Comparison of PRC and Vietnam's responses to the elimination of US textile and apparel quotas: economic and cultural perspectives Online publication date: Sat, 02-Oct-2010
by Joseph Pelzman, Amir Shoham
International Journal of Business and Emerging Markets (IJBEM), Vol. 2, No. 4, 2010
Abstract: International trade in Textiles and Apparel (T&A) is no longer constrained by a global quota system. Trading has not come to a halt and the Peoples Republic of China (PRC) has not taken over the entire T&A trade, as many had predicted. This paper compares the responses of the PRC and Vietnam to the quotas' end by focusing on demand factors in the US market and supply considerations, institutional differences between the countries, their different government policies and unique cultures, which are used as proxies to determine supply-side responses. The specific items compared are based on the pre-2005 quotas for the PRC. Since Vietnam was relatively new in the sector, it had only 20 three-digit categories that overlapped with the PRC. The overwhelming result is that the PRC and Vietnam are increasingly becoming competitors on the low-end of the product chain. Unlike most predictions, the PRC did not crowd out its competitors.
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