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Washington Outlook Archive

Textile Tariff Issues Heating Up

James A. Morrissey, Washington Correspondent

As government leaders throughout the world are ratcheting up their efforts to lay the groundwork for a successful Doha Round of trade liberalization negotiations, textile and apparel manufacturers and importers are zeroing in on tariff issues. With the elimination of textile and apparel quotas - with the exception of China - textile manufacturers see tariffs as their last remaining safety net, and importers view them as a no longer needed barrier to trade.

With respect to the Doha Round, US textile manufacturers have been pressing for sectoral negotiations that would put textiles and apparel in a separate category thereby reducing the possibility that their tariffs could be traded off for concessions in other areas. The US government is believed to be leaning in that direction. The Global Alliance for Fair Textile Trade (GAFTT), comprising 97 trade groups from 55 countries, has joined US manufacturers in pressing for sectoral negotiations. In a statement released from Geneva, Switzerland, GAFTT said, “Since textiles and clothing represent a disproportionate share of exports from developing countries, and less developed countries, and since that trade is threatened by the unfair trading practices of a small number of non-market economies, GAFTT believes that textiles and clothing must receive specialized treatment from the World Trade Organization if WTO is to fulfill its Doha Development Round of commitments.

Meanwhile, US textile manufacturers and importers are locked in a battle over the issue of extending tariff concessions to developing and less-developed countries. A US government program instituted in 1976 (GSP) that grants duty-free treatment to goods imported from developing and less developed countries is due to expire next year. From the outset, textiles and apparel were exempt from the GSP program, because imports were regulated with quotas, but with the removal of quotas, importers now are pressing for textiles and apparel to be granted the special duty-free treatment.

In testimony before the Trade Policy Staff Committee, the US Association of Importers of Textiles and Apparel (USA-ITA) said now that textiles and clothing are quota-free, they should be part of a duty-free program for developing country imports. “To help less-developed countries compete in a quota-free environment and move up the development ladder, textiles and apparel must be part of the Generalized System of Preferences,” said USA-ITA Chairman Robert Zane, senior vice president of the Liz Claiborne Corp. “It is ironic the quota program led the US importers to search out new suppliers, often in less-developed countries, but now that the quotas are gone, the manufacturers in less-developed countries are having a harder time competing, because they aren't efficient and don't have the ability to offer one-stop shopping for US importers and retailers. Now, to be competitive, they really need a duty advantage,” he added.

On the other hand, US textile manufacturers are strongly opposed to changing the GSP program to include textiles and clothing, contending that to do so would undercut regional preference programs such as the North American Free Trade Agreement, Dominican Republic-Central American Free Trade Agreement and Caribbean Basin and Africa agreements. Missy Branson, senior vice president of the National Council of Textile Organizations (NCTO), said in a letter to US Traded Representative Rob Portman that with the expiration of quotas this past January. “the domestic textile and apparel industry is more vulnerable than it has ever been in the past and the historical reasons for excluding these products from the GSP program remain.”

NCTO charges that removal of tariffs would open the door to imports from countries such as India and Pakistan, which have highly developed textile manufacturing industries, and “can hardly be considered less developed countries.” The NCTO letter added: “The United States currently offers preferential access for textile and apparel imports from more than 70 developing and least developed countries. If the GSP is expanded to include textiles and apparel, the benefits afforded to these countries will be mostly negated, and a few countries with well-developed industries will quickly move to dominate the market.”

The current GSP program is due to expire on December 31, 2006, and will have to be re-authorized by Congress.

November 2005