Globalization is spreading its wings and is affecting all the industries of the world. The global textile industry could certainly have not been left behind! The world textile industry has become a smaller place owing to globalization. Outsourcing and trade has become an integral part of the textile industry. Clothing and apparel constitute around 5.7 percent of the total exports in the world at present. The trade of clothing and apparel is expected to increase to US$ 1 trillion by 2020. The world is becoming a smaller place when it comes to textile trade. It is easy to find clothes and textiles specific to a particular region all over the world in modern times.


In the current textile trading scene, it has been observed that advanced economies like USA, Europe, Australia, and Japan are mostly importers of textiles. They find it cheaper to import textiles as compared to producing them, locally. The global textile trade is directed towards supplying these advanced economies with finished textile products and raw materials. They also indulge in exporting textiles, but it is limited to a certain extent. As per the reports of US Department of Commerce's Office of Textiles and Apparel (OTEXA), US import of textiles increased to reach 30.4 billion square meter equivalents (SME) in 2012.


Developing economies are generally exporters of textiles. They find it easy to produce textiles owing to abundant natural resources and inexpensive and skilled workforce. In fact, textile industry gives a big boost to the economy of the country. They can earn immense foreign exchange through the export of textiles and textile products. It also provides employment to the citizens of the country. For example, textile industry is one of the biggest industries in Vietnam. The country exported textile products worth $10.8 billion in the first eight months of 2012. Similarly, the textile industry plays a major role in the development of Cambodian economy. Cambodian textile and garment exports comprise of 85 percent of the total exports of the country.


The global textile trade comprises of import and export of textiles and textile products (which can comprise of raw materials and finished goods), and trading within the country to some extent. Government policies influence textile trade to a considerable extent. Two countries can have good trade relations, only if their policies complement each other. Protectionist policies by governments (even if it is for a short time) lead to impairment of trade relations in the long run. Many countries have suffered this in the past. For example, the ban on cotton exports by India in 2012 led to severe criticism of the country in the global textile industry.


US and EU in Global Textile Trade


US and EU were and still are the biggest importers of textile! But recession took its toll on these economies, and they had to cut down on their textile and clothing imports. They are constantly looking for cheaper and better options to import textiles and textile products. Currently, ASEAN region (comprising of Vietnam, Cambodia, Brunei, Burma, Laos, Indonesia, Malaysia, Philippines, Singapore, and Thailand) is the buzzword for these countries. Thailand's textile and textile products exports to USA was worth US$ 249.9 million in the first quarter of 2013. Indonesia exported textile products worth US$ 5 billion in 2012 to USA. EU is the second largest trading partner of the ASEAN region after USA.

 

The two advanced economies indulge in textile trade with certain countries to boost the other country's economy. For example, USA has signed the African Growth and Opportunity Act (AGOA) to boost the economies of African countries. As per this act, it enables the African countries to export their textile products and other products to USA duty-free.


Most of the exports from Africa reach to the United States through this act. It has encouraged many African textile exporters to export textile and textile products to USA. Sub-Saharan Africa indulged in trade worth US$ 48 billion with USA in the first six months of 2012. Nigeria, South Africa, Congo, Chad, and Angola have benefitted from AGOA immensely.


India and China in Global Textile Trade


India and China are the two economies that play the most important role in the global textile industry. The global textile trade, but naturally, entails participation from these countries. India and China exports raw materials as well as finished goods from the international market. These countries are the major suppliers of cotton, silk, and jute in the world. Average cotton productivity in China is 1306 kg/ha and average cotton productivity in India is 481 kg/ha. As per studies, almost one-seventh of the Chinese rural population is dependent on cotton for livelihood. India exported around 70 lakh bales of cotton of 170 kgs each in the year 2012-2013.


India's textile products export to USA from April, 2012 to March, 2013 was recorded US$ 4747 million. It is one of the major suppliers of textile products to USA, UAE, UK, Germany, China, Bangladesh, France, and other countries of the world. Government has fixed a target of $50 billion worth of textile exports for April, 2013 to March, 2014. But other than textile exports, India is also majorly into textile imports. India's total textile products import from April, 2012 to March, 2013 was US$ 3972 million. Similarly, China is also an attractive market for textile exporters all around the world. USA exported textiles worth US$ 70 billion in the first eight months of 2012.


Free Trade in Global Textile Trade


Largely, countries have their own rules and regulations in terms of textile trade; but the concept of free trade is gradually picking pace! Textile importers and exporters are trading products without any restriction or duty after countries sign free trade agreements among themselves. It has helped several economies to boost their trade relations with other countries. However, there are pros and cons to free trade, hence opinion about the overall benefits of free trade differ from economists to economists. Free trade policies are also influenced by international politics.

 

Free trade pact between countries is much talked about in the global textile trade. Trans Pacific Partnership (TPP) pact, for example, attracted immense debates and discussions in the past. It involves an agreement that requires some of the developed countries of world like USA, Canada, Australia, New Zealand, and the developing countries of the world like Vietnam, Mexico, Brunei, and many others to trade freely (without any duties or restrictions) with each other. The pact divided the economists of the world into two sections one section supporting this pact and the other section opposing this pact. Similarly, free trade agreements like North American Free Trade Agreement (NAFTA), ASEAN free trade agreement, etc. have also remained popular.


NAFTA enabled USA, Canada, and Mexico to trade without any trade barriers with each other. Similarly, in terms of trade ASEAN free trade agreement has made the entire ASEAN region one bloc. It lets the various countries of the region to export as well as import textile products easily and inexpensively within the region. But, it has to be noted that the effects of free trade on the overall economy depend on the country it trades with! Majority of times in the past, it has only helped the two trading countries. Free trade has encouraged globalization to a larger extent in the global textile industry. Today, a typical piece of garment travels to various places (even countries) before the finished product is sold to retailers.


Owing to globalization and advanced means of transport and communication, trade in the global textile industry has increased manifold. Trade practices influence the global textile industry in myriad ways. Production of raw materials and finished products is dependent on the global trade practices.


The face of the global textile industry would have been different, in case the trade practices were different! Trade is an important aspect in all the fields; the global textile industry could not have remained an exception. It facilitates production, reduces unemployment, and eliminates shortage. Trade practices play an important role in the global textile industry.



References:


1.      Business-standard.com

2.      Chinadaily.com.cn

3.      Wikipedia.org

4.      Agoa.gov

5.      Newindianexpress.com

6.      Textile Times

7.      Cotton International

8.      Cotcorp.gov.in

9.      Export.gov