| Between 1995 and 2005, the system of quotas on textiles and apparel known as the Multifibre Arrangement (MFA) was eliminated via the Agreement on Textiles and Clothing (ATC), which liberalized apparel trade and drove a reorganization of the global apparel industry. The effects of this on finished apparel trade have been well documented, but not how this has affected trade flows of the necessary inputs, such as equipment and materials, or the quality of the finished apparel. An understanding of these effects helps to predict how a future trade agreement, the Trans-Pacific Partnership (TPP), will affect the global apparel industry. Using trade data and the Global Value Chain approach to assess the changes in trade, this paper finds that many Asian suppliers, such as China and Vietnam, have seen an increase in their finished apparel exports at the expense of regional suppliers to the US and EU, such as Mexico and Morocco. Meanwhile, the US, the EU, and Japan have seen increases in the levels of their exports of equipment and materials, due to increased global apparel production, and China is becoming an increasingly important exporter of these goods as well. A "yarn-forward" rule in the TPP and high levels of FDI inflows into Vietnam suggest that Vietnam will see an increase in the level of their finished apparel exports, at the expense of China. Additionally, by leveraging US trade and domestic production data, this paper estimates quality indices that indicate that the quality of US apparel imports has increased since 2005. US apparel imports from Vietnam have seen relatively larger gains in quality than other Asian competitors since 2005, which provides further evidence that Vietnam stands to gain from the passage of the TPP. |
