Thursday, May 19, 2005

Textile Imports from China--A Quota Without Teeth?

As an economics teacher, it's easy to go into the classroom and say that import restrictions are bad. And in fact, I do my duty and say exactly that. Convincingly, I would judge. When I'm a consumer, things are not always so cut and dried. The problem I have is that I've found so many Chinese-made goods to be of absymal quality--so much so that I'd rather run around in my tattered old clothes looking like a young Jed Clampett than buy new ones made in China. With that opinion of Chinese goods in mind, I took a look at the import quotas announced today by the Department of Commerce's International Trade Administration (ITA). You can read the news release yourself by clicking on the title to this post.

The purpose of a quota is to reduce the amount imported. These quotas, which apply to several specific categories of textiles, have been set 7.5 percent above the level of imports last year. Unless Chinese imports of the products in question were expected to be more than 7.5 percent greater than last year, then these quotas were set with the realization that they would not actually reduce imports. Why would the government impose a quota with no effect? The U.S. has fired the proverbial warning shot across the bow at China. Talks between the two governments are to begin shortly to try to settle the issue amicably. As Theordore Roosevelt put it, "Walk softly, but carry a big stick." The threat of serious import quotas is that big stick.

U.S. consumers might have to pay a little more for their clothing, depending on how the negotiations turn out. As for me, I just hope the Chinese figure out how to do cheap AND good instead of just cheap!
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Larry Kudlow's Money Politic$ blog has a post today about China's currency that complements this post nicely.

Link

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