The Impact of NAFTA on the U.S. Textile Industry
When the North American Free Trade Agreement went into effect in 1994, many expressed fears that one consequence would be large job losses in the US textile industry as companies moved production from the United States to Mexico. Opponents of NAFTA argued passionately, but unsuccessfully, that the treaty should not be adopted because of the negative impact it would have on employment in the United States, particularly in industries such as textiles. A glance at the data four years after the passage of NAFTA suggests the critics had a point. Between 1994 and mid-1997, about 149,000 US apparel workers lost their jobs, over 15 percent of all employment in the industry. Much of this job loss has occurred because producers have moved production to Mexico. Between 1994 and 1997, Mexico's apparel exports to the United States trebled to $3.3 billion. In 1993, the US jeans maker, Guess?, sourced 95 percent of its product domestically. Now it gets about 60 percent of its clothing from outside the United States, with Mexico as one of the biggest suppliers. Similarly, in 1995, Fruit of the Loom Inc., the largest manufacturer of underwear in the United States, said it would close six of its domestic plants and cut back operations at two others, laying off about 3,200 workers, or 12 percent of its US work force.
The company announced the closures were part of its drive to move its operations to cheaper plants abroad, particularly in Mexico. Before the closures less than 30 percent of its sewing was done outside the United States, but Fruit of the Loom planned to move the majority of that work to Mexico. However, the issue becomes more complicated when one takes a closer look at the data. To be sure, there have been job losses in the US textile industry, but clothing prices in the United States have also fallen since 1994 as textile production shifted from high-cost US producers to lower-cost Mexican producers. This obviously benefits US consumers, who now have more money to spend on other items. The cost of a typical pair of designer jeans, for example, fell from $55 in 1994 to $48 in 1997. Nor is the fall in prices simply a result of the movement of production from the United States to Mexico.
NAFTA has also resulted in textile production being moved from Asia to Mexico. In 1980, 83 percent of all US textile imports came from Asia. By 1997, Asia accounted for 41 percent of...