By the mid-1990s, Europe and the U.S. agreed that the whole edifice should be scrapped. The most competitive countries, such as Ghana, the Dominican Republic, and Turkey, hailed the decision. China, which was not then a member of the World Trade Organization, was not in the picture. Now China is, and as quotas come off over the next year, it could displace much of the developing world as the low-cost producer, winning 45% of the $500 billion global garment trade. The U.S. could lose about half a million of its remaining textile jobs over time. South East Asia, Africa, and Central American producers could lose up to 30 million jobs.
It's too late to do much about this massive transfer of jobs. Some countries, such as Pakistan and India, are investing heavily to remain competitive with China. But many others, such as Cambodia, are deeply threatened. Reimposing quotas, which some advocate, will only prolong the inevitable. The lesson is clear. Tariffs, quotas, and other forms of protectionism carry a very high price, and unwinding them can be painful indeed.