Textile Jobs

1. The migration of many textile jobs and garment companies out of the United States, mainly to Mexico to operate there was due to the cheaper advancements in technology included with cheap workers compared to the United States. The Mexican industry's wages don't even reach to $2 per hour versus $13 to $14 per hour in the States. So they will save more on huge production than manpower where are easily available. Mexico has a strong capability when it comes to skilled and professional labour as such engineers and technician in textile industry. There are many textile factories in North Carolina closed because of the failure to modernize and launch policy changes to remain competitive with foreign markets. The increase in Mexican garment production for export has an effect as well.

2. Upon enactment of NAFTA both sides gained and lost. Mexico has skilled and professional labour and technological advancements as such as the American companies but the difference is the American has long history in technical expertise. Mexico has R&D centres, as well as technical centers of excellence to train their workers. It compete with Asian imports as well. Also, NAFTA contributed to Mexico’s economic recovery directly and indirectly after the 1995 currency crisis in terms of market-based economic reforms, resulting in increasing investor confidence in Mexico. Facilitated access to external funds and because of that Mexican consumers began to eagerly satisfy their demand for a wide variety of goods and brands from abroad.

The Mexican economical structural dependence on imports has increased significantly. These results indicate that the long-term income elasticity of demand for imports (essentially manufactured goods) like textiles, ie: cotton, apparel, etc has more than doubled over this period. Nevertheless in the United States side, when NAFTA was enacted, U.S. foreign direct investment (FDI) in Canada and Mexico more than tripled to $348.7 billion, including the textile industry. Canadian and Mexican FDI in the U.S. grew to $219.2 billion. The main effect has been a huge increase in United States agricultural exports to Mexico with supplying more than 75% of Mexican agricultural products. The United States exports to Mexico that grew the most in terms of percentage volume change were cotton, apples, pears, cattle and dairy products. The positive impact has been a slight increase in United States jobs in the agricultural industry. This was due to the increased supply of agricultural products.

The side that I think lose is in the US, NAFTA eliminates the middle class and it allows company to lower their wages threatening to move to Mexico. The U.S. has suffered a decrease in labour supply and employment in textile and apparel sectors. In fact NAFTA expanded the maquiladora program, in which U.S.-owned companies employed Mexican workers near the border to cheaply assemble products for export to the U.S. These workers have "no labour rights or health protections". When it became a choice between joining the union or losing the factory, workers chose the factory. Without union support, the workers had little bargaining power. The main losing party should eventually go to Mexico as Mexico's dependence on the U.S. economy has increased markedly. Although Mexico has implemented a dozen trade agreements which have removed trade barriers with over 40 countries, more that 80% of Mexican trade is still with the U.S. International investment by both party, U.S. and Mexico has also been affected by NAFTA. With the removal of Mexican limits on foreign investment, as well as the removal of tariffs, it has become much more profitable for Americans to invest in Mexico. Nevertheless it is obvious that the controversy surrounding NAFTA still exists till this very day difficult to get a consensus on whether the overall effects resulting from NAFTA are positive or negative for the countries involved.

3. Finally, the idea of protecting the textile industry from painful free trade agreement is not a perfect solution, bringing a positive outcome to many with only a little much to sacrifice for the betterment of the countries’ wealth and dependency.

In terms of pursuing free trade or protecting domestic industries such as the textile industry, I think that pursuing the free trade agreement without looking into vulnerable industry like textile is much better applying. Many smaller developing countries like Bangladesh, and Sri Lanka have relied on the quotas to build nascent textile industries of their own. Their weak and unstable economic and political mechanism, becoming dependent on exporting textiles, and they may be seriously affected their exports will be forced to compete with China and India. The textile factory workers in these countries—the ones who will soon lose their jobs—represent one of the most vulnerable segments in society. They include the poorest and least educated citizens in countries where social welfare safety nets are almost nonexistent. Nevertheless, it will also drive up the cost of clothing and other textiles for the American consumer. In exports basis, the U.S. textile and apparel industry is strongly NAFTA dependent, free trade agreement with about half of total exports going to either Canada or Mexico in 2001. The picture is different for imports: less than one fifth of sector imports come from NAFTA countries. In contrast, the U.S textile industry has benefited from NAFTA by expanding exports to both Mexico and Canada, especially of high and good quality textiles. In the current political and economic climate, it will be difficult to push the free trade agenda. But if, as the evidence strongly shows, free trade accelerates the process of development, raising output, leading to a convergence of relative commodity prices, and ultimately reducing poverty and inequality in all three countries, then it is important to push this free trade process forward, institutionalize it, and extend it to the rest of the hemisphere. It will deliver the most favourable terms of trade, while enhancing government (tariff) revenues, protecting infant industries to narrow and etc. The act of protecting vulnerable sector, textile sector will clearly show a loss of revenue in time to come for a free trade.