Economics, Politics, Social Commentary and occasionally Superstring Theory.

Thursday, December 30, 2004

New Year's Fun

The Economist has an article here about the potential impacts of the elimination of textile quotas on January 1, 2005. A quota works just like it sounds; the U.S. only allows a certain amount of textiles from each country to be imported per year. The U.S. has had textile quotas in one form or another for the last 30 years. Because the domestic textile industry happens to be located in sensitive political geographic locations (like steel), any move in the industry is bound to be interesting.

Among some of the attention-grabbing findings is that China could gobble up about half of the U.S. market and more than 30% of the EU market. This would, of course, wipe out the economies of Bangladesh, Cambodia and a group of other countries. However, those numbers are based on cost alone and don't take other relevant circumstances into account (i.e. proximity, scale, etc.) Moreover, I don't think China wants the textile market. Textiles are how poor countries enter the world market; China is not a (relatively) poor country and is already in the world market. Moreover, textile dominance would be a step back for China. They're currently moving into manufacturing with an eye to jump into tech and services sometimes in the next decade. Exerting their influence in textiles would be a step back, not a step forward.

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