NCPA - National Center for Policy Analysis

The Mischief Of Clothing Quotas

February 24, 2000

Trade experts say politicians have promised free trade in apparel again and again -- but they have only made the quota system all the more extensive and convoluted. There are now no fewer than 1,000 import allotments, covering scores of categories from each of dozens of countries.

So U.S. consumers must pay tens of billions of dollars every year in higher prices.

Here are a few of the inefficiencies generated by the apparel-quota process:

  • Factories, workers and textiles take circuitous boat trips on the high seas in search of some far corner of the earth from which apparel can be brought into the U.S. under loopholes.
  • Well-connected foreigners own or control quotas -- which they trade openly like stock options.
  • Fraudulent labeling of goods as coming from countries with unfilled quotas is reportedly rampant in Asia and the Middle East -- which requires the hiring of hundreds of U.S. customs inspectors to look out for fraud.
  • U.S. Customs frequently conducts country-of-origin audits on the entire manufacturing history of a garment shipment -- which requires 1,000 or more pages of documents, such as payroll records, bills of lading, electrical bills and fabric-cutting tickets as evidence.

The U.S. government employs "jump teams" to visit overseas factories and peruse invoices, count sewing machines and watch seamstresses.

As a result of these and other absurdities, Americans are the ones hurt. For example, a lady's wool/acrylic alpaca hand-knitted sweater from China costs 67 percent more at wholesale thanks to quotas and duties. Experts say that for cheaper fabrics, like cotton, the effect can be even greater.

Source: Andrew Tanzer, "The Great Quota Hustle," Forbes, March 6, 2000.

 

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