Why Textile and Apparel Majors Need to Know about Trade Policy

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This past week, our class moved to the topic of trade policy, which as usual turned out to be one of the most challenging and “least exciting” chapters for our students. A common question in students’ mind is (and probably for some professors in the textile and apparel field as well): as a fashion major, why do I need to care about trade policy?

The answer is straightforward: textile market is shaped by rules—trade policy. Trade policy affects the availability of T&A products in the market in terms of quantity, price and speed. Trade policy also affects T&A companies’ access to the market, both domestic and foreign. Simply look at the clothing and shoes we wear daily: if they are imported, very likely the price we pay includes 10-30% additional tax (tariff). Even the clothing is “made in USA”, we should realize that the survival of US domestic apparel manufacturing could be the result of protection by the exact same trade policy which makes imported competing products 10—30% more expensive than otherwise in the US market.

Yet, trade policy does not happen naturally. Trade policies are deliberately made by policymakers and strongly influenced by industry players. Two things I hope our students can realize: first, the T&A industry cannot afford ignoring trade policy. Think about this case: if the US yarn manufacturers did not actively advocate “yarn-forward” rules of origin to be adopted in NAFTA and CAFTA, what will happen to their fate right now? Vice versa, how will the commercial interests of apparel retailers/importers be affected if they stop voicing themselves and simply leave the trade protectionism forces to influence trade policymakers? As the saying goes: if you are not at the table, you are on the menu. To certain extent, there is no good or bad trade policy, but winners and losers.

Second, understanding trade policy making is about understanding the real world. Trade policymaking is a painful balancing process like trying to “breathe and suck at the same time”.Not only different interests groups may have conflicting views on a specific trade policy, but also different policymakers may have their respective philosophies and priorities. As we mentioned in the class, agencies in the executive branch such as the US Trade Representative Office and the Commerce Department put national interests and international obligations of the United States at its heart whereas the Congress often times gives preferences to regional, sectoral and party interests.  A full understanding of T&A trade policy thus requires familiarity with what’s going on in this unique industry sector, knowledge about its key players as well as having a big picture vision in mind. For example, without recognizing the value of becoming a WTO member for China, it will be difficult to appreciate why it was willing to allow US to restrict its apparel exports from 2003 to 2008 on a discriminatory basis (T-shirt book, part III).

Our FASH students shall be encouraged to jump out of the narrowly-defined fashion world, because no industry operates as an island. Instead, the T&A industry is part of the world economy and shaped by the “rest” of the world economy.

 Sheng Lu

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Author: Sheng Lu

Professor @ University of Delaware

30 thoughts on “Why Textile and Apparel Majors Need to Know about Trade Policy”

  1. After reading this and finishing my case study, I noticed that many points overlap.

    The first overlap I saw was in regards to the textile market being shaped by rules, or trade policy, and how these trade policies do not always happen naturally. While I was doing the case study I realized that trade policy is a must. Without rules and regulations, trade would be chaotic and disastrous. If for some reason there were no trade policies enforced anymore, the T&A industry, along with all of it’s players, would be significantly impacted and more than likely in a negative manner. Unfortunately, as the case study proves, there are no easy answers or ways of handling which policies are the best to practice. As stated, there is no good or bad trade policy, but winners and losers; but in many cases a single winner or loser cannot be found either because instead it is a combination of numerous winners and losers on a smaller scale.

    Another overlap between the case study and this blog is found in the paragraph that pertains to understand trade policy making and understand the real world. Throughout the case study, I learned you must be able to see and understand the big picture before handling and making decisions about the smaller details. Every situation is different but in almost all cases regarding trade policy there will be a mix of opinions, view points, and countries/groupings that do not see eye to eye. To make the best decision, or one that will provide an outcome with more winners than losers, you must understand the real world big picture of things and know where policymakers stand within this world. A key point that can drive this idea home is highlighted within the blog. At first I didn’t understand why China would allow the US to restrict its apparel exports. I later learned, after opening my eyes to the big picture of things and understanding other factors that went into making this decision, that by agreeing to these terms with the US, China would actually benefit in the long run. Although for 5 years China would have restrictions on apparel exports, after this, there would actually be more positive aspects than negative ones in China’s equation, and they would be granted access into the WTO. In other words, the good would essentially outweigh the bad. Without understanding the big picture, it would be difficult to understand why China would want to agree to a 5 year apparel export restriction.

    1. Great thought! This is also an exercise about critical thinking. While at school, students always try to find a correct answer, but in the real life, it is more about making a hard choice. Making a smart choice requires in depth analysis of the situation, evaluating pros and cons, just like how we did in the case study

  2. When comparing this article to the case study about the Multi-Fiber Arrangement, it is amazing to see how far trade policies have come compared to the 80’s and even the 50’s. The case study showed me that it is not easy to come to a final decision, especially when there are so many other opinions involved. After reading this article, it shows how the case study, although from a stand point in the 80’s, trade policy affects the T&A availability over all. Trade policy depends upon the policy makers and the others involved fighting towards the decisions of what they think is right, with out these discussions and disagreements, there will never be a good final decision behind the problems. This heavily connects with the article and its example of “yarn-forward” advocates being heavily involved in these policies, while in the case study President Reagan gave false pretenses towards something he did not seem to really read into and look where that got him.
    Although trade policy is a difficult topic to understand and to be passionate about, it is a very important thing to have a full understanding over. As in the case study we have to determine who are the winners and losers out of the MFA arguments, but before figuring out who wins and who loses, the reader (us) must put our own opinions into account. Just like a policy maker, they weigh out all the benefits and the challenges before they come to a conclusion.

    1. agree! making trade policy in the 21st century is anything but easier than in the past. the industry is getting more dynamic, rules are getting more complicated and more stakeholders are getting involved: thinking about the rising awareness of environmental protection and labor standard and climate change. All of these new issues now need to be properly handled together with the conventional debate on trade liberalization vs trade protectionism.

  3. While I have always been aware of the importance of trade policy, I was unclear of the implications it has in the textile and apparel industry until discussing it in depth this semester. Globalization is defined as the freer movement of endowment (natural resources and goods) and production factors (capital and labor), a theory that does not come without implications. Nations can no longer act alone, the need for collaboration and coordination is essential; they are interdependent. This also means that, as discussed in the second case study on the MFA, there will be both winners and losers.

    I agree with the statement Sheng made that “the T&A industry cannot afford ignoring trade policy.” While it may not seem like the most important factor to TMD/TM students, as individuals about to enter the work force,it is essential to comprehend that trade policy it is a driving factor in the way companies plan their business strategies. As seen with the MFA, though Reagan had gone against his word on increasing domestic production of goods (another issue in itself), he was focusing his efforts towards the future. He understood the market share that South Korea, Taiwan, and Hong Kong had in the T&A industry and that the only way to combat complete domination of the market would be by building up least developed countries and forming lasting relationships with these countries. In a global industry such as fashion, it is essential to keep the big picture in mind and recognize the growing nature of the industry.

  4. After reading this article and doing the second case study, I now have a better understanding of why TMD/TM majors need to care about trade policy. No matter what happens, we are ultimately effected in the end. After doing the second case study I realized that everyone is ultimately effected because the “big picture” needs to be in account. Trade policy can benefit some countries while hurting others, but if it continues that way, trade policy will continue to emerge. If this happens, the “big picture” is that everyone will suffer in the end. When dealing with trade policy it is always best to recognize what will happen in the future as well as the present, not just what is happening now.
    As TMD majors we need to understand that trade policy is a driving factor and can determine the way a business operates, which can include our jobs. We need to know that this is our future, and this is our economy, it is up to us to have knowledge about trade policy and see what is beneficial for us now and in the future.

    1. how to form a big picture vision? jump out of the world of narrowly-defined fashion, care more about what’s going on in the outside world, read extensively, travel abroad and accumulate all kinds of experience.

  5. After evaluating the diagram above, I came to the conclusion that I was unaware of the discrepancies between what the US apparel and textile industries’ true motives were and how US policy affects them. For example, the government cannot be one sided when it comes to the progression of each industry. They have to find a counterbalance in trade flow to ensure maximum benefit for both textile and apparel producers domestically. However, after reading the case study, I understand that there will always be a winner and loser ( or a shareholder that doesn’t benefit as much). Given that, I think that there is room for the change and reformation to the current trade policies and procedures.

    First, I believe that the government is obligated to continue their subsidies to domestic production in order to keep a stable position as a leading exporter for textiles. If they cannot continue this, NAFTA/CAFTA will have drastic trade inbalances. However, I feel that this should be one if not the only form of protectionism implemented by the US government.

    In addition, I think that freer movement of goods and services( aka globalization) has created many benefits for all involved in the global supply chain of the textile and apparel industries. Since there has been an increase in the movement of intermediary goods, the ability for them to be imported/exported easily is crucial to the success of the final product. Moreover, globalization encompasses the comparative advantage theory, where all countries produce and export goods they are most efficient in producing.

    As more and more countries enter the global textile and apparel industry, looking at the bigger picture is necessary. More than 150 countries are involved in importing/exporting textile and apparel goods, reiterating how important it is to come to a mutually beneficial solution for everyone. This is an issue that doesn’t have one simple answer, but as long as we evaluate all possible choices, a balance can be found.

    1. good thoughts! This is also why I like studying the textile & apparel industry. It is not just a single sector, but about the whole world. when we get dressed each day, we wear more than just clothing, but the world economy, the trade regulations and politics maybe. That’s why we are important.

  6. After reading this article, and finishing case study 2, I now have a better understanding on why trade policies are so important to TM/TMD majors. The Textile and Apparel industry is a global sector involving many countries. Having trade policies are crucial to every country involved in exporting or importing textiles and apparel goods because it allows goods to move more freely and helps the product get developed at a faster rate which is more efficient. As a TMD major, I now realize that trade policy affects so many textile and apparel businesses, and that is where I will be one day, meaning that I can be affected by this, but now I am more knowledgeable.
    Having to figure out who the winners and losers were of the Multi Fiber Arrangement was difficult, but made me understand trade policies more fully. I had to really think about the policy and who benefitted most, and who did not. Trade Policies that happened in the past are still affecting the future of the textile and apparel industry, and I believe that this case study has especially made me think more in depth about how the textile and apparel industry is put together, and how the import and export of goods is affecting my own life as a TMD major.
    There is an increasing amount of goods being exported and imported, and making a trade policy is much easier today with technology then it was back in the day. There will always be a demand for clothing, and having the world work together to produce that clothing is something that should never go away, and that should be continued. I am glad that I am now more knowledgeable on the textile and apparel industry and trade policies of goods.

    1. Excellent! Glad to hear~ This is exactly the purpose of TMD433: providing students with the big picture vision and wisdom to pursue a successful career in the T&A industry. No matter our TMD/TM students work as designers, merchandisers or market analysts, such a big picture vision will enable you to see the long-term business trend of this industry, capture the opportunities and stay on the right track.

  7. “As a fashion major, why do I need to care about trade policy?”

    I see this question as being almost silly. A better question would be, “As a fashion major, why SHOULDN’T I care about trade policy?” The textile and apparel industry is global. Today, it is nearly impossible to find a finished product that cannot be traced to multiple countries. For every country the sweater I am currently wearing can be traced back to, there is most likely some trade regulation or agreement between the countries. To fully grasp what goes into making my sweater, it is important to understand these trade policies.

    Moreover, trade policies affect every aspect of the textile and apparel industry, from thread production to the retail sales floor. The final price, quantity, and delivery time of merchandise can be traced back to which trade regulations affect the product. The same goes for the material used to manufacture that product, the thread used to put it together, and the labor needed to assemble the final product. Everyone along the supply chain needs to be concerned with trade regulations because they directly affect every point along it.

  8. I always wondered why Economics was part of our requirement for TMD/TM majors. I never understood how it connected back to this industry. After taking this class and reading this article I now know how importaint it is to understand economics. without it you won’t to be able to comprehend the textile and apparel market trade system. Also by completing the second and third case study I have a better understanding of the importance of this trade system. The agreements and rules are implied to help keep our country in the competition. without them our textile industry would disappear because other countries would buy their yarn form cheaper countries. The regulations have changed so much in the past three decades. And they have changed for the better.
    Coming into this major I was unaware of this whole globalization and trading process. Fashion is so much more than just creating and buying pretty clothes.

    1. So it is with the courses on textile science. We want our students both know the technical skills like those graduates from RSDI and FIT, at the same time have the big picture vision of the textile &apparel supply chain in mind. This is the value of attending the four-year college

  9. When I first began my education her at URI, trade policy and its relation to my major was not one of the main subjects on my mind. I’m sure many other students can agree that I had a more narrow view of the TMD major. After learning about trade policy, reading this article, and finishing case study 2, it is now clear to me how important it is to educate myself on trade policy. It is extremely relevant to the TMD major and a current and ongoing topic. I am so used to being able to read or study something and come out with a clear answer, and Dr. Lu commented on in class. However, this topic is not like this. There is no straight forward answer and it is a very complex and difficult topic to discuss. There are so many factors involved that it is hard to make a set viewpoint on this topic. Especially pertaining to the case study and the MFA, the winners and losers are different depending on whose point of view you are looking at it from. However, looking at all these different viewpoints helped me understand how complex trade policy can be. It did help me see it from a big picture point of view and even though I still do not know every aspect involved in trade policy, I understand that it is a crucial topic to my major and is relevant to me and my future career in the fashion industry

  10. Trade policy is essential for the textile and apparel industry to continue its success. Without trade policy, there would be no consistent flow of the industries product and manufacturing in a global perspective. This article and our third case study share similar viewpoints. Trade policy must have rules and regulations set in order to balance the playing field. It’s hard to say which rules and regulations will be the most sufficient because there is no right or wrong trade policy. There will always be winners and losers depending on which side the views are coming from. Trade policymakers all have similar end goals, however getting to this conclusion includes extensive debates and conversations. The US Trade Representative Office and the Commerce department are mainly focused on the policies being made at the national and international level. Then you have Congress who put their attention to regional, sectoral and party interests. The textile and apparel industry is significantly impacted by these decisions. In the end, the textile and apparel industry is part of the world economy.

  11. Before this class I never gave a single thought to trade policy because I never thought I needed to. Now I can see how necessary it is to be familiar with all parts of the industry including trade. As this blog post shows, trade can not be ignored and we can not escape it. The majority of the apparel we own has been imported and as consumers we pay extra for the tariffs on imports. If I am ever employed at a design house or department store I will benefit from this class because I will know how the company imports their apparel and fabric and why they do this. My pop-pop is always complaining that everything is “made in China” and he doesn’t understand why. Thanks to this class I can explain it to him.

  12. Like the rest of my classmates, I never really thought about trade policy and how it effects the fashion industry. I thought I just had to worry about getting a certain product into a store and to make sure that, that store sells it and makes a profit from it. Now learning and knowing how trade policies work and how important they really are to the textile and apparel industries. We should care where and how our products are made, and understand the set rules and regulations for them even though we all may not agree with them. As a TMD/TM major, trade policy does effect everyone in the long run. Why not try to understand something that effects our potential careers and lifestyles.

  13. I believe that understanding trade policy is a crucial element to not only being a fashion major, but also to being a consumer. Before taking this class, I was unaware and uninterested in anything related to the topic. Now, being familiar with topics discussed in class, assignments throughout the semester, and articles such as the one above, I realize how important this knowledge really is. Upon graduating, I feel that having the knowledge of trade policy is essential as we plan to enter into the workforce. Although our future careers may not directly relate to the involvement of trade policy, it is likely that we will require some sort of trade to produce or provide a product to the consumer. Also, trade policy has an impact on many facets of the consumer’s life, regarding the product we have access to, along with prices. Understanding the forces at work behind this process allows for a more eligible worker, while providing a more knowledgeable experience.

  14. As a fashion major it is pivotal to have awareness and knowledge of trade policy. This class and the case studies we have done, have given me insight as to how complicated the textile and apparel industry truly is. One of the main reasons for this sophisticated industry is because of trade policy. As I learned in the case studies, it is difficult to find a ‘right answer’ in trade policies, especially because globally, the industry continues to change. I think it is extremely important for us as TMD/TM majors to have an understanding of these complications specifically because trade policy is a major force and impact in the textile and apparel industry. Each sector of the fashion industry now involves several different countries due to globalization. Because of globalization, trade policy has an affect on the entire supply chain of this industry. If I want to become successful in one of these areas, I must know how these business function in regards to trade policy. Understanding this continuously changing industry and the policies that businesses are required to follow, is absolutely crucial!

  15. I absolutely think that it is necessary for TMD/TM majors to know about trade policies. When I first began my journey as a TMD major, I never thought that I would have to know anything about trade policy, but after completing the case studies, especially case study 2, it brought to my attention the importance of knowing about trade policies. Since fashion in today’s age is such a global industry, it would be impossible to work in the fashion industry and have no knowledge about trade policies. We are all bound to work with other people from other countries in our future careers.

  16. As a fashion major and business minor it is clear to me why anyone interested in commerce needs to know about trade policy. Unless the company that you work for only does business in one state, then trade policy applies. Whether it be international trade or interstate or intrastate commerce, policies and regulations are needed to make businesses run smoothly and fairly. In business law we are shown many cases where business is done unfairly and needs to be regulated. Laws are put in place to provide consequences to these unfair practices, but policies are put in place to avoid these practices all together.
    When talking about fashion in particular, trade policies are highly prevalent. As mentioned in the article above, the textile market is shaped by trade policy. Everything from where companies get their raw materials to where they assemble their products to where and how much they can import or export and whether intermediary goods versus assembled goods can be imported or exported and at what cost. Trade policies also influence the competition of the textile market.
    As a global industry, fashion products are compiled of materials and labor from many different countries, and each country does business slightly different. So in order to regulate the way business is done globally trade policies are put into place. As we saw in The Travels of a T-Shirt, every product has a long story of how it became assembled and sold to consumers. Each aspect of the supply chain needs to be regulated and managed so that business can run smoothly.
    When working for a company in the future, TMD/TM students will need to understand all aspects of the supply chain not just in the U.S., but globally. They will need to understand what regulations and policies need to be followed with each country or group of countries. In order to be successful in the fashion industry, companies need employees who can understand the implications of trade policies, work with them and provide that company with a profit at the end of the day. That is why TMD/TM students need to understand trade policy.

  17. As you once reiterated in class, “we must have rules”. Without rules in any industry their would be chaos. The article above does a great job outlining the complications the Textile market faces. The textile market is created through the rules set in place in the trade policy. Each company has their own process in which they use to collect all of their goods whether it be raw materials, fabrics, etc. This would not be feasible without the ability to import and export goods globally. It is imperative for anyone in the industry to be familiar with the rules and regulations regarding trade policy because regardless of what sector you may decide to work in your will be exposed to these implications one way or another. As a student studying to be in the industry I find it extremely important to know the ins and outs of what makes our industry go round. Trade policy is at the top of this list.

  18. After reading this article, and analyzing case study #2, I feel as though I have been enlightened and now have a much better understanding as to why TMD majors should really care about trade policy. Case study #2 allowed me to realize that ultimately, everyone is going to be effected because there is a ‘big picture’ that must be taken into account. Although trade policies can benefit some countries, at the same time, it also can hurt and cause negative consequences to other countries. When considering trade policies, its extremely important to recognize how those policies will impact our future and the best way to recognize this is by always keeping the ‘big picture’ in mind. After taking TMD433, I feel as though, as students, we now understand that trade policy can determine the way a business may operate, the impact it will have on employment and jobs, and the abilities it has to negatively or positively impact an economy. Now, we are seeing more and more countries entering the global T&A industry, so it is of vital importance to look at the ‘big picture’. The issue of trade policy does not have one simple answer, but if we can try to evaluate and recognize all possible choices and outcomes, we may be able to collaborate to find a balance for all nations.

  19. Trade policy was always a subject that I had never thought about when it came to fashion design and textiles. I feel that as an industry it is an area that gets overlooked. It makes sense now why when clothing is bought it cost more money and it may not be as cheap as some people would think it should be. I never knew that we were paying the tariffs on clothing as well. Which puts things into perspective. I feel that when it comes to trade policy in textile and fashion design not many people know that trade policy is an important part of the industry.

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