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On January 1,2005, most countries around the world, including Canada, dropped quotas on imports of apparel and textiles under World Trade Organization rules adopted in 1994, setting the stage for increased competition from low-wage, developing countries. Even before quotas expired, falling prices boosted import volumes in recent years, depressing domestic output. Recent newspaper headlines have highlighted factory closings and job losses.
This paper takes a look at the role of the textile and clothing industries in the Canadian economy1. It starts with a brief overview of recent trends in global trade. It then looks at these industries in Canada, in terms of jobs, productivity, output and trade.
Although clothing and textiles are often combined for analysis, they are quite different. The apparel industry is very labour intensive, its workers are low paid and production is mobile and can shift easily for economic reasons. The textile industry is capital intensive, continually investing in new technology to remain competitive as production is less transitory, and its workers are higher paid.
World trade2
In 2003, clothing and textiles accounted for 3.1% and 2.3% of world merchandise trade, with $226 billion ($US) in clothing and $169 billion for textiles. Although trade continued to recover from declines in 2001, which had been exacerbated by falling prices due to increasing imports from less-developed countries and exchange rate movements, growth was below the 14% overall rise in manufactured goods trade.
The EU, US and Japan account for the majority of textile and clothing imports. Although the EU still has the lion's share, it has been losing ground over the past 15 years. Canada's share has changed little.
China has become the world's largest supplier of textiles and clothing, as other Asian nations have shifted much of their labour-intensive production there. In 2003, China's textiles and clothing exports surged 31% and 26% respectively.
Textiles and Clothing in Canada
Textiles consist of mills that manufacture yarn or textile fabrics. It also includes textile product mills that manufacture carpets, curtains, linens, etc. from purchased fabrics. Textiles have a large degree of vertical integration with the output of one firm often being the input of another; from fibre to yarn, to fabric, to dyeing, to finishing, to its final form (a textile product or an...