The Great Textile Compromise
Forbes has a good article on the textile deal that the US and China had signed in early November. In this deal the US will lift emergency safeguards that it implemented earlier in the year in order to protect home and other foreign textile makers, from Chinese "competition", and in return China will limit growth in 21 textile categories until at least 2008.
While the rest of the media is making it seem like the deal was a victory for both China and the US, in reality it was an American economic defeat. As part of the deal imports from China will be allowed to grow by 10.0-15.0 pct in 2006, by 12.5-16.0 pct in 2007, and by 15.0-17.0 pct in 2008. What kind of victory is it when you still allow the other guy to increase their exports by 17% a year?
This is even worse then the deal that the Europeans agreed to in which imports are restricted to 8.0-12.5 pct a year growth, although that only covers 10 items unlike the 21 that the US agreed to.
So overall all this means is that the US agreed to a slower increase in the pace of the gradual deindustrialization of America. This in the end will lead to an ability for the Chinese to defeat the US without America putting up much of a fight.
While the rest of the media is making it seem like the deal was a victory for both China and the US, in reality it was an American economic defeat. As part of the deal imports from China will be allowed to grow by 10.0-15.0 pct in 2006, by 12.5-16.0 pct in 2007, and by 15.0-17.0 pct in 2008. What kind of victory is it when you still allow the other guy to increase their exports by 17% a year?
This is even worse then the deal that the Europeans agreed to in which imports are restricted to 8.0-12.5 pct a year growth, although that only covers 10 items unlike the 21 that the US agreed to.
So overall all this means is that the US agreed to a slower increase in the pace of the gradual deindustrialization of America. This in the end will lead to an ability for the Chinese to defeat the US without America putting up much of a fight.
posted by Aleksandr at 11:28 PM
3 Comments:
I actually do think this is an American victory. Imagine how this will lower prices.
You are right Christopher.
The average American will benifit.
Defending a weak industry who's work can be done cheaper elsewhere, helps the few, hurts the many.
But it sounds good to some.
The only real money in a nation's economy is Agriculture, mining (including drilling) and manufacturing (including tiny operations in small businesses). All other money is either a nessasary expense (like transportation and sales) or a waste (like entertainment).
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