Rivoli Questions Ch. 7

1. Learn the route that Chinese t-shirts make to Miami and Sherry Manufacturing.
Shanghai-western coast of Mexico-Panama Canal-Miami port

2. What does Rivoli mean when she says that the US has lost in the "race to the bottom" and is "not going gracefully"?
The textile and apparel industry (TAAI) has largely deserted the US for lower wages in China.  Only an extensive, complicated, and, some would say, hypocritical system of protections allow the last remnants of the industry to survive in the US.

3. What is the AMTAC and what is the losing battle that they are fighting?  Use China, politicians and free trade in your answer.
AMTAC = American Manufacturing Trade Action Coalition.  AMTAC lobbies politicians on issues related to The US TAAI.  Specifically, AMTAC hinders free trade by trying to protect the TAAI from competition with China and other countries.

4. What did the "alphabet army" demand of the Bush administration? They wanted quotas that restricted Chinese textile and apparel imports. When? July 2003 Why? From 2000 to 2004 the US TAAI lost 1/3 of their remaining jobs. What was the result?  Bush restricted imports from China. How did the Nov. 1, 2004 deadline influence the Bush administration? 11/1/2004 was a few days before the presidential election and Bush did not want to lose votes because voters in the TAAI had lost jobs to China.

5. Whose side would you be on, Julia's or Augie's?  Why?

6. How does Figure 7.1 demonstrate that Augie has been successful?
The graph shows that during the period 1989-2003 Chinese apparel exports to the world grew more than 400%, Chinese apparel exports to the US grew much more slowly.

7. You are a Chinese free trade lobbyist.  How do you use Figure 7.2 and Figure 7.3 to support your argument that the US has created unfair trade in cotton knit shirts?
China is the world's largest country.  Between 1989 and 2003, US imports of cotton knit shirts from Mexico, the Caribbean and sub-Saharan Africa grew much more rapidly and to higher levels than those from China.  And, for 2003 the US placed an import limit on China that was less than Sri Lanka's and only 1/4th of Vietnam's.

8. What is the CBTPA?  In your informed opinion, should it be renewed in 2008?  Why?  Why not?
CBTPA = 2002 US-Caribbean Trade Partnership Act.  It allows tariff-free imports of apparel manufactured in 24 Caribbean countries.

9. Why does politics instead of comparative advantage control textile and apparel manufacturing in the US?
The US TAII accounts for 5% of manufacturing employment.  Employees = voters...and lobbyists.

10. In which US states is the textile industry concentrated? 60% of it is in Georgia and North and South Carolina

How has that made the industry's political voice relatively strong? Mill owners and workers and representatives share cultural traits and economic interests and are relatively unified compared to other industries.  In many congressional districts the TAII provides a majority of the manufacturing employment.  This means that congressional representatives are beholden to the TAAI.

How is that different from the geographic distribution of the US retail industry and their political voice? The US retail industry employs more people than the TAAI but they are scattered throughout the 50 states and do not represent a cohesive block of voters.

11. How has the US apparel manufacturing industry forced US presidents to perform a difficult balancing act during the past 50 years?  Use the terms free trade, Thurmond and Reagan in your answer.

During the past 50 years US presidents have promoted free trade, all the while protecting the TAAI, Ronald Reagan included.  This has forced them to balance domestic politics with global politics. Reagan needed the southern vote to win in 1980.  From 1976-1979 textile and apparel imports into the US had increased by 50% and caused TAAI plant closings in the US south.  Reagan promised South Carolina senator Strom Thurmond that he would limit Asian imports if Thurmond would help deliver southern votes to Reagan.  Thurmond did. Reagan won the election, but did not keep his promise.  Asian imports continued to soar.

12. What is the MFA?  What is the GATT?  What is the relationship between the two?
MFA = Multifiber Agreement, passed in 1974 and extended in different versions until 2004, which places quotas on US imports of textiles and apparel.

GATT = General Agreement on Tariffs and Trade which is an international agreement that is designed to reduce trade protection and make it freer.

The US initiated the GATT and MFA and the two agreements are diametrically opposed.

13.  What will be the consequences of phasing out the MFA?
Trade in textiles and apparel would be freer. Clothes would be less expensive in the US.  The US TAAI would collapse. 

Which countries would benefit?  Those that produce the least expensive high quality textiles and apparel.   Which would suffer?  The US.  Smaller countries, protected by the MFA, but which cannot compete with China.  Why? Job losses in TAAI.  But...clothes would be cheaper for US consumers.  It's complicated.