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Welfare Analysis of the Dominican Republic-Central America-United States Free Trade Agreement: The Cotton Textile and Apparel Industries

2008; Taylor & Francis; Volume: 22; Issue: 2 Linguagem: Inglês

10.1080/08853900801970585

1521-0545

Suwen Pan, Mark Welch, Samarendu Mohanty, Mohamadou L. Fadiga, Don E. Ethridge,

Economics of Agriculture and Food Markets

Abstract This article studies the effects of the Dominican Republic-Central America-United States Free Trade Agreement (US-CAFTA-DR) on the world fiber market using a partial equilibrium modeling approach. We find the effect of the agreement on the U.S. cotton yarn and Caribbean cotton apparel industries to be positive while the U.S. cotton apparel industry suffers significant losses. Cotton apparel producers in the Caribbean region gain approximately $80 million under US-CAFTA-DR while gains by the U.S. yarn industry average about $120 million over current trade arrangements. The U.S. cotton apparel industry loses about $40 million per year under US-CAFTA-DR. Notes 1The terms “Region” (following CitationGelb, 2005) and “CAFTA countries” will be used to refer to the Central American countries and the Dominican Republic who have signed US-CAFTA-DR. 2For the purposes of this article, we follow CitationGelb (2005) by defining “textiles” as yarn or fabric and sometimes end products such as bed linens, towels, window curtains, tarpaulin, tents, etc. The term “apparel” refers to clothing, footwear excluded. 3On January 1, 2005, The Agreement on Textiles and Clothing phased out all quotas on imports of textiles and apparel from countries that are members of the World Trade Organization (WTO). 4For a more complete comparison of the provisions of US-CAFTA-DR to CBTPA that affect the apparel industry, see AAFCitationA, 2005. 5For more discussion on the modeling challenges and methodologies associated with NTBs, see CitationFugazza and Maur, 2006. Pan, S., Mohanty, S., Fadiga, M., and Ethridge, D. 2004. Structural Models of the United States and the Rest-of-the-World Natural Fiber Market, CER # 04–03, Cotton Economics Research Institute, Department of Agricultural and Applied Economics, Texas Tech University. U.S. Department of Agriculture, Foreign Agricultural Service. “Central American-Dominican Republic-United States-Free Trade Agreement”. Overall Agriculture Fact Sheet, March 2005.