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US And China Reach Agreement On Textile Imports

By James A. Morrissey, Washington Correspondent

The US and Chinese governments have reached a new bilateral textile trade agreement that has won the enthusiastic support of textile state members of Congress, US textile manufacturers and even importers who see it as the lesser of two evils.

The three-year pact, running until the end of 2008, places 34 categories of textiles and apparel under quota control with growth levels only about 3.8-percent higher than if they were placed under quotas using the tedious and unpredictable safeguard mechanism the US government has employed to control a surge in Chinese imports. The new quotas, which go into effect January 1, 2006, cover 14 particularly sensitive product categories that have been under quota this year as a result of safeguard actions. These include cotton and man-made fiber trousers, cotton and man-made fiber knit shirts, underwear, woven shirts and brassieres. In addition, the new quotas will be applied to 20 product categories where safeguard petitions are under consideration including socks, sweaters, swimwear, knit fabric, wool suits, wool trousers, ramie trousers, sewing thread, combed cotton yarn, cotton towels, polyester, filament fabric, man-made filament fabric, fiberglass fabric, textile blinds and industrial fabrics. The new agreement would also allow the textile industry to file petitions for additional safeguard petitions should the need arise.

Rep. Robin Hayes, one of the textile state congressmen who put pressure on the Bush administration to come up with a good agreement, said, “I am proud to say that our government signed a deal with the Chinese that will allow our manufacturers to operate in a climate that is better than existed previously.” He warned, however, this agreement “is not the end of our efforts by a long shot.” He said the next step is to ensure that the US Customs service strictly enforces the agreement, and he added that something must be done to correct the Chinese currency imbalance that textile manufacturers say is an unfair subsidy for their imports. Although Hayes was persona non grata with some textile manufacturers because of his support for the Dominican Republic-Central American Free Trade Agreement, textile lobbyists at a Capitol Hill news conference heaped praise on Hayes for his work on the Chinese agreement, saying Hayes was instrumental in “placing the Chinese issue squarely on the administration's radar.”

Jim Chesnutt, chairman of the National Council of Textile Organizations (NCTO), said: “Under this agreement, the US textile industry will know with certainty that China will not be able to flood the US market during the next three years. It will not have to rely on an uncertain safeguard process that would have required dozens of cases to be filed each year with no guarantees on the outcome of each of the cases.” Like Congressman Hayes, Chesnutt pointed out the threat from China is not eliminated by this agreement, but “only delayed.” He said China continues to subsidize its textile and apparel industry, manipulates its currency and employs “multiple unfair trade practices.”

Although textile and apparel importers do not like any kind of quotas, they see the new pact as an improvement over the safeguard process, which has resulted in considerable uncertainty surrounding their overseas sourcing.

Kevin Burke, CEO of the American Apparel & Footwear Association, said that while his organization could never support quotas, “this agreement is far more preferable to the disruptive safeguard regime we had previously endured.” He urged the US government to publish details defining the thresholds the textile industry will have to overcome in order to justify further safeguard petitions. He also called in the Chinese government to put in place a “transparent and cost-effective allocation system” so companies can make fair and efficient use of the quotas.

Eric Autor, the National Retail Federation's trade expert, echoed those sentiments.“The repeated imposition of safeguards and the lack of any effective monitoring or allocation system have created an unacceptable level of unpredictability for retailers trying to do business with China,” he said. He argues that safeguard quotas were approved for “ political reasons” without regard for the adverse impact on retailers and consumers. He contends that safeguards drive up the cost of clothing without helping to create or protect US jobs, saying that most of the products are no longer manufactured in the U.S. at competitive prices or in commercial quantities.

Following is a list of the products (by Customs classification) that will be covered by the new quotas —
Baby Socks (239 p)
Socks (332/432/632p)
Cotton Knit Shirts (338/339)
Woven Shirts Men's and Boys' (340/640)
Sweaters (345p/645p/646p)
Cotton Trousers (347/348)
Brassieres (349/649)
Underwear (352/652)
Swimwear (359-s/659s)
Wool Suits (443)
Wool Trousers (447)
Man-made Fiber Knit Shirts (638/639)
Man-made Fiber Trousers (647p/648p)
Silk/vegetable Fiber Trousers (847)

Home Furnishings Textiles
Thread ((200)
Knit Fabric (222)
Special Purpose Fabric (229)
Combed Cotton Yarn (301)
Cotton Towels (363)
Polyester Filament Fabric (619)
Synthetic Filament Fabric (620)
Glass Fiber Fabric (622)+
Blinds (666p)

November 2005