March 13, 2005

Off The Rack

Now that WTO quotas on clothing and textiles have been eliminated, how's this free-trade thing working out for everybody?

No surprise that China is off and running with the gun.

In the first month after the end of all quotas on textiles and apparel around the world, imports to the United States from China jumped about 75 percent, according to trade figures released by the Chinese government.

As you might expect, that didn't help the U.S. trade deficit much.

U.S. Trade Deficit Hits $58.3 Billion as Chinese Imports Surge

"We view these figures as an affirmation that we're growing faster than our trading partners by as much as 2 percent and we need them to take steps so they can grow and buy our products," Rob Nichols, the spokesman for Treasury Secretary John W. Snow, said in an interview.

I guess that makes it okay, then. Too bad the folks running up credit card bills can't explain away their debts the same way.

And if the indebted Americans thought they're in real trouble, the African textile factories are getting hit by both the lowered trade barriers and the the falling dollar (not to mention the yuan, due to the artificial peg on the Chinese currency). It doesn't help that the African currencies are pegged to the South African Rand, which has appreciated relative to the USD along with the commodities prices.

In places like Lesotho, a nation of 1.8 million that is already wrestling with AIDS and drought, the news is perhaps most wrenching. Lesotho's garment industry - and therefore its manufacturing base - rests on the faltering premise that Americans will buy all the clothes that it can sew.

Yeah, relying on the charity of American capitalism does not make sound economic policy. Interesting how many of the African garment factories were set up by Taiwan companies. And I thought it was tough to find people willing to station themselves in Shenzhen, but Lesotho? I doubt there are any karaoke bars in Lesotho. Posted by mikewang on 06:45 PM