US textile industry nervous as China quotas expire

China occurred in early 2005 with the expiration of an international quota system that had governed textile trade for decades.

US textile industry nervous as China quotas expire
U.S. textile producers are concerned as quotas on clothing from China expire at the end of the year but importers say there is no reason to expect a big jump in shipments from the Asian giant.

"The Chinese government is used to taking action to make sure its exports stay competitive and that is exactly what it's done since July," said Cass Johnson, president of the National Council of Textile Organizations.

"We've started to see China really begin a surge over the last three months," with shipments of shirts, pants, socks and underwear to the United States up significantly after a slow start earlier in the year, he said.

U.S. industry fears a repeat of the sharp increase in textile and clothing imports from China that occurred in early 2005 with the expiration of an international quota system that had governed textile trade for decades.

The United States responded to that surge by imposing emergency "safeguard" curbs, which were allowed under the terms of China's entry in the World Trade Organization.

Later in 2005, Washington and Beijing negotiated a broad safeguards pact that re-established 21 quotas covering 34 categories of textiles and clothing through the end of 2008.

With the United States in a recession and world trade in a slump, 2009 will be nothing like 2005, said Brenda Jacobs, an attorney with Sidley Austin Brown and Wood who does legal work for the U.S. Association of Importers of Textiles and Apparel.

Unnoticed 'Blip?'

The expiration of the safeguard quotas will be "a blip that no one is going to notice," Jacobs said.

China has a 41 percent share of the total U.S. textile and apparel import market. But Commerce Department data show its exports of those goods to the United States were down 1.61 percent in the 12 months ending Oct. 31.

In addition, through Nov. 27, China had not filled any of its quotas for 2008 and was only above 90 percent for two categories of socks. Other fill rates ranged from 2.8 percent for window shades and blinds to 85.1 percent for cotton trousers, according to the Commerce Department.

"The nature of what's happening in the U.S. economy is that all of the (foreign) manufacturers are finding themselves with fewer, smaller and later orders," Jacobs said.

"China's feeling it just as much as Vietnam. Maybe more. Vietnam and Bangladesh are better price points when you have a consumer that is very, very price conscious," she said.

Still, the U.S. textile industry estimates the Chinese government has pumped $10 billion in new export subsidies into its textile sector since July to shore up exports.

It's possible there won't be a surge after January 1, but the textile industry wants the U.S. government to be prepared to take action if there is, Johnson said.

House Ways and Means Chairman Charles Rangel, a New York Democrat, ordered the U.S. International Trade Commission in October to monitor imports from China in 2009, after the Bush administration turned down an industry request to do that.

A few weeks later, President-elect Barack Obama endorsed Rangel's action, raising U.S. industry hopes the incoming administration could once again curb Chinese textile and clothing imports if they quickly surge. The textile-specific safeguard provision the Bush administration used in 2005 also expires this year.

Obama could use a more general safeguard provision known as Section 421 to restrict imports, Johnson said.

Reuters
Last Mod: 24 Aralık 2008, 22:25
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