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Price Dynamics in the US Market for Apparel Imports: Impact of Quota Elimination under the Agreement on Textiles and Clothing and Safeguard Restrictions on the People's Republic of China

Author

Listed:
  • James, William

    (Asian Development Bank)

  • Hernando, Juan Paolo

    (Asian Development Bank)

Abstract

This paper evaluates the impact of the removal of quotas on unit prices of clothing imports from various suppliers into the second largest global market for clothing imports, the United States (US). New quota restrictions over 26 categories of clothing were introduced on 1 January 2006 and will be in place through 31 December 2008. The paper examines the impact of these new restrictions on price movements in 2006 and the first three quarters of 2007. The dynamics of change in unit prices for 26 major groups of suppliers in the US market are indicative of the adverse effects that quantitative restrictions have on US consumers. However, the restrictions have benefited other Asian clothing suppliers. The paper also examines the strategic response to elimination of quotas under the Agreement on Textiles and Clothing by the US using preferential trade agreements to carve out a captive market for US textile intermediate products through large preferential margins in applied tariffs and rules of origin. The outlook for future price developments is assessed and conclusions regarding options for developing Asian suppliers to maintain their ability to compete in the US market are briefly considered.

Suggested Citation

  • James, William & Hernando, Juan Paolo, 2008. "Price Dynamics in the US Market for Apparel Imports: Impact of Quota Elimination under the Agreement on Textiles and Clothing and Safeguard Restrictions on the People's Republic of China," ADB Economics Working Paper Series 114, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0114
    as

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    References listed on IDEAS

    as
    1. Markusen, James R. & Melvin, James R. & Maskus, Keith E. & Kaempfer, William, 1995. "International trade: theory and evidence," MPRA Paper 21989, University Library of Munich, Germany.
    2. Tewari Meenu, 2006. "Is Price and Cost Competitiveness Enough for Apparel Firms to Gain Market Share in the World after Quotas? A Review," Global Economy Journal, De Gruyter, vol. 6(4), pages 1-48, November.
    3. Aaditya Mattoo & Devesh Roy & Arvind Subramanian, 2003. "The Africa Growth and Opportunity Act and its Rules of Origin: Generosity Undermined?," The World Economy, Wiley Blackwell, vol. 26(6), pages 829-851, June.
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    More about this item

    Keywords

    clothing imports; quotas; strategic response; textile intermediate products; United States;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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