A
t
midnight on January 1, 2005, the World Trade Organization terminated
the Multi-Fiber Agreement’s (MFA) quota system for apparel
after ten years of incremental phase-outs. This agreement, a
piece of U.S. legislation, was created in 1974 to set export quotas
on all textile-manufacturing nations.
These
limits on how many garments a country could export served to protect
the U.S. ailing garment industry from being overwhelmed by a growing
number of cheap imports from developing countries, particularly
China. Developing nations demanded the quotas be removed, asking
the WTO in 1994 to phase them out, saying that developed countries
used them to unfairly protect their own industries.
Says
Kimi Lee, director of the Los Angeles-based Garment Workers Center,
“Although it’s hard to know for sure, 80,000 job losses
are predicted in the U.S. [from those inside the textile industry].
Because of [quotas], the MFA made large companies spread out their
production. Once Bangladesh hit their 10,000th pair of pants,
for example, you would have to go somewhere else to get your pants
made. With quotas gone, the companies would be able to find the
country with the lowest wages to produce there.”
Unexpectedly,
however, in the last 30 years, the quota system also resulted in
positive growth for developing nations. This quota system forced
buyers, including large retailers like J.C. Penney, the Gap, Wal-Mart,
and Ralph Lauren, to purchase textiles and ready-made garments from
a long list of countries. This allowed developing nations, such
as Bangladesh, to build up their garment industries. In Bangladesh,
one-third of the country’s industrial workforce now works in
the garment industry, which accounts for 75 percent of all its exports.
The country is expected to lose nearly a million jobs as a result
of MFA’s termination.
In
a September 2004 report on the MFA by the National Labor Committee
(a sweatshop workers advocacy group), Gary Ross, vice president
of worldwide operations for Liz Claiborne, asked, “Would we
be in 35 countries if quotas didn’t exist? We’d probably
be in as few as 10 or 15.”
Law
Of The Jungle
P
redictions
from experts about the impact of the MFA’s termination paint
a wide range of scenarios. Many predict that China—with the
world’s largest work force, and some of its lowest wages—will
control nearly half the global apparel market within ten years.
In
the same report, J.C. Penney’s purchasing department president,
Peter McGrath, described the post-quota trade environment as “the
law of the jungle: only the strongest will survive.” Increased
competition is expected to drive down prices, which could potentially
drive down wages as a result.
After
learning that Bangladesh asked the WTO to review the quota eliminations
and its impact on poor nations, J.C. Penney threatened to pull work
from the country if the request was not withdrawn. Said McGrath,
“We will have to question our business relationship with our
partners if they continue to act like this. We can’t go back
without causing major disruption to U.S. importers, so we are talking
tough to people who want to bring up any issue at all.”
The
U.S. International Trade Commission predicts that South Africa,
the Philippines, Malaysia, and Indonesia will all lose out post-
MFA. The International Monetary Fund adds Mexico and Thailand to
that list.
What
is left of the U.S. garment industry also stands to take a big hit.
Since 1994, the U.S. has lost 800,000 textile and apparel jobs—
350,000 of those lost in the last 4 years. In September 2004 the
New York Times
reported that the U. S. might lose 600,000
more jobs due to the expiration of quotas if motions for protection
were not made.
UNITE
HERE, the union representing garment workers, among others, has
joined a garment industry-labor lobby to adopt restrictions on imports.
So far, the Bush administration has approved safeguards for bras
and socks.
Erosion
Of Standards
O
thers
worry that the new, unfettered trade environment in the apparel
industry will undermine the modest but important gains won by garment
workers worldwide.
Cambodia,
for example, has high labor standards, union representation, and
wages that were increased as the result of a strike in 2000. Cambodia’s
garment factories provide overtime pay, union representation, and
bathroom breaks. Its garments have an International Labor Organization
seal of approval indicating that they were manufactured in factories
in compliance with fair labor standards.
In
a post-quota world, however, employers in Cambodia, as well as Mexico
and Central America, may point to China as a way to claim that current
wages, however meager—as well as other costly expenses such
as union representation, overtime pay, and bathroom breaks—are
one more thing they can’t afford in a highly competitive industry
made even more cutthroat.
India
and Vietnam are also expected to gain a large share of the apparel
market, for the same reasons as China: raw materials, cheap labor,
weak or nonexistent unions, and a vertically-integrated apparel
industry that allows them to manufacture their own textiles.
Sheila McClear
writes for
Labor Notes
magazine
,
covering
farmworkers, steel- workers, and health care.
This article
originally appeared in the February 2005 issue of
Labor
Notes
.
