By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
|Photo by Gregory Bojorquez|
Look for the union label when you are buying that coat, dress or blouse.
Remember somewhere our union’s sewing,
our wages going to feed the kids, and run the house.
We work hard, but who’s complaining?
—Garment Union song
At midnight New Year’s Eve, the world will come to an end for many apparel manufacturers and their workers, as the World Trade Organization terminates the 1974 Multifiber Arrangement’s quotas that have stabilized the global clothing industry for 30 years. The end of these quotas for the WTO’s 148 member nations is expected to trigger a flood of cheap, well-made Chinese textiles and clothing into factories and department stores from Manila to Mission Viejo. It’s a flood that could drown some developing countries, destroying already fragile industries while continuing the steady deindustrialization of America’s own economy. The effects threaten to reach far beyond the loss of indigenous manufacturing jobs, seriously damaging economies in poor countries and increasing emigration toward wealthier ones. It is the rag trade’s Y2K, but this time the sky really is falling.
The quota expirations for 98 categories of textiles and apparel mark the final stage of a 10-year phase-out of restrictions on the annual metric tonnage countries could export to North America and Western Europe. Originally designed to protect these continents’ local clothing industries, the export ceilings created new garment economies in places like Haiti, Mexico and Kenya. When, say, Wal-Mart exhausted its quota of pajamas that it had consigned from one country, it would turn to another for more inventory, thus spreading industrialization throughout Eastern Europe and the Third World.
In 2002, the last time specific quotas were abolished, Haiti lost half its U.S. market to China, which packs a triple threat of low wages, modern efficiency and quality merchandise. Since quotas on brassiere exports were phased out in 2002, for example, Haiti’s U.S. exports have plunged more than 94 percent, while China’s initially increased 232 percent; likewise, as China’s unfettered exports of infantwear jumped 826 percent over the same period, Bangladesh’s shrank 18 percent. These statistics, analysts warn, only hint at what lies ahead four weeks from now, when 701 quotas in the U.S. alone will disappear. In addition to the presumed tidal wave of Chinese products, post–January 1 predictions include:
• More offshoring of American apparel companies, since companies that had previously been "shackled" to the U.S. by quotas will have no reason not to set up plants in Third World countries.
• Sub–Saharan African countries, which had benefited from no-tariff agreements with the U.S., will lose trade because the savings they passed on to American retailers from not paying import duties will not match the savings offered by other countries with lower overhead and, now, no quotas. (Tariffs will not be affected January 1.)
• By 2010, according to a federal task force on textiles and apparel, only one-quarter to one-third of the current 50 to 60 exporting countries will be doing business with the U.S.
"When [apparel quotas] came off in 2002, China’s share in those 29 categories went from 9 percent then to over 70 percent today," says Mark Levinson, chief economist for the Union of Needletrades, Textiles and Industrial Employees (UNITE). "When quotas expire in January we expect the Chinese market share in the U.S. to increase from just under 20 to about 70 percent. That’s a huge increase in millions of workers in developing countries [who] will lose their jobs — it’s the largest industrial shift in the last century. Roughly tens of billions of dollars will be shifting to China. This is a monumental issue globally."
Locally, of course, the big questionis how January 1 will affect Los Angeles, California’s largest garment-producing center. The L.A. County Economic Development Corporation claims L.A.’s apparel-manufacturing sector generates $24.3 billion annually, making it the city’s single largest industry. Still, it’s an industry in decline. The number of Los Angeles’ cut-and-sew garment workers peaked in 1996 at 97,500, according to the state’s Employment Development Department; there are currently about 62,600 workers employed, the vast majority Latino or Asian women immigrants.
For now the consensus seems to be that there is no consensus. According to Ilse Metchek, executive director of the California Fashion Association, 2005’s first quarter will simply reflect the last months of 2004 — although she believes one immediate effect will be even more gridlock at the L.A. and Long Beach harbors, which are now operating at a crawl as Christmas goods from Asia stream into port.
"You’ve got a lot of nervousness in the industry," she says of the harbors possibly becoming worse chokepoints. "Retailers are afraid they won’t have inventory on the shelf. It will all shake out about the end of April, beginning of May."
One thing Metchek is not counting on is price drops.
"Wal-Mart can’t get any cheaper," she says, claiming the profit margin on clothing is already razor thin. "Apparel is 10 percent cheaper than it was 10 years ago. There’s only so much [retailers] can buy. If any savings are to be had, they will be kept by the stores. The price of labor is not the biggest factor for stores — it’s the cost of transportation."