Textile and Apparel Barriers and Rules of Origin: What's Left to Gain after the Agreement on Textiles and Clothing?

Abstract

Although textile and apparel imports from most countries entered the United States quota-free after the expiration of the Agreement on Textiles and Clothing on January 1, 2005, substantial restraints remain on U.S. trade in these sectors, including high tariffs, quantitative restraints on China and Vietnam, and preferential rules of origin. While there is a substantial literature on liberalization of quotas and tariffs in these sectors, this paper provides a new and detailed examination of the effects of rule-based foreign demand for U.S. textile and apparel inputs. This paper uses the USAGE–ITC general equilibrium model to estimate the effects of removing textile and apparel restraints in 2005. Full liberalization is estimated to increase U.S. welfare by $2.0 billion (net) while decreasing U.S. textile and apparel output by 9.0 percent. Quantitative restraints continue to have considerable effects on U.S. welfare: their