Last week Brad Setser pointed out that the weak dollar hasn't benefitted the US very much in terms of cutting imports and boosting exports. In fact, it's done virtually nothing at all as far as tackling a soaring current account deficit goes (Brad runs the numbers today on a $900bn CA deficit for 2005). Somebody who has benefitted, however, is China. In particular, the weaker dollar/renminbi and the end of the Multifibre Agreement has generated a booming textile export trade coupled with shrinking import growth. Bad news both ways for the US and for a European Union seeking to defend its own textile jobs in the face of 10%+ unemployment.
Imports of Chinese textile and apparel products into the United States soared in the first quarter, offering fresh evidence that the world's clothing trade is being drastically reshaped by the abolition of global quotas in January.While Chinese exports to the US have skyrocketed, sub-Saharan Africa -- the region surely least able to cope with the Chinese deluge -- is taking it on the chin. US Commerce Department's data on the first three months of 2005 shows that US textile imports from sub-Saharan Africa as a whole dropped 1.5%. The region's #1 category, womens' and girls' slacks, accounting for over 20% exports by area of fabric, fell 10.4% in the first quarter. The top three categories accounting for almost half the region's textile exports to the US, collectively dropped 4.7%. Things in Mexico aren't going much better, with total textile exports to the US dropping 4.3% in area in the first quarter.
The United States Commerce Department said Friday that in the first three months of the year, preliminary data showed that United States imports of textile and apparel products from China rose more than 63 percent from a year ago. . . .
Trade relations between the two countries are already tense, partly because the United States trade deficit with China reached a record $162 billion last year, making it the largest trade imbalance ever recorded by the United States with a single country.
European officials are also weighing some form of trade restriction to stem the equally large flood of Chinese textile and apparel imports into the European Union.
Both Africa and Mexico had high hopes once that their privileged access to the US market via NAFTA and AGOA would spur growth, wealth and broad economic development. Looks like it's time to kiss those dreams good-bye, as must happen with all free trade delusions.