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Textile News
James A. Morrissey, Washington Correspondent

Textile Official Warns Of Impending Disaster

By James A. Morrissey, Washington Correspondent

Warning of an “impending disaster,” the president of the Washington-based National Council of Textile Organizations (NCTO) has called on the World Trade Organization (WTO) to restrain the growth of Chinese textile and apparel imports to the United States and Europe.

In a paper presented at a WTO meeting in Geneva, Switzerland, NCTO President Cass Johnson warned that if present trends continue, China, within the next 15 months, will achieve a 70-percent import market penetration in US and European markets for products that are not covered by import quotas. Late last year, the United States placed import quotas with limited growth rates on 34 of the “most sensitive” textile and apparel product categories. What concerns Johnson now are those product categories where there are no import quotas.

In order to restrain the growth of Chinese textile and apparel imports, the US textile industry has been pressing for a permanent “safeguard mechanism” that would permit quotas on products where they are causing or threatening to cause market disruption. Textiles and other manufacturing industries also are seeking actions, including legislation, to offset what they see as currency manipulation by the Chinese, giving them an unfair subsidy. A bill pending in Congress would impose a 21.5-percent tariff on Chinese goods unless China reforms its currency policies. The Bush administration has been pressing China to take voluntary actions to circumvent legislation, but so far nothing meaningful has happened.

In his report at the WTO meeting Johnson said China is “racing toward monopoly status” in apparel categories not covered by quotas. He noted that, as of now, there are no means for either the United States or the European Union to stop the Chinese once the current safeguard mechanism expires in 2008.

Johnson said less-developed countries also have a stake in restraining Chinese trade. He warned that unless actions are taken in connection with the Doha Round of trade-liberalization negotiations, expected to be concluded this year, developing countries will see their textile and apparel industries “quickly dismantled” once the safeguards disappear.

Noting that NCTO has analyzed trade patterns, Johnson said: “The grim reality of today’s marketplace means that importers and retailers will put 70 percent of their business where the price is best,” and that will be with China. He added, “There is no other business choice they can make.”

In a related development, 11 trade associations representing all segments of the US fiber, textile and apparel industry signed a letter urging the WTO to establish sectoral textile negotiations in the Doha Round that would consider textiles and apparel separately from the overall Non-Agricultural Market Access (NAMA) negotiations. The letter said sectoral negotiations could deal with issues such as market access, differentials in tariff levels from country to country and preservation of preferential free trade agreements. The associations also want to address what they see as currency manipulation issues. The letter said, in part, “The global textile and apparel sector is simply too critical and too sensitive to be handled in a general fashion as part of the overall NAMA negotiations.” The textile trade associations said a sectoral negotiation is needed in order to have “an exhaustive discussion” regarding the potential for global markets to be monopolized by suppliers from only a handful of countries. Textile manufacturers fear textiles could become a trading chit in connection with overall negotiations. US textile and apparel importers are opposed to sectoral textile negotiations on grounds that, in the past, they have resulted in special preferences for textile trade. 

March 7, 2006