NCPA - National Center for Policy Analysis

What Happens After Textile Trade Barriers Fall?

May 12, 2000

America's textile industry has been protected over decades by tariffs, quotas and other rules. But most of those barriers to foreign imports are due to be swept away by 2005. What will happen to the American textile industry's more than 1.4 million workers and the more than $100 billion worth of goods they produce each year?

The outlook may not be as dire as some observers expect.

  • Employment in the industry is expected to drop by only 100,000 or so by 2006.
  • While clothes-making is a labor-intensive business and emerging countries with their abundance of cheap labor have a competitive edge over the U.S. industry, labor costs are less important than they used to be.
  • It has become a capital-intensive business -- in which a few relatively skilled workers watch over huge mechanical looms.
  • Moreover, America remains the world's second largest grower of cotton -- after China -- and in many cases it still makes sense to weave near the farms, rather than ship cotton abroad.

Then there is the fashion factor. Styles change at lightning speed and designers need to be near their markets so they can observe and respond to changing tastes just as quickly.

However, at the lower end of the fashion scale there will still be plenty of room for imported T-shirts and cheap jeans.

Source: "Sweatshirts to Body Scans," Economist, April 29, 2000.


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