Progressive Policy Institute



The Institute

New from PPI

Memos to the New President

2008 Briefing Series

Events

Press Center

Issues
National Defense & Homeland Security

Foreign Policy

Economic & Fiscal Policy

Trade & Global Markets

Regional Issues U.S. Trade Policy The Globalization Debate PPI Trade Facts World Trade Organization Finance & Investment About This Project Energy & Environment

Health Care

Technology & Innovation

The New Economy

Work, Family & Community

National Service & Civic Enterprise

Quality of Life

Crime & Public Safety

Political Reform

Education


The Third Way



All_Our_Might.com

About PPIContact UsPress Centerspacer

Trade & Global Markets
PPI Trade Facts

PPI | Trade Fact of the Week | December 1, 2004
Textile Quotas Will End January 1, 2005


Editor's Notes: The PPI "Trade Fact of the Week" is a weekly email newsletter published by PPI's Trade & Global Markets Project. To sign up for a free subscription, click here. (Just make sure to check the box next to "Trade & Global Markets.")

Original links are included though some may have expired.


The Numbers:

Date for abolition of textile quota policy: January 1, 2005
First "restraint" on Asian textile imports: September 29, 1701?

What They Mean:

"The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun," says Ecclesiastes. "Is there any thing whereof it may be said, See, this is new? It hath been already of old time, which was before us."

Can rich countries with highly paid workers succeed in labor-intensive "older" industries? This question, central to some modern American trade policy debates, was raised in the United States as early as 1833, when Sen. Daniel Webster warned a Pennsylvania crowd that local manufacturers could not survive in open competition with the "unpaid, half-fed pauper labor of Europe." His theory was not original even then, however: it predates not only Webster, but the Industrial Revolution and the United States itself.

A 300-year-old example, perhaps especially relevant as the New Year's Day end of the 30-year-old textile quota system approaches, comes from 18th century Britain and the opening of direct sea trade between Northern Europe and Asia. Britain's East India Company, finding the heavy black woolen "broadcloth" its directors had hoped to export unappealing to tropical-country buyers, began instead to ferry Asian cotton back to London late in the 17th century. Cool, cheap, and colorful, the Indian "calicoes" (so-called because many were shipped from Calicut in modern Kerala) sold well, but their popularity was not universal. Daniel DeFoe -- associated with the wool industry as well as the author of Robinson Crusoe -- asserted that "above half of the woolen manufacture was entirely lost, half of the people scattered and ruined, and all this by the intercourse of the East India trade;" John Barrett, MP for Lynn, gloomily said that wage gaps gave India an advantage so big as to threaten the British textile industry's future, as English garment workers earned a shilling a day and Bengalis only "a copper."

Such arguments proved convincing to Parliament, which passed a law in 1700 (but as noted above, effective as of September 29th, 1701; the delay was meant to accommodate ships en route), to ban the stuff. Familiarly known as the "Calico Act," it asserted that "the continuance of the trade to the East Indies... must inevitably be to the great detriment of this kingdom, by exhausting the treasure thereof, and melting down the coin, and taking away the labour of the people..." The act thus outlawed imports of "wrought silks and stuffs mixed with silk, of the manufacture of Persia, China or East India, and all calicoes [i.e. cotton] painted, dyed, printed or stained there," unless it was then reshipped for export to Europe or the American colonies.

The law, apparently not a total success, was augmented in 1720 by a second Calico Act, which claimed that British manufacturing faced "utter ruin and destruction," and imposed five-pound fines on anyone found wearing Asian-made cotton clothes. (This no small penalty -- at a shilling a day for a garment worker, five pounds represented about four months' wages.) This seems not to have worked either; by 1728 another writer friend of the wool industry was denouncing British women as driven by "their passion for their Fashion" rather than the national interest, and scandalously indifferent to the balance of trade. Ultimately, as in some more recent similar challenges, technology proved a better solution: the invention of the spinning jenny and the water-frame loom, kept Britain in the 18th-century textile field.

Further Reading:

Three centuries later:

The British Department of Trade and Industry's textile trade page, noting the garment industry's employment of 220,000 workers (as compared to 280,000 in the United States):
http://www.dti.gov.uk/sectors_textiles.html

The website for the Indian Textile Ministry:
http://www.texmin.nic.in/

Some facts on quotas and textile trade:

World clothing and textile exports now total about $400 billion, or roughly 6 percent of the $7.7 trillion in annual global exports. The main users of quotas are the United States, the European Union, and Canada, which together account for $56 billion in textile imports and $136 billion in clothing imports (excluding intra-EU trade.) The quota system uses agreements between importers and exporters to set detailed limits on imports of shirts, suits, bedsheets, lengths of yarn, square meters of fabric and other products. The U.S. agreement with Nepal, for example, limits 2004 imports of Nepali-made goods to 9,876,850 towels; 1,235 tons of dishrags, pillowcases and other miscellaneous goods; 369,322 dozen dresses; and similar figures for shirts, skirts, and pants. The United States now has 49 such agreements covering about $60 billion in imports. According to the WTO's 2004 trade statistical report, eight countries -- Bangladesh, Cambodia, the Dominican Republic, El Salvador, Mauritius, Nepal, Pakistan, and Sri Lanka -- rely on these products for more than 40 percent of export revenue. This may be an incomplete list, as it does not include small island states (e.g. Fiji, the Maldives) and smaller sub-Saharan African countries like Lesotho and Swaziland.

The WTO's textile page, including a report on the world clothing industry after the end of quotas:
http://www.wto.org/english/tratop_e/texti_e/texti_e.htm

The International Trade Commission looks at the future for 30 countries supplying the United States with textiles and clothing:
http://hotdocs.usitc.gov/pub3671/main.html

The Customs Service lists countries and products covered by quotas:
http://www.customs.gov/xp/cgov/import/
textiles_and_quotas/textile_status_rpt/

Use together with the Commerce Department's explanation of the textile classification system:
http://otexa.ita.doc.gov/corr.htm





Search Tips 

Support PPI
Make an online gift
Get Email Updates
Learn More  

Print Printable Version of this Article

Send this Article to a FriendSend this Article to a Friend

Related Links Trade Fact of the Week Archives

Privacy Statementndol_ci.cfm?contentid=250168&kaid=106&subid=122Email GroupsJobsInternshipsSupportOur Publications

Site designed and managed by Beaconfire Consulting