Rivoli Questions Ch. 8 Key
1. What is the "trade regime" that Rivoli continues to mention in this chapter?
Rivoli is referring to the textile and apparel manufacturers' lobbyists, US congressmen and the system of tariffs and quotas that protect US manufacturers from competitors in China and other countries.
2. What point do Figure 8.1 and 8.2 make about changes in the textile and apparel industry in the US? Use the terms workers, technology and production in your answer.
Figures 8.1 and 8.2 show that during the past 15 years, production per worker in the US textile and apparel industry has increased while the number of workers has decreased. Mechanization of production (technology) has caused these changes.
3. Explain Rivoli's statement, "textile jobs are not going to China; textile jobs are just going, period." Use the terms technology, labor productivity, China and ten in your answer.
From 1995 to 2002 China lost 10 times as many textile manufacturing jobs as the US. Not all of these jobs migrated to some country with lower production costs. Most job losses were caused by the dramatic increases in labor productivity caused by rapidly improved technology.
4. The "Own Worst Enemy" section is complicated. What is the section's basic point?
The protectionist policies (tariffs and quotas) have made US textile manufacturers less competitive because the tariffs have increased the cost of manufacturing.
5. How do quotas cause Chinese manufacturers to focus production on LL Bean polos instead of Fruit of the Loom briefs?
Instead of briefs, I should have said t-shirts. The US gave China a number (a quota) of cotton knit shirts that they could export to the US. To maximize their profit Chinese producers manufactured and exported the higher cost type of cotton knit shirt.
6. Explain how quotas force products and laborers to move. Use these terms in your answer: Esquel, globe-trotting corporations, trade barriers.
Esquel is the largest producer of t-shirts in the world. Trade barriers, like quotas, forced them to become a globe-trotting corporation. When they could not get quota for t-shirts in Hong Kong, they moved production to Malaysia and then Sri Lanka. These geographic shifts in production required that cotton, managers and, sometimes, workers had to be shipped to new locations.
Your shirt's label might be misleading.
7. Why is there a quota market? Because quotas are a fixed option that have market (albeit black market) value.
8. How does it work? Countries buy and sell each other’s quotas.
9. How does quota trading affect the price you pay for apparel? The cost of quota is added to the price of producing apparel and, therefore, you pay a higher price.
10. Does the quota system save US manufacturing jobs? Not many and at a high price.
11. What is Wal-Mart's role in the race to the bottom?
As the world's largest retailer, Wal-Mart has been able to negotiate extremely low prices from its suppliers of textiles and apparel. This has put some US manufacturers out of business it forced some Chinese manufacturers to cut costs by paying low wages and providing poor working conditions.
12. Which countries were the "(Unintended) Winners? "dozens of small developing countries" Countries like Bangladesh and Mauritius were able to develop textile and apparel manufacturing industries because the US, with its MFA, did not allow China to provide more of our textiles and apparel. What did they win? They won a sort of economic aid from the US. By limiting China we gave those small countries an incentive to become low cost manufacturers.
13. Summarize Rivoli's example of a free trade-protection controversy concerning apparel from the 17th century. Use the following terms in your summary: corpse, summer, entrepreneurial instincts, printing, wool, cotton, India, laws
Great Britain tried to protect its woolen industry by limiting imports of comfortable colorful cotton apparel from India. The British parliament created laws to protect the wool industry from competition. For example: corpses in coffins had to be dressed in wool clothing; cotton garments could be worn only in summer; and, cotton garments printed, stained or painted in India (calicoes) could not be worn. These restrictions stimulated the entrepreneurial instincts of some British citizens who developed a mechanized cotton fabric printing process.
14. What was the most significant result of the protection of the wool industry? England's Industrial Revolution, which initially was devoted to apparel manufacture.