According to the 2008 World Trade Statistics Yearbook, the Caribbean manufacturing industry is once again facing severe competition. Regarding the issue of clothing exports, the WTO explained that neighboring countries in the Caribbean and Central and South America are facing strong competition from low labor cost countries.
According to the Yearbook, labor-intensive mass production activities are generally concentrated in low labor cost countries, usually export processing zones in developing countries. They import raw materials or other semi-finished products for processing or assembly before exporting. For some countries, EPZs account for the vast majority of all exports. From 1997 to 2007, the export of manufactured goods in the export processing zones of Mexico, the Dominican Republic, and some Central American countries was faster than the export of traditional products in the first half of the cycle, but lagged behind the export of traditional products in the second half of the cycle.
The yearbook specifically mentioned that China’s accession to the WTO in 2001 and the expiration of the Textile and Clothing Agreement at the end of 2004 intensified competition in the global apparel market, and the low export growth in export processing zones reflected this. Competition also comes from emerging Asian powers such as Vietnam and Cambodia and traditional competitors such as India and Bangladesh. The U.S.’s apparel imports from export processing zones in Caribbean countries fell by an average of 13.4% annually. The Yearbook also highlights that another reason for the decline in manufactured export growth is the growth in natural resource export earnings.
Some preferential trade agreements (such as the U.S. Caribbean Basin Plan) and the European Union and the United States taking defensive measures on the import of certain textiles and clothing from China have caused the exports of some developing countries to remain flat or even increase slightly. Some preferential trade policies allow the processing of garments from fabrics sourced outside the United States. This benefits small exporters such as Madagascar and Haiti, which have seen apparel exports to the United States grow by 26% and 15% respectively over the past five years.
