(U-WIRE) WASHINGTON – On Jan. 1, 2005, the World Trade Organization will completely dissolve export quotas for all textile factories around the world. So, while cable-knit Abercrombie sweaters and bootleg jeans from Gap should be more affordable after Christmas, many of the already struggling workers in third world nations will most likely lose their jobs to the world’s greatest competitor in cheap labor: China.
In 1995, the Agreement on Textiles and Clothing, created a timeline to eventually phase out quotas. The reasoning behind this is to further globalize world trade, based on free market ideology and forfeit the possibility of raising quotas. The final phase out this January is said to be the biggest global textile trade revision undergone in 30 years.
The quotas began in 1974, when the WTO created the Multi Fiber Agreement to restrict the amount of exports allowed to each country per textile buyer. This helped out developing countries such as Sri Lanka to get a piece of the globalization pie, while still allowing textile buyers, such as American Eagle Outfitters, to make their clothing cheaper than if it was produced on U.S. soil.
With quotas, each export factory was told how many jeans or skirts it could make for a particular company, limiting the amount of goods coming from major producers, like China. As the quotas are dissolved, buyers from corporations such as Banana Republic Inc. or J.C. Penney Inc. can get the clothes cheaper by moving all their factories to China, where labor, materials and other costs are the cheapest on the planet. Wal-Mart has already announced that they will be getting a one way ticket to China once the quotas dissolved.
Wal-Mart’s global procurement chief, Andrew Tsuei, said in the Washington Post, that he expects to reduce the number of countries where Wal-Mart has apparel deals from around 63 to a mere four or five elsewhere that can produce all of Wal-Mart’s orders most efficiently and least costly.
“The overall balance of quality, reliability and price makes China probably the most competitive market in the world,” said Tsuei.
Free market jingoists argue that a quota system distorts free trade and curbs the free market competition, the trademark for true neo-liberal globalization. However, with currency rules that keep materials cheap and relaxed labor standards, China has its own unfair advantages compared to those who try and live up to world standards for human rights and fair wages. Yet, to the business supporters trying to improve their profit margins, these controversial items are minor road bumps on the path to a completely free world market.
“If I didn’t have this job, we wouldn’t have enough to eat,” said 20-year-old Mohammed Ismail Mazeela in The Washington Post. Mazeela is one of 2,000 women from surrounding villages who work at the Daya Apparel Export Ltd. factory in Sri Lanka. Her $40 monthly wage supports her family, buys the electricity for the single light bulb in her shack, the food cooked on her concrete floor, and schoolbooks for her sister’s three children. “There is nothing else here.” The decision to push the U.S. dollar, but not U.S. democracy when dealing with foreign business is a flaw that critics see as a future downfall in the system. Critics question just how far the economic boom can proceed, if the government will not bend towards some sort of standard human rights policies.
“You’re dropping us in the well on the first of January with no rope. Fifty to sixty thousand people might lose their jobs. Fifty to 100 factories will be closed,” said Sri Lanka’s minister of trade, Jeyaraj Fernandopulle. Sri Lanka depends on the garment industry for 450,000 jobs, which more than half of its exports and as much as one-sixth of its total economic activity. “Most of the factories are in rural areas. Almost all the families are dependent on their wages. Their entire livelihood is gone when you take off the quota.”
All the money-conscious, yet fashionably sensitive college students will undoubtedly benefit from the quota drops. As clothing production shifts to lower-cost locations, the prices of your favorite Gap jeans or JCrew V-neck could fall by as much as one-third. Yet on the other side of the world, smaller countries with sweatshop factories as a main source of labor, feel as if they’ve been suddenly drowned without a life vest on.
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