COMPARISON OF PRC AND VIETNAM'S RESPONSES TO THE ELIMINATION OF US TEXTILE AND APPAREL QUOTAS: ECONOMIC AND CULTURAL PERSPECTIVES

International trade in textiles and apparel has, as of January 1, 2005, been set free from the very intricate Multi-Fibertextile and apparel quota Arrangement (l\I1F A). This event has raised many uncertainties about the new international trade climate and has placed enormous pressure on Olina as the expected clear cut beneficiary of this hberalization. ' Other countries considered to be major contenders include Vietnam which also has a large population employed in the textile and apparel (T&A) sector. Since the old quota system had provided a certain degree of market certainty to competing T&A producers, will the new free trade environment lead to a shake out where mass producers with large economies of scale dominate the new reality? The removal of T&A quotas will create opportunities for Vietnam and Olina along with other developing countries, but it will also expose them to additional competition from each other. The outcome of this competition will depend on the demand in the US, the ability of the exporting countries to differentiate their exports and on their ability to transfer additional resources to expand domestic output in the direction of the new 'free market signals ' and away from rent seeking objectives. Obviously, exporting countries that adjust to this new environment quickly will improve 1 Ollna is currently the major exporter of apparel products. In 2000, it accounted for roughly 18 % of total world trade i