Massive garments job losses seen in 2004

When quotas on baby clothes and soft luggage ended last year, BusinessWeek reports, China’s exports of baby clothes to the US leaped 826 percent, and its soft luggage shipments rose fivefold. "In Thailand, the Philippines, Indonesia, and Mexico, production of those products dropped by half. In the Dominican Republic, luggage exports plummeted by 70 percent, to $8.2 million."

The worse is still to come, BusinessWeek predicts, as the US and Europe are set to remove by next year, a 30-year-old regime of strict import quotas on clothing and textiles. "From the Dominican Republic to Bangladesh, some 30 million workers in dozens of developing countries could see their jobs suddenly evaporate."

China is a major threat. So are India and Pakistan. Once the quotas are lifted, BusinessWeek points out, a handful of countries – most notably China – are expected to quickly dominate the clothing industry worldwide, using their low wages, modern factories, and good infrastructure to put everyone else out of business.

Yet, China asserts that it is also still a developing country in need of labor-intensive jobs just like everyone else. Besides, China and also India and Pakistan, point out that they have done their homework in terms of preparing their garments industry to compete in a global environment. They have upgraded factories, trained manpower and improved overall productivity to a fine degree. Why shouldn’t they be now allowed to reap their just rewards?

Under a 1974 global pact called the Multi-Fiber Arrangement (MFA), 47 nations each gets a share of the European and US markets for clothing and textiles. The original idea of the quotas was to afford some protection to the declining textile industries of the developed countries. But it had the possibly unintended consequence of some poor countries becoming hopelessly dependent on it.

In 1995, the US and Europe agreed to begin phasing out their quotas on clothing and textiles as part of the deal that created the World Trade Organization. Of the 140 categories of clothing covered by the MFA, quotas on about 50 less contentious categories have already been eliminated. By Jan. 1, 2005, the quotas are scheduled to completely disappear, though most products will still face import duties of 16 percent in the US and 18 percent in the European Union.

The developing nations enjoying the quotas now have to go cold turkey. "In December 2001, after 13 years of negotiations, China joined the WTO. Now, as a member of the global trading club, China will be able to compete on an equal footing to sew blazers, blouses, and bedspreads for the fashion-conscious consumers of Europe and America. The grand prize: $500 billion in global garment trade. China’s weight is likely to be felt far beyond its borders."

BusinessWeek estimates "apparel industry workers in China earn an average of $73 per month, compared with $75 in Indonesia, $102 in the Dominican Republic, and $300 in Honduras." China has the added advantage of trading companies in Taiwan and Hong Kong that enables it "to quickly deliver its goods to stores thousands of miles from its shores. Last year, China’s exports amounted to 17 percent of the global clothing market."

BusinessWeek cites World Bank estimates that once all quotas are lifted, China’s share is expected to quickly jump to 45 percent. "China now sells the US $6.5 billion of its $60 billion in apparel and textile imports. The number may hit $40 billion by 2010, the World Bank says." No wonder even America’s domestic garments industry is crying foul, leading to the recent imposition of safeguard tariffs.

In conversations I have had with our local garments industry leaders, they have told me that they have actually started to feel the pinch. Prices have reportedly started to fall on items that went off quota last year. Massive jobs loss has started to happen in the Philippines. We are simply not as productive and the cost of our labor not as competitive as China.

I wonder why Ate Glo, who started her government career as an executive of the garments board, has so far said and done nothing about it. In fact, it is an Asean concern that should have been tackled in summit meetings and in dialogues they constantly have with the US, Europe and China.

The phaseout of the quotas has the potential of destabilizing the already politically volatile Indonesia and the Southeast Asian region where over a million jobs are at stake. The country desk officer of the AFL-CIO in Indonesia told BusinessWeek he thinks "the huge layoffs are going to come in 2004."

The stark reality as BusinessWeek puts it, is "the phaseout of quotas creates a Darwinian survival of the fittest – or, as critics of globalization would have it, a race to the bottom, where wages and benefits are certain to be sacrificed in a frantic effort to retain market share."

The really unfortunate thing is, our garments workers are about to be made extinct, yet our leaders are doing nothing but wait for the unfortunate day to happen.

Wow Bohol

I just got this e-mail from reader Florentina Garcia of Dumaguete City.

"Re your article in The Philippine STAR, Oct. 29, 2003, Too Much WOW in WOW Philippines: I stayed at Bohol Beach Club sometime last September, and found the same problems you described, in a cheaper room. I didn’t know any better, or didn’t really care, as our group was there to dive, and not to be WOWed.

"I was surprised to read that the more expensive rooms were in the same conditions. Yes, if I had paid a lot more for my room, I’d want something nicer, not just a bigger room."

Oh well… my question is, how come our tourism officials do not have a program to warn tourists of resorts like this? How come Bohol’s local officials are not doing anything to protect the island’s good name and tourism potential by imposing strict standards? Dick Gordon’s brave words to promote local tourism end up sounding like nothing more than hot air.

As usual, our officials are, as we used to say when we were cub reporters at the police beat, natutulog sa pansitan.

Txt Msg

Got this on my cell phone.

Bakit sa ‘pinas kung mag-aaply ka ng clerk kailangan college graduate ka. Pero kung mag-aaply ka ng Presidente ng republika, high school drpout ok na.

Real Thing

Two older women, Coleen and Melinda, who were rivals in a social circle, met at a Christmas party at their country club.

"My dear," said Melinda, "Are those real pearls?"

"They are," replied Coleen.

"Of course the only way I could tell would be for me to bite them," smiled Melinda.

Coleen responded, "Yes, but for that you would need real teeth."

Boo Chanco’s e-mail address is [email protected]