textiles and apparel efficiently are able to stimulate greater trade with the U.S. Consistent with
theory, a country’s depreciating exchange rate as well as relatively cheaper prices to that of the
U.S., also play an important role in determining textiles and apparel trade flows to the U.S.
market. Although the aggregate nature of the variables used in the gravity model for this study
does not allow a measure of the relative costs of inputs in the textiles and apparel production
such as labor, nevertheless, we are able to conclude from the results of relative prices that so
long as textile and apparel products are perceived as cheaper abroad, U.S. importers will
continue to purchase from abroad and global producers will find it profitable to sell their
products in the U.S. market. Certainly, it appears that strong competition among exporting
countries makes trade flows more sensitive to price changes, overcoming the existence of trade
restraining policies such as the MFA imposed by the GATT and renewed under the ATC with
the advent of the WTO in 1995. In fact, the abrogation of the ATC in January 2005 is expected
to pave the way for even greater access to the U.S. market of textiles and apparel products from
leading global producers, such as China. This must be a source of major concern to U.S. textiles
and apparel producers and the communities in which they are located. Additional job losses in
the future would threaten the economic viability of many rural communities in the South where
textiles firms are mainly located.
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