The End of Quotas:
A Final Nail or
Much Ado About Nothing?

You’ve probably seen the headlines or read the reports. “Panic is spreading ahead of quota abolition,”; “Beware Beijing when it’s freed from quotas cage,”; or “China To Rule Textile Market after 2005,” are just several titles to the literally hundreds of articles and studies covering the impending lifting of apparel and textile quotas come January, 2005. As the headlines suggest, much of the content is apocalyptic. Factories will close their doors, thousands will lose their jobs, and the American textile industry, like others before it, will vanish.

Is this the final nail in the American textile and apparel industry’s coffin, as a respondent to last month’s UniformMarket poll commented? (For results, see accompanying story). Or, since so little is actually produced in the United States anymore, much ado about nothing? UniformMarket decided to find out. Before uncovering our findings, some background.

The original idea behind quotas was to provide protection to American and European textile manufacturers while helping some poor countries build textile industries. Quotas were distributed liberally across the developing world, and the countries that got them built new textile plants. They also got to live with a system that covered over 140 categories of clothing that favored larger countries, like China and India , over smaller ones.

Unique in manufacturing trade policy, the quotas set limits on the number of clothes developing countries can send to the U.S. Filipinos can sell Americans all the bicycles and yo-yo’s they can make. But there are limits on how many articles of clothing they can sell.

Many economists have cried foul to this approach, saying that quotas actually diminish the American standard of living. An analysis by the International Trade Commission suggests that quotas may raise clothing prices by 25 percent across the board, with Americans paying $50 billion more for clothes than they should.

But that could change shortly. The commitment to lifting textile quotas dates to 1994, with the close of the Uruguay Round talks that created the World Trade Organization. On January 1, 2005 , the United States , Europe and other rich economies will abolish their quota systems. The event is awaited with enthusiasm in China and India – but in many other countries, including the U.S. , it has produced a wave of fear, as the livelihoods of over ten million workers across the developing world and in this country could be affected.

Those who worry focus their concern on China , who was not a member of the World Trade Organization when the deal was brokered. Now China is, and as quotas come off completely in a few months, it could displace much of the developing world as the low-cost producer. According to Business Week, China could wind up with 45 percent of the $500 billion global garment trade. The textile sector, still the largest manufacturing employer in the United States , could lose most of its 650,000 remaining jobs over time.

What does all this specifically mean to the American uniform industry? Not very much, according to the experts. “The lifting of quotas is neither good or bad,” says John Gunzler of Edwards Garment, a Michigan-based manufacturer. “This has been coming for years, and the companies that are on the ball and well capitalized will do what is necessary to compete. You can’t exist solely on domestic manufacturing anymore.”