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A New Pattern Is Cut for Global Textile Trade

The result is a likely bonanza for consumers. The United States alone imports approximately $90 billion worth of textiles annually. Under the new system, prices of blue jeans, men's shirts and other types of clothing now governed by quotas could fall by as much as one-third, as production shifts to lower-cost locations.

However, it has left development and trade officials in other countries worried about their future in a global system that makes job security for seamstresses in Asia, Africa and Latin America dependent upon the decisions of buyers in Manhattan and industrial policy in Beijing.

At the Timex (Garments) Ltd. factory in Sri Lanka, workers stitch bras for major U.S. brands. China's efficiency and speed to market may lead to substantial layoffs in Sri Lanka. (Peter S. Goodman -- The Washington Post)

About This Report

Staff writer Paul Blustein wrote and reported from Honduras and Washington. Staff writer Peter S. Goodman wrote and reported from Sri Lanka, Cambodia and China.

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In Honduras, Minister of Industry Norman Garcia said he hopes the country can hang on to most of its 130,000 textile jobs but acknowledges that economic survival may require a detour back to agriculture. At least, he said recently, economic success for China's 1.3 billion people will probably mean rising prices for the melons, peppers, shrimp and fish that Hondurans can harvest year-round.

"If the Chinese are destined to become the manufacturing center of the world," he said, "somebody's got to feed those guys."

Initially rooted in efforts to protect developed world factories by limiting imports, the textile quotas evolved into a sort of de facto economic aid, awarded as a way to spread the wealth of U.S. and European consumers around the globe. Ironically, many of the same countries voicing concerns today about the end of quotas argued for decades that they should be abolished. At the time, those countries believed that scrapping the quota system would give their textile companies unlimited access to the United States and Europe -- a sure path to riches. They got their way when the member states of the World Trade Organization in 1994 agreed that the Multifibre Arrangement would expire after 10 more years, ending one of the world's more extensive exercises in managed trade.

That position now stands as a colossal miscalculation, which failed to factor in the rise of China. The world's most populous country was on the outskirts of the global economy at that point, and there was little inkling that its cautious economic reforms were about to begin reshaping international commerce.

Since then, China's increasing efficiency and its burgeoning, low-cost partnership with U.S. consumers have prompted other textile-exporting countries to appeal to Washington for new preferential trade agreements. The quota system is independent of the customs duties that the United States and Europe apply to imported textiles, which average 16 percent in the case of the United States. Countries such as Cambodia and Honduras have asked that, as the quota system disappears, their goods be given duty-free access to the United States to give them a cost advantage over China. U.S. textile executives, concerned about the approximately 695,000 jobs left in the dwindling U.S. industry, likewise have asked that the Bush administration use its power under global trade rules to limit the growth of Chinese imports until 2008.

These sorts of measures, like the quota system itself, may distort free trade. But proponents argue that China has its own unfair advantages -- including currency rules that keep its goods cheap, hidden subsidies and, most significantly, abusive labor standards of the sort that other countries have been under world pressure to correct.

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