The Great Quota Hustle

Presented by: Nora Liza bt Sabberi Nor Zaidatul Nabila bt Zait Shaziana Shazlin bt Mazme

Key Points
The Great Cuota Hustle discusses the quota system governing the import of clothing into the United States. After a brief discussion of how the system began, the case describes how the quota system is often manipulated by exporters. The case explains who usually wins and who loses due to the convoluted structure of the United States' clothing quota rules. Key Points The quota system limits the amount of clothing imports from particular countries. Clothing manufacturers relocate their factories (and workers) from country to country in order to be producing in countries from which U.S. clothing imports are still allowed. The system fosters falsification of origin documents in order to create the impression that garments were manufactured in certain countries (from which they would be allowed into the United States). Companies holding quotas (that is, permission to export a specific amount of clothing to the United States) make money because they are quota holders, not necessarily because they are efficient manufacturers.

The quota system required continuous monitoring by the U.S. government, which sends teams all over the world to verify that clothing is actually being manufactured where clothing tags and certificates of origin claim.

Question 1
What was the original purpose of placing quotas on clothing and textile imports? Are those goals now being met?

Question 2
What is the impact of these quotas on the U.S. economy?

Question 3
Who gains and who loses from the use of these quotas?

Question 4
The quota system is scheduled to be eliminated later in this decade. Will its elimination benefit or harm the U.S. economy? Defend your answer.