I would expect that the declines in apparel production will continue and accelerate, as will the production in most yarns, knits and wovens, though at a slower pace. Much depends, of course, on how trade rules evolve.

Many US brands have significant "brand equity" in global markets - examples are Fruit of the Loom and Polartec, but this value is derived from marketing rather than production. Brand equity can continue to grow even as production shifts to other countries. And aggressive US firms are realizing that a prerequisite for success can derive from both advanced R&D and from diversifying production to Asia. Examples are industry leaders such as Standard Textile and Invista. So US firms that are smart about protecting and developing brand equity, about international diversification, and about leading edge R&D can do well.

Well, I agree with almost all observers, who predict that China and India will be the big winners in the post-quota world. They will win not so much at the expense of US firms, where adjustment has been taking place for decades, but at the expense of smaller countries who had come to rely on quota for market share. The surges and price drops we are seeing from China right now are quite amazing. T-shirts, the garment that I research in my book, are showed an increase in imports from China over 1200% during the first 2 months of 2005 over the same period in 2004, with price drops in the neighbourhood of 30%. So, yes, that is a force to reckon with. And I think that there will be some constraints on China, both externally and internally imposed, that will strengthen India's position as well. India and just a handful of other countries seem able to take on China in many textile and apparel categories.

I do not see the regime coming back, but I do expect to see very aggressive use of the China safeguard. Under China's WTO accession agreement, these safeguards-which are really just extensions of the quotas-can be applied until 2008. So for categories where we are seeing these big surges from China I do expect the safeguards to be applied aggressively, especially by the US and EU.

Also, we should remember that protective tariffs are quite high on textiles and apparel in the US - close to 17% for apparel on average and up to 30% for some categories. So even though these tariffs are not technically part of the MFA regime, they do represent trade barriers. I do expect a lot of pressure to maintain these tariff barriers, now that the quotas are gone.

Well, the US has a trade agreement under the African Growth and Opportunity Act (AGOA) that effectively eliminates tariffs for goods from most of Africa, and there is something similar in place for the Caribbean countries. So this alone gives these countries about a 16% cost advantage over India and China. Unfortunately, however, this margin may not be enough to close the gap with Chinese and Indian producers. Most of the large importers simply do not want to go to 40 countries to source their apparel, which is what they had to do under the quota regime. They want to go to 4-6 countries and I think it unlikely that Mauritius will be among them.

On the bright side, the quotas did help to develop a trade infrastructure in many of these countries. As I discuss in the book, the quotas indirectly helped to build roads, port facilities, trade finance capabilities and so forth. I think we all hope that much of this hard and soft international trade infrastructure is transferable to industries where these countries might develop enjoy a comparative advantage.

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