production is a matter of some debate. Another factor is that much US government financial support goes to plant biology research at US universities, and the results of this research ultimately benefits growers everywhere."
How can small and under developed countries (from Mauritius/Africa and Sub Saharan countries) which so far depended upon the textiles quotas fight for survival?
"Well, the US has a trade agreement under the African Growth and Opportunity Act (AGOA) that effectively eliminates tariffs for goods from most of Africa, and there is something similar in place for the Caribbean countries. So this alone gives these countries about a 16% cost advantage over India and China. Unfortunately, however, this margin may not be enough to close the gap with Chinese and Indian producers. Most of the large importers simply do not want to go to 40 countries to source their apparel, which is what they had to do under the quota regime. They want to go to 4-6 countries and I think it unlikely that Mauritius will be among them.On the bright side, the quotas did help to develop a trade infrastructure in many of these countries. As I discuss in the book, the quotas indirectly helped to build roads, port facilities, trade finance capabilities and so forth. I think we all hope that much of this hard and soft international trade infrastructure is transferable to industries where these countries might develop enjoy a comparative advantage."
20230103183907.png)
