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Last Updated: Thursday, 13 January 2005, 00:19 GMT
China threat to Caribbean textile workers
By Iain Bruce
BBC News, The Dominican Republic

Workers at the Four Seasons factory
The Four Seasons factory is operating at 50% capacity
Dulce Vasquez has been sewing trousers at the Santiago Free Trade Zone here in The Dominican Republic for 13 years.

"I've had to bring my two boys up alone on these wages, but the money's hopeless," she says. "We're constantly in debt."

"It's the same for all of us," her colleague Manuel Jesus chips in. "We couldn't get by without doing bits and pieces of other work on the side."

Ms Vasquez is badly worried about what will happen now the international quota system - known as the Multifibre Agreement - has ended.

The system used to give The Dominican Republic and other countries in the Caribbean and Central America a guaranteed share of the US clothing market.

But from the beginning of this year, cheaper Chinese imports have free access to the United States. As a result, employers warn that a third of the jobs in the Dominican textile industry could go in the next three years.

"It's deeply unfair," Ms Vasquez says. "But I'd even take a wage cut because there simply aren't any other jobs here."

Mr Jesus is doubtful. "They've threatened this for years," he says.

"They make us work 10, 12 even 13 hours a day and say they can't pay the overtime because we're too expensive. If we try to form a union they say they'll have to pack up and move to Asia."

Uncertain future

On the other side of the country, in the southern town of San Cristobal, Richard Alvarado walks up and down the aisles of the Four Seasons assembly plant that he runs with his mother and father.

Jean-Marie Burgaud, free zone consultant
Mr Burgaud says 70,000 jobs could be lost in the Dominican Republic
The meringue beat on the PA system blends into the buzz of the sewing machines. The atmosphere seems relaxed.

But Mr Alvarado is clearly concerned.

Sharper competition already means they are working at 50% capacity. Now he has just 500 employees stitching sports and children's wear for outlets like Wal-Mart.

The future could be worse.

This is precisely the kind of small, bottom-end, garment factory that is most at risk. "Many of us free zone owners have feared this moment for a very long time," he says.

Under threat

The Dominican Republic was one of the pioneers of free trade zones which can be seen on the edge of almost every Dominican town.

Four Seasons dresses
Dresses and women's underwear could safeguard jobs
The industrial estates are full of low-cost, tax-free assembly plants, most of them making jeans and other clothes for the US market.

Since the early 1980s, they have been one of the country's main sources of income and jobs. They account for 80% of exports, worth $4bn a year, and thus make up the biggest source of foreign exchange after tourism. With 180,000 workers, 120,000 of them in textiles, the zones are the biggest employer after the government.

Now all that is under threat.

"The Dominican Republic was selling 16% of the trousers imported by the US last year, and China only 2.5%," says Jean-Marie Burgaud, a free zone consultant who has been working in the region for more than two decades. "If you imagine that China takes all that, we're going to lose 70,000 jobs in this country."

Chinese partners

Dominican factory owners argue three things could limit the damage.

A proposed Central America Free Trade Agreement, or Cafta - which includes The Dominican Republic but which is currently stuck in the US Congress - could help to reduce costs and job losses.

Sunset in the Dominican Republic
The Dominican Republic's textile industry's heyday has passed

The Dominican Republic's proximity to the United States might give them an edge if they can move up-market into quick-change, fashion goods, supplying retailers who are not prepared to wait the 45 days sailing time it would take for new lines to arrive from China.

"We won't be able to compete on items like pants and shirts," says Mr Alvarado. "But probably we will be able to compete on items like dresses and women's underwear that are short runs and need a fast turnaround."

Thirdly, there is the possibility of greater vertical integration. In other words, doing more of the work here.

This could even lead to an alliance, rather than competition, with China, according to Bernardo Vega, a former Governor of the Dominican Central Bank and Ambassador in Washington.

"Already, some of the important owners of big free trade zones here are considering integrating backwards and producing the cloth here," he says.

"Maybe they'll bring some Chinese plants to work here so that they can take advantage of the short distance into the US."

All over

But such measures can only claw back a part of what is likely to be lost.

Dulce Vasquez
Single mother Dulce Vasquez is worried about the future
The bottom line remains labour costs.

One alternative, according to Mr Vega, could lie across the border in neighbouring Haiti. Wages and living standards there are even lower.

"Already two big Dominican textile assembly plants are doing some of their labour intensive production in Haiti. Then the product comes here for finishing," says Mr Vega.

"But the political situation in Haiti means this cannot be done on a large scale," points out as Mr Burgaud.

For him, the Dominican free zones may be a victim of their own success. Twenty-five years ago they formed the spearhead of a certain phase of globalization, based on lowering tariffs and deregulating labour markets.

"Now the whole world is heading towards a system that looks very much like the export processing zones." And that may mean the Dominican Republic has had its day.


SEE ALSO:
Country profile: Dominican Republic
09 Dec 04 |  Country profiles
Timeline: Dominican Republic
31 Dec 04 |  Country profiles


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