The Tusnami in the Indian Ocean -- and a man-made tsunami caused by the expiration of a treaty, the Multi-Fibre Agreement..

"Man-made Tsunami"
January 13, 2005

Huck Gutman

        The worlds largest seismic dislocation since the 1940s which occurred in the Indian Ocean on 26 December was catastrophic. When two tectonic plates shifted under the Andaman Sea, they created a tsunami of terrible intensity, wreaking immense destruction in Sumatra, Thailand, Sri Lanka, India, even the east coast of Africa. At first 20,000 deaths were reported; as of the moment of my writing, the death toll has climbed to more than 1,50,000. Five million are reported homeless. There is every reason to believe that both figures will increase as rescue workers reach areas as yet unsurveyed.

        World response has been swift and generous. Offers of aid - food, money, transport - have led to huge rescue operations and the relatively swift provision of food and clean water. Even in the USA, where the generosity of the people far outstrips the miserly commitment to human welfare of the current business-oriented political establishment, President Bush was forced by public opinion to increase US contributions to the relief effort from $35 million to $350 million. Private donations augment public funds, and help for the two most severely hit nations, Indonesia and Sri Lanka, is well under way.

        Nature, many have realised, is not to be controlled: it continually reminds us that human life is contingent. At the same time, billions have understood, watching images on television or listening to eyewitness reports on radio, that we are all united on this globe we inhabit. Tragedies which occur in one part of our planet affect us all by reminding us that those made wretched could, but for the grace of accident or fate, be ourselves.

        The earthquake has also revealed to many a difference between more developed nations, which have put in place tsunami warning stations in the Pacific, and less developed nations, which do not have such easy access to funding and therefore have made such warning stations a low priority. Despite the fact that we live on one globe, disasters have more severe repercussions in impoverished nations than wealthy ones.

        Still, another tsunami - metaphorical but no less real - has crested beyond the shores of the nations of the world, and is heading toward those shores, threatening devastation to both underdeveloped and developed nations. It will spare India and China, but should wreak havoc on Bangladesh, Cambodia, Indonesia, possibly Pakistan, and a host of other nations, not excepting the USA. The worst consequences, as we might expect, will come in the poorest places.

        About this tsunami, not natural in origin but humanly created, and therefore capable of being prevented by human intervention, there is little public recognition and almost no outcry of concern. Indeed, dominant financial interests have made certain that no steps will be taken to prevent the destruction that it will occasion.

        In 1973, a Multi-Fibre Agreement set international textile quotas, providing a large number of developing nations with access to new manufacturing sectors and, more importantly, enabled them to generate large numbers of new jobs. Those quotas expired on 1 January.

        The ensuing new economy of textiles will transform the world. New wealth will be amassed, new jobs created. And millions of current workers, some in the most impoverished areas of the world, will be permanently thrown out of work. (Business Week reported that the end of MFA quotas could mean losses of 30 million jobs.) The nations inhabited by these newly and soon-to-be unemployed will likely plunge into a downward economic spiral unlike anything those nations have experienced in recent decades.

        What is so appalling is that this tsunami, created by greed and an ideological commitment to free trade, can be prevented. But there are few warning systems in place: the mass media and even the intellectual centres in universities serve the interests of the rich and powerful. Of course, when the tidal wave of massive unemployment occurs it may not be dramatic enough to appear on television screens.

        Yet, the suffering brought about by this tidal wave of unemployment and the national economic catastrophes which ensue will quite literally dwarf the immense suffering which has been the consequence of the historic tsunami in the Indian Ocean.

        Textile manufacture, and what it can do to working people, is far less photogenic than natural disaster. For almost two and a half centuries, the textile industry has been a mixed blessing, providing employment on a large scale - but almost always at low wages and in extremely difficult working conditions.

        The production of textiles and apparel can be called, with good reason, the great motor of economic development. The industrial revolution began in Britain, occasioned by the invention of the spinning jenny and the mechanical shuttle, which in the 18th century made it possible for machines to do much of the work historically performed by human hands. It is fruitless to argue whether Britains navy or its textile manufacture or its banks made that nation into a great imperial power: the navy protected and expanded the shipping routes which were essential to textile trade, and the textile trade created the profits which enriched the London banks and underwrote the costs of the worlds most potent navy.
        Likewise, Germanys emergence as a world power in the 19th century was also based on the textile industry - although not in textile manufacture directly. Germanys development of the chemical dyes which supplanted plant-based dyes in textile manufacture created not just great profits, but a strong chemical industry which served as the industrial armature for one of the worlds great producers of munitions. Two World Wars were indirect results of this.

        But textile industry jobs - both the production of cloth, and the sewing of fabric into clothing - have been, since the onset of the industrial revolution, low-paying jobs. As industrialists turned their attention to high-priced items, first cars and then electronics, they shipped low-paying textile jobs to underdeveloped areas internally and then externally. For example, immigrant communities in the north of the USA, and later low-wage agrarian areas of the American south, had an influx of such jobs; when labour costs rose, those jobs were sent to low wage nations overseas.

        Under the 1973 MFA, with its set-asides to enable nations to achieve a small slice of market share of the world need for clothing, underdeveloped nation after underdeveloped nation used clothing manufacture as a means to provide jobs to its poorest citizens. Four years ago, wanting to write a report on what international clothing manufacture looks like in the daily life in a developed nation, I visited a local Wal-Mart (the worlds largest chain of stores) and began reading labels in clothing. Poland, Mauritius, Sri Lanka, Egypt, Guatemala, Nepal, Turkey, Kenya, the Philippines. The list ran on and on, to over 50 countries.

        As Mark Weisbrot, an economist with Washingtons Center for Economic and Policy Research said recently, These quotas were there for a reason, so that some of the poorest developing countries would have a chance to have an apparel and textile industry and use that as a steppingstone for development.

        Textile manufacture provides jobs, but the jobs are a mixed blessing. To be sure, weavers and more importantly today sewers earn wages, which enables those workers to enter into and even survive in a cash economy. But textile workers have, since the origin of textile factories in Britain in the 18th century, always and everywhere been lowly paid and badly exploited.

        This is not the place to argue whether the location of exploitative shops in Bangladesh and El Salvador and Kenya are good or bad for those national economies. Certainly, the textile industry provides not just large numbers of jobs, it also provides important new sources of the foreign exchange so necessary for a nations economic well-being and development. Yet, for every increased dollar of needed foreign currency which flows into those nations, new problems emerge: the uncontrolled growth of cities, gruelling labour, the expansion of urban poverty, dramatic new inequities of wealth.

        The largest benefits from textiles and apparel accrue to those who own textile and clothing factories, and in the post-modern world, to those huge multinational conglomerates which merchandise and sell clothing. In developed nations, and increasingly in developing ones, the value added which comes through advertising brand names is far, far higher, in many products, than the value of the raw materials, weaving, and sewing which go into those products.

        The profits on the manufacture of this clothing make a small group of entrepreneurs rich. Let us look, for instance, at Nike, the worlds wealthiest maker of sports shoes and sports clothing. Here is a fiscal analysis by the US-based National Labour Committee: Nike sneakers made in China by young women paid 20 cents an hour arrive in the USA with a total customs value of $14.61. That $14.61 includes every conceivable expense - the materials, labour, shipping, and the profit to Nikes contractor in China. That profit to the contractor is not inconsiderable: it has been the driving force behind the growth of the new wealth in China. Nike then turns around and sells the sneakers in the USA for $135, which represents a 924 per cent mark-up. What labour earns is pitifully small, especially as compared to the profits made by the multinational conglomerates, as another example reveals: a worker in the Dominican Republic who sews a sweatshirt for Nike earns eight cents ($0.08 dollar) for a garment which retails in the USA for $22.99.

        Now, with the expiration of the Multi-Fibre Agreement quotas, the world enters a new era, one of global free trade in textiles and clothing.

        The world textile and apparel market is enormous, in excess of $353 billion annually. Nations with low labour costs, chemical and fiber-producing industries, strong transportation infrastructure, and access to large ports are expected to be the big winners. (India is the worlds third largest cotton producer, the second largest yarn spinner. It has infrastructure in place: not just experience with textiles - until Independence, India had the worlds largest textile industry - but an existent base, with textiles currently employing 35 million, the second largest sector in Indias economy after agriculture. Already, textiles are 17 per cent of Indias manufacture, 27 per cent of its export earnings, and generative of 8 per cent of GDP.)

        There will be winners in the free trade era following the elimination of the MFA quotas. According to the World Trade Organization, China, which currently has a 16 per cent share of the US clothing market, will jump to 50 per cent of that $77 billion annual market. India will be another winner, going from 4 to 15 per cent. South America will be a big loser, dropping from 16 to 5 per cent.

    Figures can be so dull, yet we ignore them at our peril. So, despite a kind of brute facticity, I
hope the reader will bear with me for several paragraphs. For these figures are like a seismological reading of a major earthquake which will produce tsunamis all over the globe. We can ignore the instruments and what their statistics speak to us, but we do so at our peril.

        Indonesia has 1.7 million workers in clothing: many of its factories are expected to close, and the remaining factories expect to cut 20 to 30 per cent of their workers. Busniness Week estimates one million jobs will be lost in Indonesia. The direct casualties of economic disaster - what jobs are there to turn to when the factories close? - will be higher by a factor of five than the fatalities of the recent tsunami. And that is without counting any of the family members who depend on those textile paychecks for their collective livelihood.

        To take a small yet surprising example: More than a third of Moroccos 2,00,000 textile workers face the loss of their jobs. Singapores The Age revealed, As many as 50,000 workers in the tiny mountain kingdom of Lesotho in southern Africa could lose their jobs after WTO textile quotas are lifted. Or to take a larger one: a sizeable proportion of Vietnams almost 3 million textile jobs are imperiled.

        Nor is the developed world immune. In the USAs largest textile-producing state, North Carolina, 1,60,900 jobs were lost in the last decade: 1,00,000 remain, and between a quarter and half of them will be gone in next four years. Overall, one-third of the 6,75,000 textile/apparel jobs which remain in the USA are at risk.

    Among the worst casualties will be many of the nations of South Asia.
In Bangladesh, between 1.8 and 2 million people are employed in the textile trades, 80 per cent of them women. The UN Development Fund expects up to one million Bangladeshis will lose their jobs in the wake of the MFA quota expiration.

        Cheap and efficient Chinese and Indian manufacture will likely lead to these huge job losses, which will come in jobs held by vulnerable people. As a trade specialist at Bangladeshs mission to the WTO said recently, These are mostly very low qualified female workers who will find it very difficult to find employment in other sectors.

        The economic catastrophe will be much larger, of course, since the direct employment of textile workers indirectly provides further employment of another 5 to 10 million workers (the latter figure is the estimate of the Bangladesh government); one responsible economist suggests the figure will be closer to 15 million. Even more difficulties loom in terms of the nations finances. Bangladesh accounted for four per cent of clothing imports into the USA in 2002, and three per cent of the European Unions import market, for a total of $5.5 billion in export income. Three-quarters of Bangladeshs foreign exchange comes from these textile exports. Thus, the ultimate effect of the elimination of MFA quotas will be deeper fiscal penury not just for individuals, but for the nation of Bangladesh. And it is not just Bangladesh.

        Nepal has 50,000 textile trade workers, 60 per cent of them women. According to broader figures supplied by the Garment Association of Nepal, another 50,000 workers are provided jobs because of linkages to the textile industry. Ten per cent of the workforce is employed in textile and apparel manufacture. When their families are included, up to 3,50,000 people rely on the textile industry. Three quarters of Nepals foreign exchange comes from textile exports. Analysts predict that Nepali job losses will be massive.

    To be concluded.

Huck Gutman was Fulbright Visiting Professor of English at Calcutta University. He teaches at the University of Vermont.