Research Questions

There are two primary research questions that will guide the proposed study:
1) What is the actual economic impact of Chinese clothing imports on the economy of the United States? Answering this question will most certainly include a close analysis of import-export ratios for both countries leading up to and following the 2005 World Trade Organization-brokered apparel trade agreement. Answering this research question may also include, but is not necessarily limited to, a quantitative evaluation of the following variables: economic indicators and outcomes of domestic apparel production compared to Chinese production (preferably over a longitudinal period, perhaps comparing and contrasting outcomes before and after the 2005 import-export agreements); employment/unemployment figures for domestic apparel industry employees both here and in China (again, taking the same pre- and post- intervention measures); and an assessment of retail apparel purchases in the United States before and after the 2005 agreements.
2) Considering the data collected in response to research question #1, as well as empirically validated methodologies for forecasting, what can the researcher predict as potential economic outcomes in these same areas for each of the next five years?
Objectives

The primary objective of the proposed study is to close the gap of information and knowledge that currently exists with respect to understanding the impact that American imports of apparel produced in China has had on the economy since the year 2000. Once that objective is fulfilled, it will be broadened to include using that information to discern and predict possible business and financial trends for the next five years.
Benefits of the Study

The most important benefit of the study is that it will fulfill the objective stated above, and, in doing so, will help apparel industry stakeholders, as well as the general public, begin to understand the implications of certain trade relationships. It is expected that the study will provide a replicable methodological framework for studying U.S.-China import-export relations, and that the framework will be specific enough to be precise, while simultaneously flexible enough to accommodate adjustments for other market and industry sectors. This potential seems particularly timely given recent concerns reported by the media about tainted Chinese exports in a variety of market segments (ranging from dog food and toothpaste to snack foods and children’s over-the-counter medicine). The study may provide a real-time methodology that is simple enough to be deployed quickly and sophisticated enough to collect pertinent and useful data for rapid analysis. If other researchers further the work that is started here, then businesspeople and economists can begin to manage the import-export trade relationship more effectively so that benefits are maximized for both countries and, by extension, threats are minimized for other affected stakeholders. The ultimate benefits can be maximized not just by the apparel industry, but potentially by any other market sector.
Scope of the Study

To be sure, a study that examines current and recent import-export patterns between two countries could easily become unmanageable should the researcher fail to establish well-defined parameters within which the study will be conducted. In order to avoid such a pitfall, the researcher will determine the nature and integrity of the data that are available and will subsequently make a determination regarding the limits of the study with respect to the longitudinal timeframe that will be analyzed. In addition, the researcher will limit data collection to two or three economic indicators so that the study does not become diffuse in its focus. The intention is for the scope of the study to be broad enough to permit an accurate understanding of the specific variables that are selected and their potential impact on each country’s economy, while at the same time being specific enough to make the data set meaningful and to ensure its manageability.
Competencies from the Major

The proposed study fulfills numerous competencies required of the international business major. First, the work that has been done by the researcher to date has involved the identification of key business and economic concepts that can be proposed as viable units of study. Second, the work has involved the student researcher’s engagement with the world of business and economics outside of the classroom, requiring her to identify pertinent current events and apply theoretical constructs to real-life, real-time situations. The subject that has been selected for the research study will require the student researcher to integrate theory with practice, demonstrating her ability to apply academic concepts to current and relevant issues in the contemporary international business environment. It will also challenge her to make research relevant in larger society. Finally, the proposed study will fulfill the competencies of reading, research, and writing that are required of all majors. It will also demand critical thinking, evaluative, and interpretation skills.
Glossary of Terms Used in Study

The following terms will be used throughout this study, and are defined here for the reader’s orientation and convenience:
Imports: Imports are defined as the goods that are produced abroad and which are purchased by a country and then sold domestically. A country chooses to import goods for many reasons, but in the United States, apparel retailers tend to import clothing made in China because it has been incredibly inexpensive to do so. Less expensive than manufacturing clothing domestically, and less complex than purchasing from other, smaller Southeast Asian countries, the United States steadily increased imports of clothing made in China between 2000 and 2005. As a result, retailers were able to attract more customers by passing on the savings to them, thereby stimulating their own profit margins (Mehar, 2002).

Exports: Exports are defined as the goods that a country produces and then sells to another country for profit. In the present study, China is the exporting country; the United States is the importing country.

Trade Agreements: Trade agreements are defined as contracts between two or more nations that serve as the guiding terms by which commerce between the countries will be managed. Trade agreements typically consist both of policy compromises reached by the member countries who are party to the agreement, as well as practice guidelines and strategies for enforcing those guidelines. Trade agreements may be reached directly between two negotiating countries, or they may be supervised by an international regulatory body. The World Trade Organization and the International Monetary Fund are two such bodies, and both China and the United States are members in both of these organizations.

Tariffs: Tarrifs are taxes that are levied on imported goods. Customs agents in the importing country inspect incoming goods and determine their value based upon established formulae. Tariffs are a significant part of domestic and foreign business and economic policy, and are often adjusted or introduced in trade agreements.

World Trade Organization: The World Trade Organization is an international body comprised of 150 member countries, the function of which is to negotiate, establish, and oversee trade agreements between and among the members. The trade agreements that are negotiated by the World Trade Organization serve as binding contracts between the signatory parties.

Chapter Two
Review of the Related Literature
Introduction

The purpose of Chapter Two: Review of the Related Literature, is to offer the reader a more thorough treatment of the topics that were introduced in the Background and Overview of Issue section in Chapter One. For the sake of organization and clarity, this chapter is divided into two main parts, with each section further organized by subheadings. In the first section of the literature review, the researcher provides some historical contextualization of the trading patterns of the United States and of China, with a particular focus on the import-export dynamics of the apparel industry. In this section, the researcher discerns early trade patterns between the United States and one of China’s neighbors, Japan, and identifies how that particular trade relationship established a pattern, for better and for worse, that has been replicated in the relationship between the American and Chinese apparel industries.
In the second section of the literature review, studies that are related to the topic of the economic impact of apparel imports on the United States economy are examined and analyzed for their relevance and value to the proposed study. The studies that are included provide valuable empirical data that help establish a historical baseline for import-export ratios in the apparel industries in China and the United States, and establish variables that can be incorporated for measurement during the study phase of the proposed research project. Finally, the inclusion of a methodological framework developed by Mehar (2002) will provide a foundation upon which the methodology of the present study can be clarified and constructed. Chapter Two will end with a summary and conclusion section in which the salient points of the literature review will be recapitulated.

Historical Contextualization of Trade Between the United States and China: Precursors and Patterns
In order to understand the complicated dynamics that characterize the contemporary trade relationship between the United States and China, particularly as they involve the apparel industry, it is necessary to have a basic command of the historical participation of each country in trade ventures, as well as the overall scope of China’s current participation in international business and the world economy. This first section offers such an overview.