American Industry Overview: Men's and Boys' Underwear and Nightwear 

Industry Snapshot

Throughout the first decade of the twenty-first century, a particularly important force shaped the $2.2 billion U.S. nightwear and underwear industry: economic globalization. As foreign competitors' share of the domestic market expanded throughout the first decade of the twenty-first century, U.S. firms adapted by basing an increasing share of their own production outside the United States. The passage of the North American Free Trade Agreement (NAFTA) and the Agreement on Textiles and Clothing (ATC) continued to bolster these trends. The ATC served as a 10-year transition period that ended trade quotas in January 2005. The apparel industry suffered a decline, as World Trade Organization (WTO) countries began the phase-out of quotas on clothing and textiles that was part of the original agreement between the original member countries. Even though all quotas were eliminated, China and the United States came to a three-year agreement in November 2005 to limit the deluge of apparel imports into the United States, enacted per a WTO safeguard. However, when this agreement ended in 2008, China's Ministry of Commerce officially declared it would not place any licensing requirements on textile and apparel exports beginning in 2009. Although China did monitor its imports in 2008 under pressure from the European Union, and had actually suppressed textile and apparel production that year, the result was that one-third of the textile and apparel manufacturing plants in China shut down, putting hundred of thousands of people out of work. These same people protested in the streets, calling for their unpaid wages. Such social unrest made Chinese officials rethink their stance on the issue, and Sheng Lu in New Cloth Market predicted that "The Chinese government is less likely to compromise on any major trade restrictions in 2009 compared with 2005."