SOMO Bulletin on Issues in Garments & Textiles
Number 5, April 2004

Find the last bulletin on issues in Garment and Textiles. As this is a double issue, and quite long, for your convenience we have left out the boxes with additional information, as well as references and further reading. For a complete version of the bulleting have a look at www.somo.nl

The SOMO Bulletin on Issues in Garments & Textiles is a bi-monthly on-line publication of the Centre for Research on Multinational Corporations (SOMO) that presents critical issues of interest to those working to improve conditions and empower workers in the global garment and textile industries. Each edition of the bulletin focuses on one specific topic. Unless otherwise indicated, information presented is drawn from SOMO research. All editions of the bulletin can be found at the SOMO and Clean Clothes Campaign websites. Content of the bulletin may be freely reproduced or distributed, with appropriate attribution.

The Multifiber Arrangement (MFA), sometimes referred to as the Multifiber Agreement, is a trade agreement adopted in 1973 by the United States, Canada, and Europe that set quotas for the amount of textiles and apparel that other countries could export to these countries. The MFA, which came into force in 1974, was seen as a protectionist measure intended to prevent the loss of textile and garment industry jobs in the US, Canada, and the EU to countries, mainly developing countries, where such goods could be more cheaply produced. It was first seen as a temporary measure, but was extended five times (Hyvärinen, 2000). However, by the end of this year, following a 10-year phase-out program governed by another agreement, the Agreement on Textile and Clothing (ATC), that came into force along with the World Trade Organization (WTO) agreement in 1995, the MFA system will come to an end. This means that in 2005, all WTO members will have unrestricted access to the European, US, and Canadian markets.

The MFA has shaped the pattern of production in garment and textiles for the past three decades by binding countries to maximum quotas of export for specific product categories. Because of the important role the MFA has played in structuring international trade in garments and textiles, the phase-out of this agreement and its system of quotas is important to consider. This Bulletin presents information on the different concerns and predictions currently being voiced in relation to the phase-out of the MFA quota system. Labor rights advocates have voiced opinions on how the phase-out and its impacts should be dealt with in order to safeguard the rights of workers, who are sure to be impacted by the changes. These ideas are also presented below.

In this context quotas refer to the limits put on the amount of different categories of garments (ex. knitted T-shirts, sweaters, gloves) and textiles (ex. knitted fabric, acrylic yarn, cotton fabric) that can be exported to the US, Canada, and the European Union (EU). Under the MFA system garment and textile-producing countries were assigned a maximum quantity that they could legally export to the US, Canada, and EU during a particular time frame. The quotas set by the MFA differed per country and per product. The allocation of quotas was generally based on historical export levels (Appelbaum, 2003:6).

In practice, the quota system was an important factor in helping to distribute garment production throughout the world: as some garment-producing countries reached their quota limit, companies looking to outsource production for the US, Canadian, or European markets would place their orders with suppliers in other countries that had not yet exceeded their quota allocation. In this way sourcing “followed” quota.

“Fifty percent of every sourcing decision today is a function of quotas,” remarked Paul Charron, chairman and CEO of US garment company Liz Claiborne (Malone 2004).

The MFA helped create garment industries in some countries where such sectors probably would not have emerged on their own, simply because these countries had available quota. In such cases, in 2005 with the lure of these quotas gone, the sustainability of these industries comes into question.

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Meanwhile, countries that were constrained by quotas (such as Hong Kong, Taiwan, South Korea, who were formally big apparel exporters) moved into higher value-added activities (Appelbaum, 2003:10).

Some developing country governments felt that the quota system should be abolished because it prevented them from having greater access to the lucrative North American and European markets and thus hindered growth in their countries.

“…Many countries in the South sought an end to the MFA as they saw it as operating primarily in the interests of the industrialized countries domestic textile and garment sectors,” according to Transnationals Information Exchange (TIE)-Asia (Choudry, 2002).

The MFA, in a way provided a certain level of stability: countries could be reasonably sure of a certain level of quota, and thereby of orders, jobs, and foreign exchange. Now that quotas are set to be eliminated there is concern, including from those who once opposed them, that the change will create uncertainty and negatively impact industries that experienced growth during the past three decades.

Quotas also had an impact on how the textile and garment industries in certain countries developed. Countries which had a potential to develop an integrated sector, for example the Philippines, abandoned the development of cotton production and of their textile industry because under the MFA it was more profitable to use imported textiles to fulfill their garment product quota.

Methods to circumvent quotas emerged during the MFA period, notably practices such as the altering of “made in” labels, the transshipment from the producer country to a second country from which the products were finally exported, or the falsification of documents.

Quotas came along with a cost factor. In garment or textile-exporting countries the government would sometimes “sell quota” to brokers or factories (Foo & Bas, 2003: 3). For example, Women’s Wear Daily, the periodical of the US garment industry, reported that “quota rights are traded as a commodity in China, and the government and some private companies are believed to be making money by selling the right to export” (Malone, 2003). In Indonesia, Bambang Sujagad, the chairman of the investment division of the Indonesian chamber of commerce, noted that there has been a black market business in selling quota and those who do not even have a factory have been able to secure some quota and then sell it to other companies (Fauzan et al, 2004: 62).

In this sense, industry watcher David Birnbaum characterizes quotas as a “form of corruption.”

“The quota premiums seldom go to those directly involved in the production process but rather to parasites such as those who are politically connected,” he writes (2004).

William Fung, managing director of Li & Fung Ltd., the Hong Kong-based trading group that specializes in garments and footwear, believes that the price of imported apparel will drop once quotas are eliminated because they have been traded as commodities in most nations. What is not clear is exactly how much of a garment’s price results from the purchase of quota rights because, as Fung notes, this can vary widely depending on the country, the product category and the time of the year, noting that prices usually increase at the end of the year when there is less quota available. Some put the cost at half the landed cost of a garment. Fung estimates that on average 15 percent of the cost of garments in the United States is due to the cost of quota rights (Malone, 2004).

In January 1995 the World Trade Organization (WTO) put into effect a new agreement that replaced the MFA called the Agreement on Textiles and Clothing (ATC). This was basically a 10-year plan to phase-out the MFA system of quotas and integrate textiles and garments into the General Agreement on Tariffs and Trade (GATT) rules. The ATC, which was preceded by seven years of complex negotiations, is the transitional tool that facilitates quota removal (Hyvärinen, 2000).

The ATC phase-out plan, which will have run its course by December 31, 2004, involved four phases. The final two phases (phase three running from 2002 –2004, involving 18% of quotas; and phase four which eliminates 49% of quotas by 2005) are the ones expected to have the most impact as they apply to products that are most strongly restricted by quotas (167 quotas maintained by the EU, 239 quotas for Canada and 701 quotas maintained by the US) (Appelbaum, 2003:9; De Coster, 2003). When quota restrictions are gone the products they applied to will be subject to the WTO’s regular rules of world trade.

Some industry-watchers have looked to the earlier years of the phase-out process to draw conclusions about what is to come. The lifting of MFA quotas has already had a negative impact on the Philippine garment industry, writes Roselinda Pineda Ofreneo (2002: 92-93), who attributes this to the mediocre quality of the goods by world standards and notes that Philippine suppliers are only used as secondary sources. In the baby apparel category, where quotas have already been eliminated, the share of US imports has already declined (Just-style.com, 2004c).

Meanwhile, in China the growth of exports in categories that have already been freed up of quota restrictions feeds into predictions that China will do well in the post-MFA order. For example, since quotas on luggage made from man-made fibers were dropped in 2001 China’s market share in that category has risen from 13 percent to 62 percent, reports Ira Kalish, global director of Deloitte Research (Malone, 2004). After the lifting of quotas on brassieres, China’s exports into the U.S. rose 232%. After the removal of quotas on baby clothes, China’s exports surged 826% while those from Bangladesh and the Philippines fell 18% and 17% (US ITC in Foo and Bas, 2003: 4).

The big question that everyone with an interest in garments and textiles -- from labor rights campaigners to industry representatives to government officials -- is currently asking is “what will happen after the MFA phase-out?”

There is no clear consensus on what the post-MFA order will be. Some industry-watchers decline to predict who will be the “winners” or “losers” once the quotas are phased-out. Others make bold statements on who will come out on top. Some studies offer contradictory predictions on the future of garments and textiles per country (as noted by University of California’s Richard Appelbaum in his survey of some 50 studies and reports on the subject (2003: 39). Serious concerns have been raised about the impact on national economies and workers, while others criticize these views as being “scare tactics.”

Industry experts also note that even though quotas will soon be gone, that does not mean that the regulatory framework governing the trade in garments and textiles is going to get any simpler or that there will not be other barriers to trade. UK industry consultant Mike Flanagan of Clothesource Sourcing Intelligence believes that trading apparel is going to become a lot more difficult, because the GSP system is still up in the air (it was to be renegotiated at the WTO meeting in Cancun in September, but was not), countries that remain outside of the WTO (current examples are Russia and Vietnam) will still be subject to quotas, and duty rates continue to fluctuate (ex. EU duties on Indian bed linen) (Flanagan, 2004). Bilateral and multilateral trade agreements and incentives used to lure investment are other significant factors that will continue to shape trade in these sectors.

Clearly, countries make use of and are directly impacted by quotas. So when the removal of these quotas is discussed, thoroughly considering the impact will mean taking into consideration the different position of each particular country vis-à-vis this system of restrictions and other factors.

In his useful overview on the impact of the MFA phase out and the voluminous literature generated around post-MFA predictions, Appelbaum notes that “countries which are most threatened by MFA phase-out suffer from a common set of interlocking problems at the level of production. Their industries are inefficient, with low productivity and poor quality. They often rely exclusively on a single market (the US or the EU), specializing in a handful of product lines, rather than providing product diversity. They typically lack both backward linkages to indigenous textile industries, and forward linkages to markets, engaging in simple assembly work at the bottom of the value chain” (2003: 48-49).

Countries that have most of their apparel exports in categories that have been highly constrained by quota (those covered by the last two phases of the phase-out) are expected to be in trouble when those restrictions are gone; countries such as Lesotho, Haiti, Jamaica, Honduras, El Salvador, Kenya, and Nicaragua (Hillman in Appelbaum, 2003: 29).

Those developing countries that are expected to benefit from the phase-out of quotas are “those that possess a strong and a diversified mix of textile and apparel products, engage in full package production, produce high-quality, high value-added products, and possess diverse markets outside the US and EU” (Appelbaum, 2003: 29). While in the days of quota, apparel-producing countries that did not have backward linkages into textiles or cotton for example could compete, after this year they will be at a disadvantage when up against countries that can more easily satisfy the terms of trade agreements (for example on such points as rules of origin).

A United States International Trade Commission (USITC) report assessing the competitiveness of foreign suppliers to the U.S. market after the phase-out (based on interviews with representatives of U.S. apparel and textile companies, US retailers, foreign textile and apparel producers, investors and public officials) generally predicted increased sourcing from East Asia and South Asia, with declines in sourcing generally predicted for the Association of Southeast Asian Nations (ASEAN), the Caribbean Basin Economic Recovery Act (CBERA), Andean (Ecuador, Bolivia, Colombia, Peru), and Sub-Saharan African countries, and Mexico. The status of Turkey was seen as uncertain and hinging upon the possibility of a free-trade agreement with the U.S. (US ITC, 2004). For more on how the USITC gathered information and arrived at these and other conclusions, plus a table that summarizes the anticipated effects of quota elimination and key competitive factors in 2005 by region and country, please see http://hotdocs.usitc.gov/pub3671/main.html.

Industry analyst Malcolm Newbery believes the USITC survey is also a good indicator of the view among European buyers.

“Europeans feel warmer to the established Asian and African countries with duty preferences (Sri Lanka, Bangladesh, Cambodia, Mauritius), and both the duty structure and the planned PanEuroMed area make their neighbours more attractive to them than is the case in the US,” he writes. He adds however that studies like this only mirror buyers views, which are not always based on an accurate understanding of the world. Such predictions need to be adjusted for buyer misunderstandings (ex. is perhaps the fear of sanctions against China exaggerated?), unpredicted world events, and buyer counter-reaction (2004: 18).

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Despite differing opinions on what the quota phase-out holds for specific countries, China is almost universally predicted to be among the likely “winners” after the phase-out (see related box below). Other countries that are expected to fare well after quotas are eliminated, according to industry resource Just-style.com, are India (due to huge, cheap, skilled labor force, design expertise, one of the world’s largest yarn and fabric producers, wide range of apparel , competitive on home textiles, has a huge domestic market) and Pakistan (large relatively cheap labor force, local raw cotton), which they see as being among the most competitive alternatives to China (Just-style.com, 2004c).

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The following are some of the predicted impacts of the phase-out:

- Consolidation of the industry

Without the need to source production in countries and with producers that have quota, industry insiders are predicting that the garment and textile industry will become more consolidated. The US State Department has also predicted that while US importer currently purchase garments and textiles from 40 to 60 countries they predicted that number would drop to 20 to 30 countries by late 2005-early 2006, and that by 2010 the number of foreign supplier could be as low as one-quarter or one-third of the current number (Foo and Bas, 2003).

The U.S. Association of Importers of Textile and Apparel believes that “there can be little question that there will be consolidation in the post-2004 world. U.S. importers and retailers have been limited in their ability to rationalize operations so long as quotas forced them to rely upon facilities in many more locations than would otherwise be justified” (Appelbaum: 6).

Instead of selecting producers because of their access to quota, other factors (ex. turnaround time, reliability, quality) will become more important. Industry insiders are predicting that this will make the system more efficient. When quotas are lifted, inefficient manufacturers will lose their previous advantage (Fung in Malone, 2004).

However, not all quota holders are worried that they will lose out once this advantage is removed.

Deepak Mohindra, editor-in-chief of Apparel Online and StitchWorld, trade journals of the Indian garment industry, observes that “Exporters who have huge holdings in quota do not feel that they will be at a disadvantage with the quota phase out in fact most of them are very confident that besides the infrastructure they have created, the relationship they have developed with the buyers will translate into positive business once quotas no longer effect buying decisions.”

He reports that Prem Verma of Sewa Exports, reportedly the biggest quota holder in India says “Why should exporters like me who have substantial holdings be scared of the non-quota scenario. We have built our business to a level when the absence of quota will not in any way be a negative factor. After all, we have created a quota holding based on past performance. The buyer is not a fool and he only comes back if the product being supplied is to his satisfaction” (Mohindra, 2003).

Clearly, a concern connected to this efficiency prediction is how will efficiency be defined? How will good labor practices fit into the equation?

Workers will be hurt by job losses, worsening labor practices

The restructuring of the industry that will be ushered in by the removal of quotas will mean job losses for many. This will be most hard felt by workers in countries with economies that are overly dependent on the apparel industry where there are weak or non-existent social safety nets and few opportunities for employment in other sectors (ex. in Bangladesh, as described above). Also in the more diversified economies where jobs were also protected (ex. United States) the problem of job loss for garment workers will be compounded by the fact that they are drawn largely from particularly vulnerable segments of the population (ex. female migrant workers whose employment options and access to social security provisions are limited by language, skills, and legal status).

Whether in countries where the industry is expected to shrink or not (ex. China and India) there are concerns that the phase-out of quotas will have a negative impact on labor practices. As the competition to provide lower cost production becomes more intense when quotas are removed, labor rights advocates fear that the “race to bottom” will be accelerated as countries feel the increased need to promote themselves as supplying the cheapest, most flexible labor in a workplaces regulated by the fewest by few social and environmental controls. Flexibilization in the garment industry translates into informalization which means worse working conditions and fewer legal protections for workers.

Job losses and large-scale collapse of some garment and textile industries

With the industry projected to become more consolidated and shrink or leave those countries where garments and textiles became big earners due to quota allotment and pressure to follow low-wage, low-skill production export-oriented models of economic development, there will be hard felt repercussions for national ecomonies and workers.

Trade agreements, which facilitate the investment in garment and textile industries in some countries or regions will be a factor in preserving jobs in some countries, but are not seen as providing enough of a deterrent to prevent buyers from looking elsewhere. Countries that have enjoyed tariff-free treatment from the US, for example Mauritius through the provisions of the African Growth & Opportunity Act (AGOA) are not expected to be competitive enough with the lower costs and full-service package that countries like China or India can offer.

“It is a very serious concern,” said Peter Craig, trade commissioner at the embassy of Mauritius in the U.S. “In the case of Africa we have AGOA, which began helping create meaningful employment and economic development in the poorest countries of the world. If that suddenly disappears on the first of January 2005, it will be another serious blow to the poorest of the poor. It is only 18 months now before the end of the Multifiber Arrangement and people will not invest with so much uncertainty. Our concern is not only for Mauritius but for the terrible repercussions on all African countries” (quoted in WWD, 2003).

Some governments and industry associations, as well as some trade unions and global justice organizations have been pushing for the re-imposition of some quotas, in order to prevent job losses, weakening economies and worsening conditions, however this is unlikely to happen as it would require a consensus among all 146 WTO member countries.

Garment prices will go down

With the cost of quota removed and the need to make sourcing decisions based on quota availability eliminated, some industry experts are predicting that garment and textile prices will go down.

“We see a lot of impact on pricing,” when the nations of the World Trade Organization drop their quotas on textiles and apparel, said Mackey McDonald, chairman and chief executive officer of VF Corp. “How much are prices going to change? The assumption we’re making is about 15 percent.”

In general garment industry MNCs are predicting a drop in prices anywhere from 5 to 20%, with the most commonly quoted price cut being pegged at 15% (Malone, 2004).

Lower prices coupled with predictions that the industry will become more efficient and involve fewer risks are seen in most phase-out studies as benefiting consumers in North America and Europe (Appelbaum, 2003: 28).

New trade barriers to replace quotas

When the MFA quotas are gone tariffs, anti-dumping measures, and bilateral trade agreements have been predicted to be important factors that will shape the garment and textile trading environment.

“There will be a fight to keep tariff protections as they are,” according to Dutch industry expert Michel Scheffer, speaking about the future of the industry in Europe “and rules of origin will be used to keep production in the European area. More non-tariff barriers will also develop (for example along the lines of the restrictions that were developed regarding the use of cancer-causing AZO dyes) and this will create uncertainty” (quoted in Ascoly, 2003).

So-called technical barriers to trade (TBTs) are grounds for limiting the entry of products under the WTO rules. (Ascoly and Zeldenrust, 2003).

There are other possible barriers. Under the WTO agreement countries facing a surge in imports, especially if those imports are arriving at non-commercial prices (“dumping”), have the right to adopt so-called emergency measures, called “emergency anti-dumping duty.” The EU recently did this for footwear and bed linen.

In general, governments in countries with garment and textile industries likely to be effected by post-MFA restructuring have been slow to react to the challenge the quota phase-out poses, despite advance knowledge that such changes were to come. Up until a few years ago, labor rights activists had also been relatively silent on the subject.

Generally there is an air of resignation about the coming elimination of quotas and a lack of consensus on what specific strategies should be pursued. This is probably due to the fact that there is no one single strategy that fits the needs of the very different countries for which the most negative effects are predicted.

Indeed, Sweatshop Watch notes that “garment workers in every country must address their unique local needs. However, new global strategies and alliances are required to tackle the imminent changes in the garment industry due to free trade” (Foo and Bas, 2003: 2).

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Preserving market share with better productivity?

A number of reports have called for increasing productivity through skills training and technology upgrades as ways in which garment and textile industries in countries at risk of losing orders can meet the challenge of the post-quota regulated marketplace. Diversification, developing local inputs, and investing in infrastructure improvements are also often recommended as ways to face up to the phase-out (Appelbaum, 49).

However, as the Sudwind Institute, a member organzation of the German Clean Clothes Campaign recently noted “the answers offered by individual countries and industry organizations are rather shortsighted. They all propagate a diversification of exports, the accessing of high quality markets, an abandonment of mass markets, and an updating of their technology and infrastructure. But if everyone follows the same strategy, what will be the long-term consequences? Within the current economic environment, only a few will be able to profit from such a strategy. The majority of workers worldwide would be among the losers” (2004: 3).

Regional cooperation in order to survive?

In her study of how African apparel firms in the sub-Saharan region can be more competitive after the phase-out, Philadelphia University’s Natalie Weathers concludes that “the answer lies in regional partnerships between African nations.”

“There are ways that African apparel firms can build competencies by reaching across national boundaries and building regionalism into their marketing strategy. Partnering means firms must be in a position to be flexible and responsive to each other. This requires open communication facilitated by investments in technology. Governments and private sector have to work together to achieve this,” according to Weathers (2004). “African apparel firms cannot be successful only on their own because of capacity constraints or limited access to raw materials. In order for African apparel firms to create a permanent presence in the USA market, a shift in mindset is required to think in terms of ‘What is good for the Africa region?’ versus ‘What is good for my company only?’”

Others have also called for the development of regional trading blocs in other parts of the world as a possible key strategy for remaining competitive (ex. Appelbaum: 50).This is also linked to many recommendations that countries push for better bilateral governmental agreements. For more on the role of trade agreements in the garment and textile industries, please see Bulletin #4 <http://www.somo.nl >.

Preserving market share with better labor standards?

Attention to social and environmental standards has also been cited as a way in which countries particularly at risk of job loss could make their industries more competitive.

“The producers in developing countries are well advised to follow the recent development in industrialized countries particularly in the field of environmentally friendly products, production methods, social clause and social labels,” suggested Antero Hyvärinen, senior market development officer, ITC, Geneva in 2000. Governments also have a role to play in this context, by initiating labor law reforms that raise standards to meet International Labor Organization standards set out in the better codes of conduct.

“Countries with labor laws consistent with … codes of conduct – and the means to enforce them – could effectively market themselves to the more socially-conscious US and EU retailers and manufacturers,” noted Appelbaum (2003: 50). This is a strategy that has not been seriously addressed in much of the MFA phase-out literature, he observed .

Following the “compliance as competitive edge” strategy costs money and comes back to a question that those involved in the corporate social responsibility debate have been posing for years: who foots the bill? Clearly suppliers, especially in LDCs, cannot cover the costs on their own.

“About half the factories I see are improving compliance with labor standards,” said Suraiya Haque, who has carried out audits for the Fair Labor Association in Bangladesh. “We hope these are the ones that survive.” But, she added that many suppliers are unsure about the future and therefore are not willing to invest in compliance (quoted in Fritsch, 2003).

The EU has included compliance with labor standards in its discussions of the future of the sector. Anna Diamantopoulou, the EU’s Commissioner for Employment and Social Affairs noted that: "An important aspect of the Commission's proposals for the textiles industry is the focus on issues of corporate social responsibility - including respect for international labour and environmental standards - and responsible management of industrial change, including consultation of workers in good time." In an October 2003 statement the Commission called for the exploration of the use of labeling to facilitate access to the EU of products made in respect of international labor or environmental standards (EC: 2).

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- Addressing workers’ needs

The Maquila Solidarity Network notes that “while there has been a great deal of speculation on the impacts the MFA phase out will have on investment and sourcing patterns, and which garment producing countries will be ‘winners’ and ‘losers,’ very little attention has been paid to the potential consequences for workers in particular countries, such as the impacts on jobs, wages and working conditions, or workers’ ability to exercise and defend their rights. Nor has much attention been given to the need for new strategies and international alliances to defend workers’ jobs, standard of living and rights” (2003: 2).

Sudwind, in their critique of the responses to the MFA phase-out, point out that this period of immense structural change and upheaval for workers could be seen as on opportunity to debate a new regulatory framework for trade and labor and calls for an international level consultation, taking the ITGLWF’s recent suggestion that the ILO and WTO cooperate more closely under the auspices of the UN as a possible first step. But a new regulatory framework takes time and in the meantime, transitional steps are needed, they note, naming quotas for large exporters and social hardship and worker training funds set up by multinational clothing companies as possible measures (Sudwind: 4).

WORKERS FACE MANY URGENT ISSUES

With restructuring of the garment and textile industries a guaranteed consequence of the quota phase-out, the issue of compensation to workers who lose their jobs due to factory closures or downsizing is also certain to be an increasingly important issue. Relocation is nothing new in a sector that has often been characterized as highly mobile, but unions and other workers’ rights advocates are likely to face increased cases in which workers will need support in getting the benefits (ex. severance pay) that they are entitled to. With much of garment production taking place in the informal economy where workers are beyond the scope of current legal protections, many workers will be left without jobs and without any compensation.

Retraining and support for jobless workers will be a pressing issue. Governments, as well as international organizations, such as the International Labour Organization (ILO), will need to play a role in organizing or providing financial support to address these needs.

The workforce in the global garment industry is highly feminized and given the potential for large-scale job losses in some countries when quotas are removed (ex. in Bangladesh where some 90% of the workforce in the sector is female), there is sure to be an immediate and disproportionately negative impact on women. A gendered analysis of the impact of the quota phase-out and the development of gendered responses is lacking. Strategies for supporting workers to reorient themselves to the possibilities in a post-MFA job market will need to take into consideration specific, gendered contexts.

With downward pressure on wages being one of the predicted impacts of the phase-out of quotas, efforts to push for living wages will need to be renewed. With a significant drop in prices being predicted in conjunction with the quota phase-out, some labor rights activists have suggested that the money saved should be put into improving working conditions in the industry and increasing wages. But just as securing market access in the past did not translate into better lives for those working in national garment or textile industries, simply lowering costs for producers does not necessarily mean workers’ wages will go up.

Attention needs to go into the actual purchasing practices of the companies that place orders for garment production around the world, in order to see that workers do not lose out in the scramble for producers to cut costs to appear more competitive. Sourcing companies will need to ensure that their pricing practices (ex. low unit prices, tight delivery schedules) are not at odds with labor standards compliance (ex. in relation to wage and working hour standards). The growing importance of large retailers in global supply networks means that their practices should also come under scrutiny when considering roles and responsibilities in relation to ensuring that labor practices at all levels of garment and textile production meet good international standards.