Flashcards in FACS 139 MIDTERM 2 Deck (21)
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
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 is the global pattern of textile production? What is the global pattern of apparel production?
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 employment in the textile industry? What is the global pattern of employment in the apparel industry?
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
1963 to 173 increase with higher increasing rate
1973 to 1987 increase with lower increasing rate
Apparel: bigger shift in apparel than in textiles
1963-1973 increase with lower increasing rate
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 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 GATT?
General agreements of tariffs & trade, the first multilateral trade agreement
What is the primary goal of GATT?
To liberalize trade to free trade from the web of restraint that had evolved
What are the basic principles of GATT?
Trade without discrimination, protection through tariffs is allowed, quantitative restrictions on imports were prohibited-quota, a stable basis for trade
What is STA?
Short Term Arrangements
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 was STA about?
Restrictions on 64 categories of cotton textiles to avoid market disruption until a more permanent mechanism could be developed.
What is Market Disruption?
To export products to a market with a price lower than the cost in that market.
What is LTA?
Long Term Agreement
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 MFA?
Why did MFA start?
With inventions and developments of manufactured fibers, many exporting countries shifted to the uncontrolled manufactured fiber product areas.
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
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 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