Life after Quotas? Early Signs of the New Era in Trade of Textiles and Clothing

On January 1, 2005, the system of quotas that had regulated imports oftextiles and clothing into rich countries for 30 years was finally dismantled.1That step came despite a last-gasp attempt by certain importing countries, in alliance with a number of developing countries that had benefited from the system’s restrictions on China and other Asian countries, to delay the reform. In liberalizing the most protected manufacturing sector, the expiration of the quota system completed a major achievement of the Uruguay Round of multilateral trade negotiations concluded 10 years earlier.2 Textiles and clothing remain subject to relatively high tariff barriers in both developed and developing countries, and certain developing countries, notably the least developed (LDCs), still receive significant tariff preferences in developed-country markets. Much has been written about the likely impact of the reforms and the fear that markets will become swamped by Chinese products, with adverse implications for other developing-country producers that export to the developed countries. This note takes a first look at the initial impact of the changes and discusses what they suggest for developing-country strategies in textiles and clothing. The development significance of exports of textiles and clothin