Problem

Protectionism in the textile and apparel industries

Nature:

The textile and apparel sectors are the most protected sectors in the world. Unlike the protection afforded other manufactured products, the textiles and apparel sectors in the developed countries appear to be the recipients of permanent protection.

Incidence:

Academic studies conclude that, for many developing country exporters, prices are roughly 25% higher as a result of trade restrictions, including tariffs and MFA quotas. The rents associated with these higher prices are split in almost equal proportions between developing country exporters (who received the quota rents) and developed country Governments (who collect tariff revenues). The quota rents are small compensation for the very large sacrifice in export volumes that the developing countries must make due to MFA. This is heavily concentrated in the labour-intensive apparel trade, in which developing countries have a natural advantage, rather than the capital-intensive textile trade, in which developed countries are more competitive.

Claim:

Protectionism in clothing trade obviously hinders the progress of developing countries, as textiles and clothing constitute almost 30% of the manufactured exports of developing countries. The restraints also, however, entail high costs to the industrialized countries themselves as their governments have had to pay benefits to those workers made redundant because of lower volume sales of domestic goods.

Values:
Protectionism
Problem Type:
E: Emanations of other problems
Date of last update
19.10.2017 – 19:47 CEST