Rise in U.S. Share of World Textile Trade
Author:
Ms. Gertrud Lovasy https://isni.org/isni/0000000404811396 International Monetary Fund

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Publication Date:
01 Jan 1953
eISBN:
9781451949421
Language:
English
Keywords:
SP; cover book; bibliography; export; continuation of the bibliography; export price; price movement; export trade; export demand; cotton goods export; Exports; Agricultural commodities; Imports; Export prices; Consumption; Europe; Western Hemisphere
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PRIOR TO THE WAR, the greater part of the world’s exports of textiles came from Western European exporters, including well over one third from the United Kingdom and about 40 per cent from continental Western European sources. Japan was the only major source of supply outside Europe, and U.S. textile exports accounted for only a minor fraction of world trade.

Abstract

PRIOR TO THE WAR, the greater part of the world’s exports of textiles came from Western European exporters, including well over one third from the United Kingdom and about 40 per cent from continental Western European sources. Japan was the only major source of supply outside Europe, and U.S. textile exports accounted for only a minor fraction of world trade.

PRIOR TO THE WAR, the greater part of the world’s exports of textiles came from Western European exporters, including well over one third from the United Kingdom and about 40 per cent from continental Western European sources. Japan was the only major source of supply outside Europe, and U.S. textile exports accounted for only a minor fraction of world trade.

The postwar pattern is different: the share of Japan, in spite of rapid recovery in recent years, is still hardly more than half of what it was before the war; the share of the United Kingdom has declined to little more than one fourth of world exports; and the United States has become a major exporter, contributing, in 1951, 15 per cent to the trade of the main exporting areas, against only 5 per cent in 1937 (Table 1).

Table 1.

Value of Textile Exports, by Major Supplying Areas1

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The areas shown accounted, in 1937, for roughly 90 per cent of world exports of textiles.

Percentages calculated before rounding of value figures.

Sources: Trade statistics of individual countries; Organization for European Economic Cooperation, Statistical Bulletins: Foreign Trade; International Monetary Fund, International Financial Statistics; The Cotton Board, Quarterly Statistical Review (Manchester, England).

Changes in the composition of export trade and unequal price movements, both for different products and for similar products from different sources, make it impossible to correct the statistics of world trade for price changes so as to make 1937 comparable with the postwar years. Data on world trade for major textile manufactures suggest, however, that there has been little change in the over-all volume of textile trade and that the increased value is due entirely to higher prices. But there have been considerable shifts not only in the distribution of trade but also with respect to types of goods. Trade in cotton textiles, though still accounting for most of the total, has declined considerably. This has been offset by a sharp rise in trade in synthetic fibers and manufactures. There has been little change in trade in woolen goods.

Trade in cotton textiles

The postwar decline in world trade in cotton manufactures has been in line with the secular trend: trade in cotton textiles had dropped gradually from almost 10 billion square yards in 1909–13 to 8.5 billion in the twenties and less than 7 billion in the thirties. World trade in 1951 is estimated at not more than 5.6 billion square yards. This trend was due chiefly to the gradual rise in production in areas which formerly depended entirely or chiefly on imports. The drying up of export supplies from the customary sources during the war precipitated this development and gave rise to an expansion of U.S. exports of cotton textiles. Although, with the gradual recovery of output in other areas, U.S. exports declined from their early postwar peak, they retained a high share in world trade—about 15 per cent in 1951 against less than 4 per cent before the war.

The most striking features in the postwar structure of world trade in cotton textiles, compared with the prewar structure, are the sharp drop in its size; the decline in the exports of the two major suppliers, the United Kingdom and Japan, matched, on the import side, by a reduction in the quantities received by Latin America and the “rest of the world”; and the remarkable increase in U.S. exports in an altogether shrinking market.

As pointed out above, the drop in total trade is explained in part by the rising output in areas previously dependent on imports; the remarkable rise in India’s exports, chiefly to deficit countries in Southeast Asia, is part of this development. But the rise in U.S. exports is out of line with that trend; and, at first sight, it would appear reasonable to attribute it to a shortage of supplies from other sources. This explanation, though valid in earlier years, has to be ruled out, however, as in 1951 the textile industries of both Europe and Japan were already faced with increasing difficulties in finding markets for their output. It also might be thought that the rise in U.S. exports was due to rising demand in particular markets which, for one reason or another, have traditionally received their supplies from the United States. But closer inspection of the postwar and prewar patterns of trade in cotton textiles by areas of origin and destination (Table 2) suggests that only a small part of the increased exports of the United States went to markets which, before the war, had been accustomed to purchase a major share of their textile imports in the United States. The Philippines received larger quantities of U.S. exports, but Cuba’s imports of U.S. cotton goods were no greater than before the war, and most of the additional U.S. exports went to markets which, before the war, had received their textile imports from other sources. The postwar expansion of U.S. exports has thus largely been a substitution for exports from other countries.

Table 2.

Volume of Trade in Cotton Textiles, by Major Exporting and Importing Areas1

(In billions of square yards)

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The dollar value varies according to quality and source of supply. The average value per million square yards for exports from the United States during 1951 was $330,000, and from the United Kingdom, $425,000.

Including unallocated.

Of the exports to “other areas”, the Philippines received 0.06 billion yards in 1937 and 0.12 billion yards in 1951.

Including re-exports of processed imported cloth.

Source: Based on data from The Cotton Board, Quarterly Statistical Review (Manchester, England). Note: A dash (—) indicates less than 0.05 billion yards.

Canada’s greatly expanded postwar imports have been supplied largely by the United States. The United Kingdom, previously the main source of Canadian cotton goods imports, has almost entirely disappeared from that market. Far the largest part of U.S. postwar exports to the sterling area were directed to the Union of South Africa, again replacing, though not completely, U.K. trade. U.S. exports to Latin America have risen in spite of the sharp decline of total imports by that area. This decline, however, was due largely to the almost complete cessation of imports by Argentina, which before the war had received most of its supplies from European sources. Part of the rise in U.S. exports was due to the sharp rise in Venezuela’s demand for textiles; lack of data makes it impossible to determine how far U.S. trade had increased in other Latin American markets as part of a general rise in Latin American imports, or had replaced imports from other sources.

The sharpest rise in U.S. exports was to “other areas” (including the Philippines). Exports to the Philippines doubled, but most of the additional supplies went to areas which previously had not or had hardly received any supplies from the United States, making up to some extent for previous imports from the United Kingdom and Japan.

Trade in synthetic fiber and woolen textiles

In contrast to the declining trade in cotton textiles, the world’s total exports of synthetic textiles have expanded substantially since the war (Table 3). Japan, before the war the largest single exporter of rayon textiles, is the only country whose exports are still considerably below the high prewar level. But the reduction in Japan’s exports has been far more than offset by expansion elsewhere, and the U.S. share, which had been less than 3 per cent before the war, was 20 per cent in 1950 and 17 per cent in 1951.

Table 3.

Volume of Exports of Synthetic Fiber Goods, by Major Exporting Countries

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Source: The Cotton Board, Quarterly Statistical Review (Manchester, England).

There has been little change in the volume of trade in woolen goods, and U. S. exports in that sector have hardly expanded; the U. S. share in total exports of woolen goods is still negligible.

Development of Production and Trade in the United States

The expansion of U. S. textile exports during and after World War II was greatly facilitated by the fact that production in the United States—in contrast to developments elsewhere—had increased considerably during the war years. Output in 1941–45 exceeded the prewar volume by 50 per cent, thus permitting a high level of civilian consumption during the war. Data on consumers’ expenditure on clothing indicate a gradual rise of domestic consumption throughout the war, largely attributable to rising income and the disappearance of practically all durable consumers’ goods from the market. After the war, therefore, there was no backlog of demand for textiles in the United States; postwar expenditure on clothing (in constant prices) has been fairly stable, scarcely rising above the average wartime level. Production, on the other hand, has continued to rise, so that a considerable margin has been available for export (Table 4).

Table 4.

Volume of U.S. Production, Domestic Consumption, and Exports of Textiles1

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Based on data from U. S. Department of Commerce, Survey of Current Business; and The Cotton Board, Quarterly Statistical Review (Manchester, England). The indices of consumers’ expenditures and of exports are based on value figures, deflated by the retail price for clothing and by the wholesale price for textiles, respectively. In attempting to harmonize the indices listed, the significance of inventory variations should be borne in mind.

Thus, in recent years 5–10 per cent of the total cotton cloth produced in the United States has been exported, against only 2–3 per cent before the war. Developments in the rayon industry have been similar; production of rayon textiles has been more than double the prewar output and the share of exports has risen from 2 per cent of output in 1937 to 11 per cent in 1949 and 10 per cent in 1951. Cotton cloth and rayon account for the greater part of U. S. textile exports; exports of woolen goods are much less important, although the wool industry has shared in the general increase in U. S. textile output. There had been a temporary rise in exports during the war; but it subsided quickly and in recent years exports of woolen goods have again been of little significance. Most of the industry’s output is absorbed in the domestic market, and is supplemented by increasing imports.

The relative shares of the three major sectors in total U. S. textile exports can be derived from Table 5. Cotton manufactures, the leading item, accounted for almost two thirds of the value of all textile exports before the war. In recent years, their share has declined as exports of synthetic fiber products have rapidly expanded, but they still account for more than half of the value of U. S. textile exports. The share of synthetic fiber products, on the other hand, has risen from just over 10 per cent of total textile exports in the late thirties to around 30 per cent in recent years. Exports of woolen goods were less than 5 per cent of total textile exports both in 1937 and in 1949–51.1

Table 5.

Value of U.S. Textile Exports, by Main Sectors

(In millions of U.S. dollars)

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These figures refer to yarn, piece goods, and made-up fabrics, thus covering a wider range than the volume figures shown in Table 4. Piece goods account for roughly half of the values shown.

Sources: U. S. Department of Commerce, Statistical Abstract of the United States, 1951 (Washington, 1952); U. S. trade statistics.

The distribution of U. S. textile exports to major markets (Table 6) shows an increase in practically all parts of the world, with the notable exception of the United Kingdom.

Table 6.

Value of U. S. Textile Exports, by Main Markets

(In millions of U. S. dollars)

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Union of South Africa, Australia, New Zealand, and Malaya.

These figures have been derived by inflating current 1938 values by the U. S. wholesale price for textiles, not taking account, however, of differences in the composition of exports to the various areas. Consequently, the figures should be considered only as rough indications of the magnitudes involved.

The 1938 figures used are 1938 exports at 1951 prices.

Source: U. S. trade statistics.

The volume and distribution of U. S. textile exports in 1948 and, to some extent, also in 1949 were still largely the result of high postwar requirements in the receiving areas and of a low level of supplies from other sources. The large shipments to the Philippines in these two years were decidedly of such an “emergency” character; the same is true of the abnormally large supplies to Malaya in 1948, which accounted for the high figure shown for exports to the overseas sterling area in that year. The gradual tapering off of the high postwar demand, coupled with the increase of supplies available from other sources, and, no doubt, also the increasing restrictions against dollar imports, were responsible for the decline in U. S. exports in 1949 and 1950. The rise in dollar earnings in the second part of 1950 and throughout 1951, with the subsequent relaxation of restrictions in a number of countries, made, however, for a renewed upward movement of U. S. textile exports. In 1951, the volume and direction of these exports were no longer determined by emergency needs and short supplies from other sources. Actually, from the middle of 1951 on, the major exporting countries found it increasingly difficult to secure markets for their products. Thus, both the volume and the distribution of U. S. textile exports in 1951 came close to a “normal” pattern established by competitive market conditions.

Development of Production and Trade Outside the United States

In contrast to developments in the United States, textile production in most other parts of the world declined sharply during the war. This fact, coupled with expanding military requirements, led to a stringent shortage of civilian supplies, and consumption in many countries, controlled by severe rationing, was reduced to low levels. The postwar recovery of textile production was slow, and for several years the available supplies were insufficient to meet the backlog of demand which had developed in practically all areas outside the Western Hemisphere. By 1950, however, output in most regions had again reached, or even exceeded, the prewar volume, Japan and other parts of Asia (notably China) being the only significant exceptions.

World output of textiles in 1950 has been estimated at some 10–12 per cent more than before the war,2 but the expansion was unevenly distributed. As shown above, U. S. production rose more than 50 per cent; production in Latin America, which had grown rapidly during and after the war, surpassed prewar output by roughly 60 per cent, chiefly on account of the spectacular expansion of Argentina’s cotton industry. Argentina, which before the war had been the heaviest importer of textiles in Latin America, has now become almost self-sufficient. Production in most other Latin American countries has also increased considerably, so that the import demand in the area as a whole has declined sharply. On the African continent, Egypt has more than doubled its prewar output and its imports of textiles have dropped to a fraction of the prewar total. Egypt now even exports small quantities of cotton yarn. Total African import demand for textiles, however, has not declined. Australia has greatly expanded both its cotton and its wool industries, with little change in import demand. The total output of textiles in Asia (excluding Japan) was lower in 1950 than before the war, chiefly on account of the heavy drop in China’s production. India, on the other hand, has stepped up output and has turned from a net importer into a net exporter of sizable quantities.3 Pakistan and Thailand are rapidly developing domestic textile industries, but for the larger part of their consumption they still depend on imports. Japan, before the war the largest exporter of cheap cotton and rayon textiles, had, in the early postwar period, completely disappeared from the market; prior to 1947, production amounted to hardly more than 10–15 per cent of prewar output. By 1950 both production and export trade had recovered to almost half of the prewar volume; and by the end of 1951, output had risen further, to roughly 70 percent of prewar output (Table 7). Declining export demand put a brake upon further expansion.

Table 7.

Volume of Japanese Production and Exports of Textiles

(Production and export figures in millions of square yards)

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Annual rate.

Source: The Cotton Board, Quarterly Statistical Review (Manchester, England).

Asia (including Japan) is the only major region where, mainly because of a reduction in available supplies,4 per capita consumption of textiles in 1950 was considerably below the prewar level. In most other parts of the world, including the United Kingdom and Western Europe, consumption levels in 1950 appeared to be higher than before the war.

Production in the major Western European producing and exporting countries recovered slowly but, by 1950, output had reached or surpassed the 1938 level. These countries were faced with a large backlog of domestic demand, and the data in Table 8 suggest that—with the possible exception of the United Kingdom and Germany—up to 1950 the proportion of output consumed on the home market was larger than in 1938.

Table 8.

Indices of Textile Production and Consumption, by Major Western European Countries1

(1938 = 100)

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The six countries shown account for more than 80 per cent of production and for more than 90 per cent of exports of Western Europe.

These figures are generally below those for production, on account of population growth.

Sources: Production indices are from Economic Commission for Europe, Economic Bulletin for Europe. Consumption indices (output minus net exports) for 1948–50 are based on fiber consumption data given in Food and Agriculture Organization, Per Caput Fiber Consumption, Commodity Series, Bulletin No. 21, December 1951; the 1951 figures have been linked by using postwar consumption indices published in Economic Bulletin for Europe.

The figures for the United Kingdom shown in Table 8 tend to exaggerate the degree of postwar recovery. Production data for individual sectors of the textile industry indicate that output in 1938 (the base year used in the table) was considerably below the average in the preceding years.5 It has not been possible, however, to use a different base period, since the production index (interim index of the Central Statistical Office) has not been extended to prewar years prior to 1938.

When a comparison is made with production in 1935–36, it is seen that cotton textile production in the United Kingdom has reached only two thirds of the prewar volume (Table 9). This has not been wholly unintentional, however. The industry, relying heavily on export trade, had suffered for many decades from a declining demand in its overseas markets. The development of domestic textile production in these markets and the growing competition from Japan had reduced U.K. exports of cotton goods from some 3.5–4 billion yards (75 per cent of production) in the twenties to less than 2 billion yards in the late thirties. Immediately after the war, however, the U.K. cotton textile industry was faced with an almost unlimited demand. Recovery was severely hampered by a shortage of labor, and the expansion of export trade was restrained by the low level of production. Domestic consumption was still controlled by severe rationing and domestic output was supplemented, at an increasing rate, by imports of grey cloth, mainly from India and Japan, for processing and re-export.6 Up to the middle of 1949, the problem of increasing output by promoting efficiency seemed to be most in the foreground. Various steps in that direction were taken by the Government; yet re-equipment proceeded only slowly. This was explained primarily by the reluctance of the industry to invest in expensive equipment, as the booming demand of the early postwar years was not expected to continue.

Table 9.

Volume of U.K. Production and Trade in Cotton, Rayon, and Wool Textiles

(Production and trade figures in millions of yards)

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Annual rate.

Sources: Central Statistical Office, Monthly Digest of Statistics. The 1938 production figures are based on data expressed in metric tons published in Organization for European Economic Cooperation, Statistical Bulletins: General Staistics and Foreign Trade.

U.K. exports of cotton cloth reached a peak in the first half of 1949; the industry was subsequently faced with a slackening export demand, largely on account of the growing competition from Japan and the emergence of India as a major exporter.

Devaluation has not led to any expansion of U.K. cotton textile exports: their volume in 1950 did not even reach the 1949 level. Most U.K. exports are absorbed, however, by the overseas sterling area, which shared in the devaluations, and where, therefore, devaluation did not lower U.K. prices vis-à-vis those of local suppliers. Japan reduced its export prices, and the relation of U.K. to Indian prices was not affected by the devaluation. But exports of cotton cloth to Canada were also not favorably affected; export prices in Canada declined a little, but not sufficiently to meet U.S. competition (see Table 14).

Table 10.

Indices of Volume and Prices of Textile Exports from United Kingdom and United States

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Dollar index.

Wholesale prices for textiles.

January–September, 280; October–December, 240.

Annual rate.

Sources: Data for the United States are from U.S. trade returns and U.S. Department of Commerce, Survey of Current Business. Those for the United Kingdom are from Board of Trade, Report on Overseas Trade.
Table 11.

Volume of Production and Trade in Cotton Textiles of Five Major Producers in Continental Western Europe

(Production and trade figures in thousands of quintals)

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1937–38 average, except for France, Germany, and Total Five Countries, where 1938 was taken as the base.

Source: The Cotton Board, Quarterly Statistical Review (Manchester, England).
Table 12.

Percentage Distribution, by Main Areas, of Textile Exports of Four European Exporters

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Including Ireland.

Included with “Rest of world”.

Sources: Organization for European Economic Cooperation, Statistical Bulletins: Foreign Trade.
Table 13.

Export Prices (Unit Values) for Cotton and Rayon Textiles of Major Exporting Countries, Compared with U. S. Prices, First Nine Months of 1949, 1950, and 1951

(U. S. export price = 100)

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1951 data calculated on basis of exports of first six months.

All cotton cloth except grey.

Dyed, printed, and colored.

Dyed and printed.

Source: Based on data from Economic Commission for Europe, Economic Survey of Europe in 1951 (Geneva, 1952).
Table 14.

Volume and Unit Value of Canada’s Cotton Cloth Imports from United Kingdom and United States

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Year ended March 31.

Source: Canadian trade statistics.

The post-Korea boom resulted in a temporary revival in demand for U.K. cotton goods; but in the second half of 1951 exports declined again, and there was some contraction of output. In March 1952 the Government, in order to help the industry, suspended imports of grey cloth for processing and re-export from Japan; it also reduced the domestic purchase tax on textiles. Supply shortages no longer present a problem and present attempts are rather in the direction of securing a higher level of demand.

In contrast to developments in the cotton industry, both output and exports of U.K. woolen textiles have been restored to prewar levels. Up to the middle of 1951, when exports suffered a severe setback in the course of the general recession in the textile industry, exports had gradually increased, the rise in U.S. consumption of woolen goods being partly met by increased imports from the United Kingdom.7

U.K. production and exports of synthetic fiber products have also increased rapidly in line with the general upward trend in that sector of textile production. But owing to the sharp decline in the cotton textile trade, the total volume of U.K. textile exports in the postwar years has not exceeded 75 per cent of the prewar volume. This is in sharp contrast to the development of U.S. textile exports (Table 10).

In continental Western Europe the postwar restoration of both production and consumption of textiles has tended to go further than in the United Kingdom. Production of cotton textiles in the five major producing countries—France, Italy, Germany, Belgium, and the Netherlands—has been higher in recent years than before the war; in 1951 their total output was some 20 per cent above the 1938 level. Exports have not expanded at the same rate and a larger proportion of output is being consumed in the domestic markets. This is true not only for the group as a whole but also for each country (Table 11). Moreover, a considerably larger share of the exports of some countries is now absorbed by other Western European countries: France and the Netherlands have been supplementing domestic production by substantial imports, mainly from Italy and Belgium.

Synthetic fiber output is expanding in all the major producing countries of Western Europe. Production for the entire continental OEEC area in 1951 was about twice the prewar volume. Most of it is being used in the producing countries, largely for blending with natural fibers. Output of pure rayon does not seem to have increased much beyond its prewar volume but—in contrast to cotton textiles—a larger proportion of production is being exported. Total exports from OEEC countries in 1951 amounted to about 450 million yards, roughly twice the 1937 exports.

Data on the volume of total export trade in textiles from continental OEEC countries are not available, but those on cotton and rayon textile exports suggest that the over-all export volume is slightly greater than before the war.

It has not been possible to obtain conclusive data on price developments for continental European textile exports. A very rough indication can be derived, however, from a comparison of changes in the volume of exports of cotton, rayon, and wool yarn and cloth with the dollar value of the total textile trade of the major exporting countries. This comparison suggests that the export prices of Italian, Belgian, and Dutch textile exports have moved roughly in line with U. K. export prices as shown in Table 10. The rise seems to have been much more moderate for German and much steeper for French textile exports. The considerable expansion of French textile exports, in spite of this development, can be explained by the fact that a large proportion is absorbed by the country’s overseas territories where French exports enjoy preferential treatment.

The postwar trend toward directing a larger share of textile exports to sheltered markets is shown clearly in Table 12, which compares the prewar and postwar distribution of textile exports by main areas for the United Kingdom, France, Italy, and Germany. The ratio of U. K., French, and Italian exports to the Western Hemisphere to their total exports has sharply decreased; for the United Kingdom and Italy, the drop has been pronounced vis-à-vis Latin American markets, but exports to the United States and Canada also have been affected. French textile exports to Latin America, which never have been substantial, have been better maintained than those of the other three countries, but French exports to the United States have declined. Germany is the only one of the four countries shown which has expanded textile exports to the United States. It is, at first sight, tempting to relate this expansion to the much more moderate rise in German export prices; the total dollar value involved is small, however, and no firm conclusion could be drawn without further investigation.

The main shift in the distribution of Germany’s and Italy’s textile exports has been toward OEEC markets; there has been little change in the distribution of French exports, though there, too, there has been a tendency to sell a larger share to continental OEEC countries and to the dependent overseas territories. The most striking development in the distribution of U.K. exports has been the increased share directed to the sterling area with a corresponding decline in the shares of all other markets.

Reasons for Rise in U.S. Share in World Textile Trade

The first impetus to the rise in U.S. postwar textile exports was no doubt given by the low level of output in practically all major producing areas outside the Western Hemisphere and the considerable backlog in demand after years of stringent shortages and severe rationing. In the immediate postwar years, part of these exports were provided under UNRRA and other relief programs; in recent years, however, they have moved on a purely commercial basis. ECA aid financed raw cotton exports, but it was not used to purchase textile manufactures.

The high level of U. S. textile exports in recent years can, however, no longer be explained by shortages elsewhere. The expansion and penetration of new markets in the early postwar years has indeed been a contributing factor, for importing countries frequently tend to adjust themselves to certain brands and to continue buying them unless prices and quality advantages induce a return to previous sources of supply. But the available data suggest that such advantages have not been offered.

Price comparisons

A comparison of the export prices of other major exporters of cotton and rayon goods with U. S. prices shows that, with few exceptions, prices of European countries throughout the three years, 1949–51, were considerably above those charged by the United States (Table 13). For only one category—white bleached cotton cloth—were prices in 1950 and 1951 below those of the United States. According to U. S. trade data, only 10 per cent of total U. S. cotton cloth exports consisted of white bleached cloth; grey cloth accounted for 20–25 per cent; the bulk consisted of printed, dyed, and colored goods. Prices of exports from India and Japan have, on the whole, been considerably below U. S. prices, but these differences were probably due largely to inferior qualities.

As was to be expected, the price differentials on European exports were largest in 1949 (first nine months). After the devaluations the margins narrowed but, with the exception of white bleached cloth, no European prices of either cotton or rayon cloth were lower than those of the United States. In 1950, prices of French and Italian rayon yarn were temporarily less than the U. S. price, but in the following year these margins had again almost disappeared.

These comparisons suggest that the lower prices of U. S. textiles have been among the factors responsible for the continued large share of the United States in cotton and rayon textile export markets. It should be noted, however, that currently published trade data are not sufficiently detailed to permit the selection of strictly comparable items, so that the recorded price differences may to some extent be based on quality differences. Information on the qualities exported by European countries suggests, however, that they are not, on the average, superior to those exported by the United States. U. K. exports are a mixture of textiles produced entirely in the United Kingdom and of re-exports of low-grade grey goods chiefly imported from Japan and India and processed (bleached, dyed, etc.) in the United Kingdom. For its domestic production, the United Kingdom is using a high proportion8 of Egyptian and Sudanese raw cotton which yields high quality goods, higher than the average produced in the United States. In recent years, however, well over one third of the total volume of U. K. cotton goods exports consisted of re-exports, so that the average quality of U. K. cotton goods exports was probably not superior to those of the United States.9

Most of the cotton and rayon piece goods exported by France are shipped to French overseas territories and are probably of qualities inferior to those of U. S. or U. K. exports. This suggests that the French figures shown in Table 13 tend to understate actual price differences.

It has been claimed by European producers that the higher prices charged for raw cotton in markets outside the United States have placed them at a competitive disadvantage vis-à-vis U. S. producers. Up to the autumn of 1950, however, these “soft currency” premia (price differentials in excess of those due to differences in quality) were moderate. Moreover, a large proportion of the raw cotton used by European exporters originated in the United States. In the last quarter of 1950, when the United States, in view of a poor domestic cotton crop, imposed severe restrictions on raw cotton exports, prices of non-U. S. cotton rose much more than those for cotton in the United States. Thus, in the first three quarters of 1951, U. S. cotton textile producers benefited from lower prices for their raw materials. But the temporary competitive disadvantage thus created for other producers was considerably modified by the simultaneous sharp rise of prices of U. S. cotton textiles.10

One reason for price (and cost) differences between European and U. S. products of both cotton and rayon textiles appears to be greater efficiency in the United States. The findings of productivity teams11 which have examined production methods in the textile industries of the United States and the United Kingdom support this view. Productivity in the cotton-spinning industries was compared in terms of operative hours needed for the production of 100 pounds of yarn. It was found that the average number of operative hours required by the U. K. industry as a whole exceeded those in the United States by 138 per cent; the hours required by the 25 U. K. mills with the best labor utilization averaged 93 per cent above the United States. The reasons given for the high productivity of U. S. mills are the use of better (more modern) machinery, more efficient utilization of labor, and a number of technical processing factors as well as factors relating to management-labor relations. The productivity team on cotton weaving attributed the higher productivity in the United States chiefly to the wide use of automatic looms. Moreover, even where automatic looms were used in the United Kingdom, they were run with considerably more supervision than in the United States. One weaver in the United States may attend as many as 104 looms, against 16–24 in the United Kingdom.

A recent study by the International Labour Office12 suggests that, late in 1949, money wage rates in the U. K. cotton industry—in both the spinning and weaving sectors—were roughly one third of comparable U. S. wage rates. On that basis, the lower productivity in the U. K. spinning sector would seem to have been compensated by lower wages. In the weaving sector, however, this does not seem to have been true.

U. S.-U. K. competition in the Canadian market

The postwar redirection of Canadian demand for textile imports has gone so far as to make it useful to conclude this study with some more detailed observations on this case. In the Canadian market, the United States has replaced the United Kingdom as the major supplier of cotton textiles. The main reasons given for this development are lower prices, superior quality and better styling of U. S. products, supply according to sample, shorter and more dependable delivery terms, and more effective advertising by the United States.

The trend of cotton cloth imports into Canada seemed to offer a good test case for determining how far price differentials can be held responsible for the expansion of U. S. export trade. Quantities imported and unit values of imports from the United States and the United Kingdom have been compared for two categories of cotton cloth: “not bleached, mercerized, or colored” and “printed and dyed” (Table 14). Although in the postwar years, when the United States supplied most of Canada’s cotton cloth imports, unit values for imports from the United States tended to be substantially below those of the United Kingdom, the results are not entirely conclusive. Even before the war, U. S. unbleached cloth had had a price advantage, but at that time Canadian imports were almost equally divided between the United Kingdom and the United States.13 Since the war Canadian imports of unbleached cloth have risen sharply, but practically all has been supplied by the United States. Prices have risen for both U. S. and U. K. imports and the differential has widened in absolute terms, but the relative price advantage of the United States has not increased, in comparison with the prewar period. It therefore would appear that factors other than lower prices must have contributed to the shift in sources of supply.

Price behavior appears to offer a satisfactory explanation of changes in the import pattern for “printed and dyed” cloth. Before the war U. S. prices were higher than those of the United Kingdom, and imports were mostly derived from the cheaper source. After the war the price differential was reversed—U. K. imports had become considerably dearer. The response of imports was as it should be: imports from the United States increased and those from the United Kingdom declined. There was no response, however, to the temporary reversal of the price advantage in favor of the United Kingdom after the devaluation. The margin was small—only 5 per cent—which, in the short run, may not suffice to induce a shift; but in the following year U. K. prices had again risen beyond those of the United States. It is just possible, though not certain, that imports would have been shifted if the price differential in favor of the United Kingdom had lasted longer.

These comparisons suggest that price considerations have been one but not the sole factor responsible for the substitution of U. S. for U. K. cotton cloth imports in the Canadian market. This shift came about during the war when supplies from the United Kingdom were hard to obtain and U. S. sources proved to be convenient, largely on account of the closeness of the market, which permitted quick delivery. Thus, Canadian importers can avoid the burden of carrying large stocks since new supplies can be obtained on short order. More effective advertising by the United States has been mentioned as an important factor; in this respect, U. S. exporters have an incidental advantage in the Canadian market, as U. S. trade journals and newspapers carrying advertisements primarily intended for the domestic market are widely read in Canada. These factors, no doubt, add to the attractiveness of importing from the United States, and it would seem that nothing short of considerable price concessions by U. K. exporters could swing the Canadian market back to its prewar sources of supply.

*

Miss Lovasy, economist in the Special Studies Division, was formerly with the Economic and Financial Department of the League of Nations. She is the author of a memorandum on “International Cartels” published by the United Nations and of several articles in economic journals.

1

Woolen goods, on the other hand, are the largest item in total U. S. textile imports; in 1951 they accounted for 40 per cent of the total.

2

These and the following figures on production are based chiefly on data for mill consumption of raw cotton and wool and output of rayon yarn and staple fiber. For basic data see Food and Agriculture Organization, Per Caput Fiber Consumption, Commodity Series, Bulletin No. 21, December 1951.

3

This is not due to the fact that supplies to Pakistan are now being considered as exports. Shipments to Pakistan are mostly via land and India’s export data refer to seaborne trade only. Recorded textile shipments to Pakistan are negligible.

4

Supplies had fallen by 25–30 per cent; the growth of population by some 10 per cent further reduced per capita consumption.

5

The same applies to the figures shown for Belgium, where production in 1938 was particularly low. In the other countries listed in the table, output in 1938 did not differ substantially from the average in the preceding years.

6

In view of the finishing process they undergo, these re-exports are not treated as such in the U.K. trade returns but are included with regular exports. Thus, the export figures shown in Table 9 include these re-exports.

7

U.K. exports of woolen goods to the United States have increased from some 7–8 million square yards in 1936 and 1937 to over 13 million in each of the years 1950 and 1951.

8

Import data show that in recent years roughly one third of U. K. raw cotton mill consumption consisted of Egyptian and Sudanese growths.

9

Reports with respect to the quality of U. S. and U. K. textile exports to markets where the former has tended to replace U. K. supplies support this conclusion.

10

Mill margins in the United States (i.e., the differences between the cloth price and the price for raw cotton) increased from an average of 35 cents in the 1949–50 season to 46 cents in 1950–51, indicating a substantial rise in profits during that period. Comparable figures for European producers cannot be obtained.

11

These teams were sponsored by the Anglo-American Council on Productivity formed late in 1948 on the initiative of Sir Stafford Cripps and Mr. Paul Hoffman.

12

Textile Wages, an International Study (Geneva, 1952).

13

The group “not bleached, mercerized, or colored” is too broad to exclude quality differences and it may well be that imports from the United Kingdom were of superior quality.

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Cover IMF Staff Papers
IMF Staff papers: Volume 3 No. 1
Author:
International Monetary Fund. Research Dept.
Volume/Issue:
Volume 1953: Issue 001
Publisher:
International Monetary Fund
ISBN:
9781451949421
ISSN:
1020-7635
Pages:
192
DOI:
https://doi.org/10.5089/9781451949421.024