Thursday, 5 January 2006 - 4:00 PM

CAFTA-US Textile and Cotton Trade Prospects: The China Effect

Georgia Clark1, Jaime Malaga1, and Justin Baker2. (1) Texas Tech University, Box 42132, Lubbock, TX 79409, (2) Texas A&M University, 2124 TAMU, College Station, TX 77843-2124

Free trade agreements with the US have resulted in significant changes in the textile and cotton industries. Over a third of the textile industry has already left the U.S. in the past five years, claiming that competition with other countries is making it impossible for US textile mills to remain profitable. Just in August, the US made an agreement with CAFTA that will affect the cotton and textile industries by benefiting them with free trade. By signing the agreement, the US gains through exports of cotton to CAFTA countries and CAFTA countries gain through exports of textile and apparel commodities to the US. But, China's textile and apparel exports to the US have grown rapidly in just the past year, despite US quotas limiting Chinese imports of items such as cotton trousers, shirts, and underwear. These factors, combined with the lifting of quotas previously held on Chinese textile imports in the US, are greatly changing the textile industry worldwide. CAFTA may no longer be able to compete with certain Chinese textile and apparel categories for the US market share. The US cotton export demand will be affected by CAFTA's textile and apparel exports, and CAFTA's textile and apparel exports will be affected by competing Chinese industries. By analyzing the current US quota import status, prospects of disaggregated textile and apparel categories will be estimated for CAFTA countries.

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