How can non-Asian textile producers fight back?
DB: Asian producers’ cost advantages may be reduced by preferential tariffs rates applicable to Mexico under NAFTA and to countries benefiting from the so-called Caribbean Basis Initiative and by their geographic proximity to the US market. Several CBI countries would receive additional benefits under the proposed Central America Free Trade Agreement, also known as CAFTA, assuming the parties adopt it, as is hoped, by mid-2005. The real question is whether these duty advantages will offset the cost advantages of Asian producers. Current evidence suggests that Latin American and other non-Asian producers are in for a hard fight. For example, when the quotas on brassieres were terminated in 2002, US imports from China increased from $350 million to $500 million in a single year, while sales from Costa Rica, Mexico, Honduras, Nicaragua and other CAFTA countries fell significantly. China recently announced it would impose export taxes on some textile exports. What impact might that have? D
