Latin American flow means few jobs in U.S. saved by anti-Asian embargo.

CONCERNS that an unstoppable Asian juggernaut is going to crush whatever is left of the U.S. textile and garment industries may be vastly overstated.

With a three-decade-old quota system lifted as of Jan. 1, U.S. manufacturers fear that the Chinese and Indian garment exporters, with their vast armies of cheap labor, are going to put them out of business in the lucrative North American market.

While it's true that the Americas are at a disadvantage--the hourly labor costs in the U.S. and Mexican apparel industries are $9 and $2.50 respectively, compared with 88 cents and 38 cents in coastal China and India--wages are only one part of the equation.

Doomsayers are wrong, argues a study by the Harvard Center for Textile and Apparel Research, because they ignore a crucial fact: proximity.

Wal-Mart Stores Inc. and other U.S. chains prefer North and Central American and Caribbean suppliers who are closer to home for products like jeans and T-shirts that must be quickly replaced on store shelves as stocks run out.

"The Wal-Mart model that dominates the U.S. retail scene," says David Weil, a Boston University economics professor and a coauthor of the report, "requires suppliers to replenish their products on a weekly basis. We don't see that relationship changing just because quotas are being eliminated."

Proximity is an important consideration in $61 billion of clothing imported into the U.S. under quotas. Why else would three-fifths of T-shirts sold in the U.S. be manufactured in Honduras, Mexico, El Salvador and the Dominican Republic, mainly using U.S.-made textiles, when Bangladesh and Thailand offer them for less? Ditto for denim trousers: The biggest U.S. jeans suppliers are Mexico, Costa Rica, Guatemala and Colombia, not any Asian country.

A U.S. chain such as Wal-Mart will have its computer place a replenishment order for jeans on a Sunday evening, giving manufacturers a breakdown by store location, style, fabric and size. By Wednesday, the manufacturer will fill the order.

The Harvard study shows that if a weekly order from a U.S. seller for a particular type of jeans manufactured in China is suddenly terminated, the Chinese manufacturer, who must work on longer lead times because of distance, will be left holding more than twice the amount of unsold inventory as a supplier in Mexico.

The report posits that the U.S. apparel and textile industries aren't going to have to throw in the towel just because the Chinese and Indian exporters will have more opportunities from Jan. 1 in certain products where proximity plays no role.

That underscores the unfairness of U.S. trade action against Asian textile exporters. The Bush administration imposed an embargo, ranging between 30 days and 50 days, on Indian towels, Pakistani cotton sheets, Chinese-made brassieres and robes, and some other products. The embargo is a clever move because Asian suppliers who are restricted by quotas "borrow" against their limits for the next year. Since there are no quotas for 2005, it means there is nothing in the bank for them to borrow from. The surplus Asian-made goods that have already reached the U.S. shores must be sent back and brought in again after the embargo is lifted.

The embargo is a mean-spirited move, not only because it came days before the dawn of global free trade, but also because it's difficult to see how turning back Chinese-made bras from U.S. ports only to readmit them later can save textile jobs in Southern California.

Andy Mukherjee is a columnist with Bloomberg News.