'China Casts a Giant Shadow': The Developing World Confronts Trade Liberalization and the End of Quotas in the Garment Industry

Abstract

This article examines the implications for developing nations of the termination of the thirty-year system of quotas in the global trade in garments and textiles. The quotas fostered the spread of manufacturing throughout the developing world by permitting importing nations to cap imports from specific countries. Developing nations became attractive manufacturing locations thanks to their access to the restricted U.S. and EU markets. The garment industry permitted even the poorest nations to participate in the global economy in an environment largely protected from the harsh realities of unfettered international competition. However, the structure of globalization in the garment industry, with its characteristic distribution of manufacturing around the world, now appears extremely fragile. The ending of the quota system on January 1, 2005, seems likely to result in a massive concentration of manufacturing capacity in China. The geographic diversification of manufacturing encouraged by the quota system may simply evaporate. The economic, political and social fall-out of this rapid shift to China is likely to be profound, particularly for those developing countries in which the garment industry is the prime - or even sole - point of contact with the global economy. In those countries, not only is the garment industry the cornerstone of the national economy, but the garment factories frequently provide the only viable employment for millions of women who are the sole wage earners for their families.