12

45 YEARS OF “TEMPORARY” PROTECTIONISM ENDS IN 2009—NOW WHAT?

The Big Bang

Despite the scrambling by Auggie and his troops, as well as the support from his allies around the world, the final tranche of textile and apparel quotas was lifted as scheduled on January 1, 2005. The surges from China were everything Auggie had feared. As Figure 12.1 shows, for some categories released from quota, China’s exports to the United States soared by more than 800 percent during the first four months of 2005, compared to the same period in the preceding year. The T-shirt, or cotton knit shirt category, showed import surges in excess of 1,200 percent. Overall, the average increase across all categories released was slightly more than 400 percent. It was a flood, and it did indeed appear that many firms in the United States and around the world would soon drown.

Figure 12.1 Percentage Increase in U.S. Imports from China for Categories Released from Quota on January 1, 2005. January-April 2005 Compared to January-April 2004.

Source: Author’s calculations from OTEXA trade data. Data in square meter equivalents.

My first thought, as I followed the trade developments in early 2005, was that we were finally seeing—after decades of political control—what free trade in apparel would look like. Though there remained multiple complex agreements governing apparel trade, the most stultifying regime had ended and the market, it seemed, was finally in charge. And if this is what a “free market” looked like, it did indeed seem that critics who feared dramatic destabilization had much to fear.

As it turned out, however, the surges from China reflected not so much market forces as politically motivated tactics. Both the exporters in China and the importers in the United States had every reason to believe that Auggie and his troops would soon find relief somewhere in Washington. Julia Hughes told me that the surge from China was partly the result of fears among both Chinese producers and American importers that the China gate would not stay open for long. There would be but a brief window, they feared, so if anyone wanted to source from China they had best do it quickly. In yet another perverse and unintended consequence, Auggie’s worst fears about the China surge were realized in part because of Julia’s fears about what Auggie would do next.

A further complexity, according to a Chinese apparel executive with whom I spoke, was that the surge itself was in part a negotiating tactic. Whenever textile and apparel import limits are negotiated by the United States and foreign governments, the practice is to negotiate the percentage increase in imports to be allowed over the current year. As a result, if limits were to be reinstated in 2006, as Chinese exporters and U.S. importers feared, it would be best to get the “base” up as dramatically as possible. If, during the brief open window in 2005, imports increased by more than 400 percent, the 2006 limits would still be more than 400 percent higher than they had been in 2004. In the end, the dramatic surges from China in early 2005 displayed more about politics than they did about markets.

The Big Wink and Nod

Many of the traditional ways in which Julia and Auggie conduct their Washington battles are risky, time-consuming, and expensive, and the complexity and the expense were adding up rapidly in early 2005. As the imports from China surged, Auggie and his troops filed numerous “safeguard” petitions, which, when successful, limited imports from China for certain types of textiles and apparel. The petitions required the U.S. industry to prove that domestic producers had been harmed, and to document each case with analysis and data. For Auggie and his troops, the cumbersome and expensive process was like trying to catch waves with a beach bucket; even as he slowed T-shirts or socks, that many more pants or skirts were flooding in around him.

Fortunately for the U.S. textile industry, however, at just about the same time, George W. Bush needed help, too.

Like every other postwar president, George W. Bush repeatedly made broad proclamations on the blessings of free trade while making complex side payments in response to the groans of the weavers. In 2002, Bush received the one-vote majority (215 to 214) he needed to obtain fast-track authority to negotiate trade agreements by promising Rep. Jim DeMint of South Carolina (ironically, the self-described free trade candidate in his Congressional race) that fabric used to make apparel in the Caribbean countries would receive preferential market access only if it was dyed and finished—as well as manufactured—in the United States. In just a quick whirl of the sausage machine, printing presses closed down in Honduras and powered up in South Carolina. While the dyeing-and-finishing deal was being worked out, the “sock dispute” stalled another trade measure as textile interests held up a tariff reduction bill in exchange for a requirement that toes be sewed shut in the United States in order for Caribbean-knit socks to gain preferential market access.

In 2005, the tried-and-true wink-and-nod was alive and well. While NAFTA had been Bill Clinton’s signature Free Trade Agreement, the Bush Administration had pinned its hopes on the successful implementation of CAFTA, the Central American Free Trade Agreement. The Administration knew the Congressional battle over CAFTA would be a tight one, and knew as well that the agreement would be politically possible only if it contained protections for the U.S. textile industry. The Administration believed most Congressional Democrats to be hopeless causes. If CAFTA were to receive the 216 votes needed to pass in the House of Representatives, it would need the support of a number of “Textile Republicans.”

Bit by bit, the White House winked and nodded. In exchange for the endorsement of NCTO (the National Council of Textile Organizations), CAFTA negotiators inserted significant protections for U.S. textile interests into the agreement.¹ The most important protection was the new pocketing rule, which required apparel linings and pockets to be made of “originating” yarn and fabric. While the support of the domestic textile industry might have seemed to give the Textile Republicans the cover needed to support CAFTA, there was much more to be gained by charging the White House one vote at a time.

In the days preceding the CAFTA vote, Bush visited textile districts in North Carolina as half a dozen Congressmen agreed to support CAFTA in exchange for more specific and arcane protections for the firms in their districts.² More promises were made about pockets and linings, and the amount of U.S. fabric that Nicaragua would purchase and the amount of Mexican fabric that they would not. Yet, on the days leading up to the House CAFTA vote, Bush was still short at least a few votes.

One more vote—that of Rep. Robert Alderholt (R-AL)—came on board in exchange for a variety of sock-related promises,³ and then Rep. Robin Hayes (R-NC), whose spokesman only days before had described him as “a solid no” on CAFTA, switched his vote from no to yes, leaving the final vote in favor of CAFTA 217-215. Hayes’s price was suggested in his letter to the Bush administration on the eve of the vote:

I cannot stress to you how critical it is to reduce these damaging Chinese surges to help protect our domestic textile industry and its work force.⁴

A few days after the vote, the Bush Administration announced plans for a comprehensive agreement limiting textile and apparel imports from China.⁵ The comprehensive agreement was to remain in effect until 2009. The quotas on China were back.

It had been a stunningly brilliant negotiation. Months before, the CAFTA agreement had been written to support the industry, and in fact had received the endorsement of the NCTO, which lobbied vigorously for its passage. Yet even though the industry supported the agreement, the Textile Republicans had held out, one at a time, for a better and better deal.

Steve Lamar, EVP at the American Apparel and Footwear Association, had stood alongside Julia Hughes in representing the apparel importers. When I spoke to him in the summer of 2008, he recalled the CAFTA drama of 2005. The domestic textile interests were indeed good negotiators, he told me. “They got paid to eat their ice cream,” he said.

A Sigh of Relief

Figure 12.2 Percentage Increase or Decrease in U.S. Imports of Apparel

Released from Quota on January 1, 2005 (January-April 2005 Compared to January-April 2004)

Source: Author’s calculations based on OTEXA quota release and trade data. Data in square meter equivalents.

For the dozens of developing countries who had feared being swallowed by China, the events of early 2005 were cause for relief, even before the new restraints on China were announced. While many had feared that the surges from China would come at the expense of poor nations such as Sri Lanka and Bangladesh, it soon became clear that the U.S. consumer’s penchant for shopping would leave plenty of demand for almost everyone. Remarkably, the surges from China in early 2005 occurred alongside healthy increases in sales for almost all major U.S. apparel suppliers (See Figure 12.2). Indeed, the only dramatic losses were those experienced by the wealthy regions of Hong Kong, Macao, South Korea, and Taiwan. The T-shirts that had been sold by Hong Kong because of the quota system were now being produced in the poorer countries. This, most trade experts would argue, was as it should be.

Keven Burke, president of the American Apparel and Footwear Association, surveyed the situation in mid-2008. Finally, he told me, after decades of globe trotting in search of quota, the U.S. apparel firms were engaged in a “race to the top.” U.S. firms were seeking out long-term relationships with high-quality suppliers, finally free of the need to buy wool coats from Mauritius because that was where the quota was. Finally, some semblance of comparative advantage appeared to be driving trade flows.

The Central American countries had the advantage of proximity to the U.S. market, and were attracting business for which speed to market was most important. Bangladesh was quickly becoming the supplier of choice for cotton trousers, while India and Pakistan were competitive for a variety of woven and knit apparel at moderate price points. Tiny Sri Lanka had carved a niche in high-end undergarments, and also was increasingly rewarded for its environmentally responsible production processes. Other countries, such as Cambodia, became known for their “sweat-free” labor practices. Vietnam was a rising star in a number of product categories.

The trade data for the 2005-2008 period suggested a more complicated picture (see Figure 12.3). While the worst fears of many developing countries had not been realized, there were indeed losers among the group, particularly in Africa. At the same time, however, there were many winners among poor countries as well, and the most significant losses were concentrated in wealthy countries.⁶ As of mid-2008, even though China was still constrained by quotas, the quotas did not appear to be binding: China had plenty of quota left and quota prices were falling. In 2008, T-shirts were coming into the United States from more than 100 countries.⁷

What’s Next?

On January 1, 2009, the landscape shifted once again when most quotas were removed for China. Not surprisingly, Auggie Tantillo and Julia Hughes disagreed on what would happen next. Julia believed the dramatic surges of the past were unlikely to happen again. Costs were rising in China, and the higher wages meant that China could no longer undercut its competitors around the world. But both Auggie and Cass Johnson of NCTO believed that China remained a dangerous threat. The U.S. textile industry continued to dwindle, and was still defined by its miseries: job losses, bankruptcies, and plant closings. The miseries, according to Cass and Auggie, were about to get much worse. Both believed that China without quotas could quickly swallow the CAFTA countries, which were the most significant customers for the U.S. industry. Perhaps more important, however, Cass and Auggie both emphasized the myriad ways in which China simply does not play by the rules. From counterfeiting to currency manipulation and unfair subsidies, they believed that the deck is stacked in favor of China and against the American companies who play fair.⁸

Figure 12.3 Percentage Increase or Decrease in U.S. Imports of All Apparel (Year Ending in June, 2008 Compared to 2004)

Source: Author’s calculations based on OTEXA trade data. Data in square meters.

In the summer and fall of 2008, Auggie and Julia were once again readying for a China battle. Brenda Jacobs, the trade attorney representing apparel importers, warned the firms sourcing in China to prepare for a fight. The domestic industry was “saber-rattling,” Jacobs warned the importers, and was preparing to use all manner of political tactics to address the China challenge.⁹ When I spoke that summer to a variety of people in Washington who worked with apparel importers, they all seemed to be engaged in the same game: guessing what Auggie Tantillo would be up to. What, exactly, were the sabers going to look like?

In mid-September 2008, Barack Obama and John McCain were unexpectedly in an apparent dead heat for the presidency. Julia and Auggie agreed that the tight race tilted the advantage to Auggie: Lining up trade protections for the textile industry was a tried-and-true vote-getting tactic. “The closer the election, the more they love us,” Auggie told me.

I asked Auggie what exactly his sabers would look like.Would the industry press for monitoring agreements, import safeguards, punitive tariffs, or congressional action?

“Everything’s on the table,” he smiled.

Not exactly what Julia wanted to hear.

Friends and Enemies, 2008

Harry Truman famously remarked that the only way to have a true friend in Washington is to buy a dog. After following the T-shirt trade battles for a number of years, it was easy to see the wisdom in Truman’s remark. In the life of a T-shirt, political alliances shift as rapidly as trade flows.

In 2004, dozens of developing countries had sided with Auggie as fears of the imminent China threat grew. In 2008, alphabet armies from around the world again arrived to shore up the American troops. ETGAMA (Ethiopian Textile and Garment Manufacturers’ Association), LTEA (Lesotho Textile Exporters Association), and CANAINTEX (Cámara Nacional de la Industria Textil de Mexico), along with armies from more than a dozen other countries, were bombarding the Department of Commerce, the USTR, and the U.S. Congress with letters and lobbyists in the fall of 2008. The China wolf was again at the door, and desperate measures were called for.¹⁰ In late 2008, it was not entirely clear what form this international coalition would take or how it would operate. “We’ll be working with them,” was about all Auggie could say of his international allies.

Yet other developing countries were on Julia’s side. Julia was supporting the McDermott bill, or the “New Partnership for Development Act of 2007,” legislation that would give duty-free access to goods from the world’s poorest countries. Of course, the poor countries that would benefit were in Julia’s camp, but those that were not quite poor enough to benefit, or those who already had free access and wanted to keep their club as small as possible, were siding with Auggie.

Some countries split their loyalties, siding with Auggie on protection from China and with Julia on duty-free access. It was hard to tell who were friends and who were enemies.¹¹ The battle lines were noticeably more blurry than they had been just a few years before.

Domestic alliances were increasingly fluid as well. The seed-to-shirt coalition that had been a reliable mainstay for generations had first begun to splinter in the early 1990s, when the shirts flipped to Julia’s side. Yet in 2005, the seed-to-fabric bloc that remained was reliably solid on Auggie’s side. The fact that the cotton growers in Texas and the textile producers in South Carolina could rely on one another for support in Washington went a long way toward explaining the generous coddling that both industries had long received. Textile producers and cotton growers had long been intertwined in the United States; in fact, in 2007, Wally Darneille, president and CEO of the Plains Cotton Cooperative in Lubbock, was elected vice-president of NCTO. “We try to look out for each other if we can,” Wally told me when I visited Lubbock.

In 2005, the cotton lobby had sided with Auggie in seeking limits on Chinese apparel imports, and a few years later the textile lobby had returned the favor by throwing its weight behind the 2007 Farm Bill. The Farm Bill, as we saw in the first section of this book, had relatively little to do with farmers, and in fact included a number of valuable nuggets for the textile producers. In particular, under the 2007 Farm Bill, the U.S. government pays U.S. textile mills for each bale of cotton that they purchase, a provision that scratches everyone’s back at once. ¹²

An uncomfortable reality was threatening this cozy alliance in 2008, however. If Wally were going to side with Auggie again in the fight against China, the cotton growers would now be signing on to battle their own biggest customer. By 2007, China was purchasing more than twice as much U.S. cotton as was the U.S. textile industry.¹³ If cotton growers signed on with Auggie to seek apparel import limits from China, the U.S. cotton growers would be crippling their biggest customer’s ability to buy U.S. cotton.

It looked like an almost impossible position for Wally Darneille as president of the PCCA in Lubbock and vice-president of the NCTO. Wally laughed when I asked him about this. “I keep two baseball caps in my office,” he joked. “Once says ‘China’ and the other says ‘North Carolina.’ I can change hats pretty fast.”

How long the traditional loyalties linking Texas and North Carolina could remain in the face of the new global business reality was anyone’s guess. A cold-hearted calculation seemed to suggest that the “seed” might soon go the way of the “shirt.” Indeed, the cold-hearted calculation would have the seed and the shirt on the same side, battling with Julia to let the Chinese T-shirts in.

No one I talked to seemed to have a clear idea how it would play out. For many, it seemed highly unlikely that the fast-talking New York fashion types would come to roost in Washington with the Texas cotton farmers (“You should see them around the table together,” Brenda Jacobs told me. “It doesn’t work.”) Julia Hughes believed that the traditions binding the U.S. textile producers and cotton growers together would be hard to break. For others, however, it was just as unlikely that the U.S. cotton growers would continue to shoot themselves in the foot by siding with their traditional allies. Perhaps the seed would just gradually drift away from the club.

Yet the very fact that the shifting or stable alliances were of such interest in 2008 proved that—whatever the outcome—apparel trade was still being worked out in the realm of politics rather than markets. Perhaps the markets were more in charge than they once were. But as I surveyed the Washington landscape of lawyers and lobbyists and quotas and trade agreements, of safeguards and trade associations and dumping petitions and shifting alliances, it looked to me like the best negotiators, not the best T-shirts, were still winning.

David Birnbaum, one of the industry’s leading international sourcing experts, was sounding a warning in the summer of 2008. China would be an “unreliable supplier,” he cautioned the importers. It wasn’t price, or quality, or factories, or shipping costs that he was worried about. It was politics.¹⁴

Obama’s Wink

By the end of October, Barack Obama seemed to have solidified his lead against John McCain in the 2008 presidential race. However, on the day of the election, virtually all media outlets were calling North Carolina—an important state in the race—a “dead heat” race for the presidency. Though North Carolina had voted Republican in 9 of the 10 prior presidential races, polls suggested that Obama would have a chance in the state.

The Obama campaign had devoted significant resources to the North Carolina textile communities, and Obama himself wore suits that were made in America throughout the campaign. In a TV ad airing in October, he referred to Carolina Mills, a North Carolina-based yarn spinning company. In the campaign ad, a somber narrator speaks over a close-up shot of a padlocked factory gate, which fades away into an American flag:

… Carolina Mills. Forced to shut down 17 plants; 2,600 jobs lost. Workers once proud to make thread for American flags have their jobs outsourced to Asia. Washington sold them out with the help of politicians like John McCain. He supported tax breaks and trade deals for companies that ship jobs overseas. North Carolina just can’t afford John McCain.¹⁵

Ten days before the election, Cass Johnson of the NCTO received a letter from Barack Obama.¹⁶ The letter was in response to a series of questions that NCTO had posed regarding the candidate’s position on textile trade. NCTO had pressed Obama on six key issues, ranging from ambitious tactics to deal with Chinese imports to inserting yarn-forward rules in future trade agreements.

In his letter, Obama committed to pursue most of the aggressive policies requested by the industry. And he acknowledged that the textile industry was a special case: “…I am especially aware of the trade challenges faced by those working in our textile industries,” he wrote. “I look forward to a productive working relationship with your industry.”¹⁷

It was a wink. The wink was eerily similar to what I had seen in any number of online and library archives. The Obama textile letter sounded so much like the Reagan letter or the Nixon letter or the Carter letter that it was hard to imagine that several generations had passed. Obama’s wink was announced to NCTO’s members on October 29, five days before the election.

John McCain did not answer NCTO’s questions. He did not need to: everyone knew that as an avowed free trader, McCain would have given the wrong answers.

Though Obama was declared the national winner on the evening of November 4, it took two more days to decide the outcome in North Carolina. Obama’s victory margin of just under 14,000 votes represented just 0.2 percent of votes cast in the state. As of 2008, North Carolina was still home to more than 60,000 jobs in the textile and apparel industry.

A few days after the election I asked Auggie Tantillo if the “Obama letter” had been a factor in the candidate’s North Carolina victory.

“I think it helped,” he said.

Julia and Auggie seem always to be consumed by the battle of the moment, without the time or inclination to look to the past. Yet like today’s garment workers in China, Julia and Auggie have brothers and sisters in time, as well. The numbingly complex battles and trade barriers that govern textile and apparel trade today harken back not just to Ronald Reagan and Richard Nixon, however. Their long and colorful history in fact precedes even George Washington.

The labels that I often heard applied to Auggie Tantillo and his troops—Dinosaurs! Protectionists!—suggested that those who sought to slow or manage trade flows were somehow standing in the way of progress. Yet while the conventional wisdom associates free markets with forward progress and prosperity, barriers, too, can lead to progress. Sometimes a wall limits our fortunes; other times a wall can incite much more creativity than an open door. It was a barrier that led Eli Whitney to invent the cotton gin, and a different sort of bottleneck that led James Hargreaves to invent the spinning jenny. While the world in aggregate would have been richer without the trade barriers, the world also would have been a different place. Trade barriers, like other barriers, can blow the future apart.

What would the world look like today had the dinosaurs never roamed? It is impossible to know. Consider the following parable from long ago, when Auggie Tantillo’s protectionist ancestors first tried to block the cheap cotton clothing flowing in from Asia.

Try This New Underwear

In the early seventeenth century, the English woolen industry had no rivals. The industry was highly successful both domestically and internationally, and it formed the backbone of entire communities in much the same way cotton mills dominated early twentieth-century North Carolina. Employment was also great in ancillary industries such as weaving and embroidery. Writers on the topic of English wool often became mired in what Thomas called “poetic ecstasy”: The more restrained lauded English wool as the “foundation of English riches,” while the less restrained compared English wool to Samson’s locks.¹⁸

Poetic ecstasy notwithstanding, the term English woolens does not compel one to jump out of bed each morning to dress. Though the fabric was indeed central to the economy, the woolens were also expensive to the average consumer, so the English middle class had very little variety of dress. And then, as now, woolens were itchy, they were hard to clean and dry, and they were hot and clammy in the damp English summers. It is hard to imagine how even the most passionate patriot would, if given a choice, prefer woolen underwear to cotton.

The handmade Indian cotton calicoes and muslins that began to pour into British ports in the mid-1600s were a consumer boon not unlike today’s cotton T-shirts from China. For socks, children’s clothing, and frocks, there was a marvelous new alternative: It was cheap, it was light, and it was washable. It came in a variety of bright colors and prints, and it was soft instead of itchy. The directors of the East India Company wrote India in 1691 that any quantity, and any type, of Indian cotton cloth should be sent: “You can send us nothing amiss at this time when everything of India is so much wanted.”¹⁹ Daniel Defoe worried that the cheap cottons from India had:

crept into our houses, our closets, our bedchambers; curtains, cushions, chairs, and at last beds themselves were nothing but Callicoes…everything that used to be made of wool, or silk, relating to either the dress of women or the furniture of our houses, was supplied by the Indian trade.²⁰

Readers can no doubt predict the response of the British woolen industry to the torrents of cheap cotton clothing flowing in from Asia. As consumers clamored for the soft and cheap clothing, the “groans of the weavers” quickly reached the British Parliament.²¹ The mill owners told of crises and even starvation in the shadow of the shuttered woolen workshops, and of the unemployed fleeing to Holland and Ireland. Even the mills that stayed open had cut their employment drastically, and the related industries, as well as woolen district shopkeepers, also suffered and added their voices to the cacophony of groans. In many districts, unemployment was above 50 percent, leaving half the men, and most of the women and children, dependent on the parishes for support. And the cheap cotton imports cost not only jobs but lives. The 1700 England’s Almanac reported that:

Lord Godolphin’s and Duke of Queensbury’s sisters were burnt to death by muslin head-dresses and night-rails; the Lady Frederick’s child burnt to death by a calico frock; a house belonging to St. Paul’s School burnt by a calico bed and curtains, a playhouse at Copenhagen with 3 or 400 people burnt occasion’d by calico hangings.²²

The new underwear was dangerous.

The war against cotton imports that raged through the English Parliament in the late 1600s pitted the woolen interests against the reasoned voices of those who argued that cotton was a superior fabric in some settings, especially in summer. Like snarling dogs today, the woolen interests tried to reserve some piece of the pie for the domestic industry. This act, introduced in Parliament in 1689, for example, reserved cottons for use in the summer only:

All persons whatsoever to wear no garment ...but what is made of sheep’s wool ... from the feast of All Saints to the feast of Annunciation.²³

Other attempts to shore up the market for woolens involved legislating the dress of particular groups in order to support the domestic industry. If the groups could be made big enough, perhaps wool could be saved. An act introduced in 1699 stipulated that:

all magistrates, judges, students of the Universities, and all professors of the common and civil law… [must] wear gowns made of the woolen manufacture [at all times of year].²⁴

When this attempt to dictate dress failed, the woolen interests turned their attention to less powerful groups. It was argued quite shamelessly that even the poorest could afford a bit of wool in their wardrobe: An act at the same time introduced to Parliament required all female English servants earning five pounds or less to wear only woolen hats. As in today’s trade agreements, there was an attempt to keep some piece of the pie for the domestic industry. If the woolens could have some part of the calendar, or some part of the population, then their well-publicized misery would be eased.

But in the end, by 1700, Parliament had granted woolen’s wishes for only one group of consumers, a group that didn’t get itchy in wool, the one group that was less powerful than female servants. An act, passed easily, stipulated that:

No corpse of any person…shall be buried in any shirt, shift, sheet or shroud ... other than what is made of sheep’s wool only.²⁵

For this event, like many others, there was a little poem:

Since the living would not bear it
They should when dead be forced to wear it.²⁶

Of course, each British citizen died only once, and once dead did not change clothes, so this limited market was not enough to restore the fortunes of the English woolen industry. With the landowners and the churches on their side, the woolen workers could not be easily dismissed. In 1701, Parliament responded with an astonishing rule for the living: Beginning on September 29, 1701, people simply could not wear this slight and tawdry cloth anymore. For all people, and at all times of year:

all calicos painted, dyed, printed, or stained (in Persia, China, or the East Indies) which are or shall be imported into this kingdom, shall not be worn or otherwise used within this kingdom of England.²⁷

Notably, the act did not exclude simple utilitarian muslins that had not been dyed or printed.²⁸ Presumably, anyone with a legitimate “need” for cotton fabric could have it met with the plain muslins. The “calicoe madams,” however, who had embraced the new fashionable prints, had best dust off their woolens. Yet while the Calicoe Laws of 1701 appeared at first to be a victory for the woolen interests, it became clear almost immediately that Parliament could not legislate the woolen industry’s salvation.

Predictably, the barriers triggered entrepreneurial instincts. With consumer demand still rampant, and the plain, undyed muslins still flowing in at very low prices, entrepreneurs in England figured out quite quickly how to print and dye cotton cloth, and had soon mechanized the process. A new industry was born in England, and it was successful almost immediately. In 1702, barely a year after the act had gone into effect, the Commissioners of Trade and Plantations bemoaned the unintended consequences of the trade barriers:

Though it was hoped that this prohibition would discourage the consumption of these goods, we found that allowing calicos unstained to be brought in has occasioned such an increase of the printing and staining calicoes here that it is more prejudicial to us than it was before passing the Act.²⁹

In putting up a wall to keep out Indian printed cottons and save the domestic woolen industry, the protectionists had instead constructed a warm and profitable incubator for the cotton printing and dyeing industry in Britain. The woolen workers were behind where they had started. By 1719, they had taken their battle to the streets. Woolen weavers declared war, quite literally, against the calicoes that had stolen their livelihood. The woolen weavers—all men—not only began to “plunder” and protest in the streets of London, they began to attack the women. The news reports of the day are replete with references to “disorders” and “outrages and abuses” on bodies of persons wearing calicoes.³⁰

The woolen weavers won the war, clearly and decisively. On December 25, 1722, it became illegal to wear—or to use in home furnishings—almost all imported cotton cloth.³¹ And the law was not a brief insanity: The ban on cottons would not be lifted for decades, forcing a generation of Britons into hot, itchy, and expensive clothing, all in the name of saving the domestic textile industry.

But being forced into woolens in the damp English summers got people thinking, and before long, the British gushed forth with a stunning string of ideas about how to manufacture cotton cloth in England: power looms, spinning jennies, factories, the Industrial Revolution itself. By blocking access to cheap cotton clothing from Asia, protectionist dinosaurs had launched the modern world.