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What was LTA about?

LTA included provisions for government to follow if they claimed market disruption. LTA limited volume growth of imports to 5% per year for most common textile products. Still focused on cotton products.


What is GATT?
ch 10

General agreements of tariffs & trade, the first multilateral trade agreement


If the stages of development in the textile complex are discussed, what are the 6 different developing stages? And what are the characteristics of each stage and what are the examples?


A. The embryonic stage
1. cottage production
2. domestic consumption
3. hand production natural fibers
4. export cotton fibers
Ex. Africa, South America
B . Early export of apparel
1. component assembly, ethnic clothing
2. cheap prices
3. unpredictable quality
Ex. Developing (blue) Pakistan, Bangladesh
C. More advanced production of fabric and apparel
1. fabric/apparel
2. increased improved products
3. fabric export
4. fiber production
5. increased/upgraded apparel
6. foreign investment
Ex. Developing- China, Mexico, India, ASEAN countries
D. The "golden age" stage
1. increased size manufacture
2. large trade surplus
3. more international trade
4. production is too expensive in domestic country
5. shift to other countries
Ex. NIC countries- Taiwan, Hong Kong, Korea
E . Full maturity
1. Increase of consumption
2. diversity of clothing, fiber
Ex. US, Canada, Australia
F. Significant decline
1. # of firms, # of workers
2. huge deficit
3. offshore production
4. European countries- Italy


What was STA about?

Restrictions on 64 categories of cotton textiles to avoid market disruption until a more permanent mechanism could be developed.


What is MFA?

Multifiber Arrangement


What is the primary goal of GATT?
ch 10

To liberalize trade to free trade from the web of restraint that had evolved


What is LTA?

Long Term Agreement


What are the reflections on the MFA?

- Removal of a sector of trade from GATT rules providing special trade rules for T&C
- Discrimination was permitted. Because it permits import controls, permits countries to regulate trade on a country by country basis
- Quotas were permitted


What is WTO? What is WTO about?

- 2005, textile trade started to comply with trade rules for all other sectors
- Free trade among all countries
- No quotas are allowed
- MFA phased-out and GATT was replaced by WTO


What is STA?

Short Term Arrangements


What is the global pattern of textile production? What is the global pattern of apparel production?
CH 6

Global Patterns of Production
*Textile Production (capital)
-Developed countries production grow slowly or stay same or decline
-Developing countries and NICSs share doubled
*Apparel Production (Labor intensive)
-Developed countries produce same amount
-Developing countries and NIC shares tripled


What is the global pattern of textile trade? What is the global pattern of apparel trade?

. Trade in apparel
1. Patterns of trade: the shift of apparel trade is more dramatic than in textile
a. Developed countries
1. exports decrease, imports increase
2. exports of developed countries
a. 1955 to 71%
b. 1992: 39%
b. Developing countries
1. imports decrease, exports increase
2. Leading apparel exporters: HK, China, Italy, Germany, korea
3. Leading apparel importers: US, Germany, Japan, HK, France


What is the overview of U.S. fiber industry? What is the overview of U.S. textile components and products industries?

The US textile industry
-The fiber industry
-Natural fibers
-2nd largest producer
-Exports to Japan, South Korea, other Pacific Rim
*Manufactured fibers
*Leading world producer (US)
*Capital & technology intensive
*15 large multinational corporations
top 10 account for more than 90% of US production (dominated by 10 US companies)
#The textile components and products industries – textile mill products
#Decreasing number of business
#Increased productivity
#1973 – 1 million
#1993 – 593,000
@Fiber industry
@Exports – increased
@1972 – less than $200 million
@1992 - $1.7 billion (cotton & manmade fibers)
@US share of market decreasing
@1979 – 33%
@1991 – 18%
$Textile mill products
$Focus on domestic need
$Early 1980’s – 97%
$1993 – 93%
$1989 - $2.8 billion
$1993 - $4.7 billion
$Exports to Canada, Mexico, W. Europe
$31% of US imports are from NICs
$26% from European Union


Why did MFA start?

With inventions and developments of manufactured fibers, many exporting countries shifted to the uncontrolled manufactured fiber product areas.


What is Market Disruption?

To export products to a market with a price lower than the cost in that market.


Why did STA start?

Because GATT couldn’t take care of textiles so part of textiles trade policy needed to be separated from GATT.


What is transshipment?

Rerouting products through a country other than where they were produced in order to take advantage of unused quotas.
Transhipment: rerouting products through a country other than where they were produced in order to take advantage of unused quotes
b. More restrictive which covered previously uncontrolled fibers: ramie, silk, and flax


What is the global pattern of employment in the textile industry? What is the global pattern of employment in the apparel industry?
ch 6

1.Developed countries- 30% less people employed
1953-1963 decrease with higher decreasing rate
1973-1987 decrease with higher decreasing rate
Developing countries: 40% more people employed
1953-1963 Increase
1963 to 173 increase with higher increasing rate
1973 to 1987 increase with lower increasing rate
Apparel: bigger shift in apparel than in textiles

1954-1963 increase
1963-1973 increase with lower increasing rate
1973-1987 decrease
Developing countries
1953-1963 increase
1963-1973 increase with higher increase rate
1973 to 1987 increase with higher increase rate


What are the key points in the global pattern of production and employment?

A.Key points in production and employment
1.Textile and apparel industries are growing but less now than ever before
2.Production is shifting from developed countries to developing countries.
3.Employment is shifting from developed countries to developing countries
4.Changes toward developing countries are larger in apparel than in textiles due to characters of apparel industry and textile industry


What are the basic principles of GATT?
ch 10

Trade without discrimination, protection through tariffs is allowed, quantitative restrictions on imports were prohibited-quota, a stable basis for trade


Under MFA, there are MFA I, MFA II, MFA III, and MFA IV. What are the important changes each of them made?

MFA I: (1974-1977) Around 50 countries involved; covered products made manufactured fibers and wool- extending beyond the provisions for cotton in STA & LTA; bilateral agreements

MFA II: (1977-1981) further reduced textiles and apparel imports in both US and EU markets

MFA III: (1981-1986) Restrains under MFA III were more extensive and more restrictive than before.

MFA IV: (1986-1961) Transshipment


When economy and trade are discussed, what do scarcity and choice mean?

Scarcity and choice-1.no society can provide everything its people want ,2.Resources of time ,labor,machinery, and land are scarce. 3. We choose between competing demands on resources( friends party on saturday, or study for 2 midterms coming up the following week)


How to understand the theory of absolute advantage? Who developed it? What might be the limitations of this theory?



What are developed countries, developing countries, and newly industrialized countries?

Developed countries- the more industrially advanced and prosperous countries in which a higher level of living is common . Developing countries- limited in their economic progress and have little or no industrial development. Newly industrialized countries (NICs)- former developing countries, then have progressed to more advanced levels of economic and industrial development.


Why is it necessary to view textile and apparel from a global perspective?

-Globalization of fashion- ex.gucci; originally from Italy. Stores in New York, Hong Kong, Tokyo, Miami+ other countries.
-24- Hour Fashion- very common to imitate couture looks. Merchandise can be made, and sent to sell in 24 hours. Its getting bigger and faster and keeps moving ahead always. quick response.
-The largest source of industrial employment in the world; (textile mills, factories) - not true in the United States. Have to look at the world. Other countries (china, Vietnam, and india it could be the main income for most people in those countries, some towns everyone works in the factories)


What are the three zones of development?

a. First-World Core
1. international upper class
2. dominant world
3. 15% of world populations
4. 80% of money
b. Second-World Semiperiphery
1. International middle class


What are the laws of supply and demand? What is equilibrium price?

1.Law of Supply a. a general statement about how producers adjust the quantity of goods or services available in relation to incentives (price b. When the reward offered for a specific product rises, this reward provides an incentive to produce more of the products. 2. Law of Demand a. a general statement about how individuals respond to changes in price.b. rising prices for a product usually cause a drop in demand 3. Equilibrium Price a. the price at which the quantity demanded equals the quantity supplied.

(The law of supply and demand defines the effect that the availability of a particular product and the desire (or demand) for that product has on price. Generally, if there is a low supply and a high demand, the price will be high. In contrast, the greater the supply and the lower the demand, the lower the price will be.)


What are imports and exports?

Imports- buying goods and services from other countries Exports- selling goods and service to other countries
*Developing countries tend to export more than developed countries because of cheap labor.


When can voluntary exchange happen?

1. In a voluntary exchange, that is, buying and selling of goods and services - both parties must feel they are benefitting 2. Both parties are pursuing their own best interests and believe they will be better off as a result of the trade.


How to read a journal article?

1. Basic Structure
A. Abstract (If I have 2 minutes read abstract)
B. Introduction
C. Literature Review (hypothesis development)
D. Method (Data Collection)
E. Results (Data Analysis)
F. Conclusions & Discussion
G. Implications and Limitations
H. References
2. Introduction
A. Basic Background
B. Why is the study important?
C. Will this study fulfill any gap?
D. The purpose of the study (2 pages right side)
E. The objective of this study (Right below purpose
F. The basic structure of this study (article)
3. Literature Review (Hypotheses Development)
A. Concepts/Terms
B. Theories/Framework/Models
C. Previous studies and research on the similar topics and issues
1. grouping and categorizing those studies
2. Finding problems or limitations, then…….
D. Developing hypotheses/proposition (look for capital H)
4. Method (Data Collection)
A. Quantitative
1. Survey (questionnaire) 2. Experiment
B. Quantitative
1. Interview 2. Observation
5. results (data analysis)
A. Hypotheses testing
B. Whether each individual hypothesis is supported or not.
6. Conclusions & Discussions
A. Summary of the results - Conclusions (if I have 5 minutes look @ 1st paragraph of Conclusion and Discussion)
B. Discussion on
1. If the hypotheses are not supported, why?
2. If the findings are not consistent with those from previous studies, why?
3. Whether all the objectives are fulfilled
7. Implications and LImitations
A. Summary of the results - Conclusions
B. Discussion on
1. If the hypotheses are not supported, why?
2. If the findings are not consistent with those from previous studies, why?