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In addition to the restraints imposed by import quotas, most fashion goods are subject to an import tax. This tax on imports, known as a tariff or duty, is established and regulated by the U.S. government, paid by the importer, and collected by the u.s. Customs Service. The amount varies for different categories of merchandise, but it is generally ad valorem, or a percentage of the first cost (invoice cost). Its primary purpose, of course, is to increase the eventual selling price of imported goods and thus protect domestic industries. For many fashion products from the low-wage countries, however, even with the addition of tariffs and shipping costs, the final landed cost in the United States is often considerably less than for domestically produced apparel of equal quality.
As part of the] 995 WTO agreement on textiles and apparel, tariffs on imports coming into the U.S. market will decline over the 10-year phase-out period for quotas. However, by 2005, when quotas are to be fully removed, tariffs on textile and apparel goods will remain. In the GATT/WTO negotiations, the U.S. government retained higher tariff levels for textiles and apparel than is generally true for other industries. Similarly, the U.S. textile and apparel industries have more tariff protection from imports than their counterparts in the European Union.
Although many countries that have exported their textile and apparel products to the United States have complained about the quota restraints on their products, many of those countries make it very difficult for outsiders to sell in their markets. Because many less developed countries rely so heavily on their textile and apparel industries to support their economies, they do not want products from elsewhere to compete in their markets. Some have very high tariffs; some have other trade barriers; and a few will permit only products that do not compete with their own. This has been a sensitive matter for U.S. and EU manufacturers who would like to sell in those countries. In recent years, many of these less developed countries have started to permit products from elsewhere in their markets. For instance, India had a closed economy until the early 1990s but has since opened the country's market to products from other countries. As a result, fashion manufacturers elsewhere began to consider India as a potential market for their products, particularly to appeal to India's growing upper income groups who would have the means of buying imports.
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