A surge in Chinese imports occurred when the 30-year-old Multi-Fibre Agreement (MFA), which placed quotas limiting textile imports to the United States, was finally abolished in January. Since then, textile and apparel imports from China rose 39 per cent from their December levels.
Unfortunately, the Bush administration announced plans for an early warning system to monitor Chinese textile imports along with possible safeguard quotas.
But restrictions will have negative consequences for the U.S. economy, says Benjamin Powell, Director of the Centre on Entrepreneurial Innovation at the Independent Institute:
Despite claims by special interest groups, restrictions on textiles will not impact the total number of jobs in the United States. Total U.S. employment is a function of the size of the labour force, not trade policies, explains Powell.
Besides, consumers are already beginning to reap the benefits of free trade and potential benefits are even greater. Since the end of the MFA, the overall consumer price index increased three per cent over the last 12 months, but:
Instead of pandering to textile interest groups, the Administration should make a serious commitment to free trade, says Powell.
Source: Benjamin Powell, Bush League Trade Policy Independent Institute, April 4, 2005.
For text: http://www.independent.org/newsroom/article.asp?id=1488
For more on Benefits of Trade: http://www.ncpa.org/iss/tra/
FMF Policy Bulletin/ 03 May 2005
