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Textile and Apparel Quota Phaseout: Some Economic Implications. Date: June 10, 2005 1 (June 10, 2005)

handle is hein.tera/crser0158 and id is 1 raw text is: Order Code RS20889 Updated June 10, 2005 CRS Report for Congress Received through the CRS Web Textile and Apparel Quota Phaseout: Some Economic Implications Bernard A. Gelb Specialist in Industry Economics Resources, Science, and Industry Division Summary Because of their importance to both industrialized and developing country economies, textiles and apparel have been major issues in trade relations. A number of agreements (multilateral and bilateral) were signed over the years restricting the amounts of textiles and apparel traded - in attempts to resolve issues between the interests of exporters and importers. This report analyzes the effects of the phaseout of the quotas on textiles and apparel that occurred January 1, 2005 - focusing on the consequences and on implementation issues. The report will be updated as events warrant. Context Textile and apparel manufacture, and international trade in their products, have been important elements of economic activity and growth since the Industrial Revolution. Major reasons for this are: (1) textiles and apparel are basic items of consumption in all countries, and (2) apparel manufacture is labor-intensive, requiring relatively little fixed capital to establish production facilities. Thus, with fiber and fabric essential inputs to apparel, these industries are major generators of jobs. Modest capital requirements contributed to textiles and apparel being major industries at the start of the Industrial Revolution and being important to developing countries now. The percentage of total manufacturing value added accounted for by textile and apparel production among developing countries in 2002 was two and a half times that for industrialized countries.' Lower wage rates in developing countries together with the labor-intensiveness of textile and apparel manufacture tend to give developing countries a comparative advantage in textile and apparel manufacture. Thus, textile and apparel manufacture is shifting to developing countries, with textiles and apparel constituting large portions of their exports. Developing countries' share of world textile manufacture (measured by constant-dollar value added) increased from 21.5% in 1980 to 37.5% in 2002; and their share of world apparel manufacture rose from 18.4% in 1980 to an estimated 30% in Congressional Research Service Ae The Library of Congress United Nations Industrial Development Organization. International Yearbook of Industrial Statistics 2004. Vienna: 2004. p. 55. 2002 is the latest year for which such data are provided.

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