Determinants of U.S. Textile and Apparel Import Trade

Consequently, U.S. importers of textile and apparel products have increased their imports over
time (see Figure 1). The major sources of textile imports for the U.S. are China, Pakistan, India,
Mexico, Taiwan, South Korea, Thailand, Indonesia, Japan, Hong Kong, Philippines, Canada, and
Sri Lanka (U.S. International Trade Administration).

According to Ikenson (2005), the time has come for the Bush administration to cut the
textile industry lobby’s cord. For years, the industry has been a thorn in the side of policymakers
attempting to do the right thing by liberalizing trade. Trade agreements and other trade
liberalizing initiatives have had to be abandoned, curtailed, or saddled with red tape to
accommodate the industry’s unwillingness to compete. Meanwhile, the industry complex has
used threats and extortions to achieve its objective of protectionism, often saddling consumers
with stealth taxes, and dragging down market prospects for other industries.

Trade flows are generally determined on the basis of the principle of comparative
advantage in a free trade system (Salvatore, 2004; Koo and Karemera, 1991). Since trade flows
of cotton and textiles have been distorted by government interventions, determinants of trade
flows of textile and apparel and their economic effects are not clearly understood. Accordingly,
the objectives of this study are to evaluate factors explaining the pattern of textile and apparel
imports into the U.S. from key trading partners and to derive implications from such textile and
apparel trade. The rest of the paper is organized as follows: in the first section, we provide a
theoretical justification for using the gravity model in determining trade flows of textiles and
apparel. In the second section, we derive the reduced form of the gravity model. In the third
section, we provide information on data sources and estimation procedure. The fourth section
presents the results and the fifth section offers concluding remarks.

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