Free Trade Hurts By Paul Magnusson in Washington
The chosen article tells about forthcoming cancellation of import quotas on clothing and textiles for the countries which are members of WTO initiated by the U. S. and Europe. The authors state that “Once the quotas are lifted, 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”.
The article presents possible advantages and disadvantages for the main world producers of clothing caused by this elimination of quotas as well as the impact of the fact that China has also become a member of the WTO and “now, as a member of the global trading club, China will be able to compete on an equal footing”. The Heckscher-Ohlin model of trade and competitive tariff let us undestand that the elimination of these quotas should do good for the countries delivering clothing and textiles but the sad fact is that this could be good if China as the main competitor could not take advantage of this.
But the current situation is different now and thus the countries would rather vote against this elimination in order to keep at least their market shares and not let China conquer new markets. It is a known fact that “China has so many advantages that its rise seems inevitable. “Take anything — garments or textiles — and people will say, ‘Sorry, China is cheaper than anywhere else””. It is clear that there will be those who win and those who lose in this situation. It is the matter of loss of gain amount only. This article is from Business Week.