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Yarn Market
James L. Lemons, Ph.D., Technical Editor

It's Too Early To Celebrate!

By James L. Lemons, Ph.D., Technical Editor

T he implementation of the China safeguard provisions certainly demonstrates the effectiveness of grassroots political efforts. The 29 senators and 144 representatives who wrote President Bush to urge the administration to invoke the import restrictions were reacting to the thousands of letters and phone calls from textile workers. The fact that the United States has lost more than 2.5 million factory jobs (316,000 in textiles) makes trade policies a key issue in next year's presidential and congressional elections.

However, this victory only sets the stage for bigger and more significant battles in the future. These restrictions will not seriously restrict Chinese textile and apparel imports into the United States, which grew by 175 percent in the first six months of 2003. Knit fabrics, dressing gowns and brassieres represent only 5 percent of the $10 billion total value of Chinese textile and apparel imports. As one textile executive observed, "It's too early to celebrate - this just represents the first step."

The ultimate goal is to keep the lid on Chinese imports even after global quotas expire at the end of 2004. The CEO of a major spinning operation said, "I hope this is the first of several moves that will force Beijing to agree to comprehensive longer-term restraints." If nothing else, this action sends a message to importers and retailers that Chinese products might be hit with quotas, which will cause some retailers to move some orders away from China.

Similar requests are being formulated by other segments of US manufacturing to include furniture and electronics. This cumulative effect may force China to examine the global repercussions of its trade policies. As one textile executive said, "They will resist changing any aspect of their successful strategy, but I think this might force them to reassess their situation."

Whether this will result in any changes in China's policies and what these changes may be is anybody's guess. However, since it has been such a magnet for foreign direct investment, it can afford to open its markets to more imports. China knows this would put more pressure on the United States to resist imposing any additional safeguards.

Textile Markers

Remember the proposed textile marker system? It now has new life, thanks to additional federal funding of two proposed projects. The US Department of Agriculture Cotton Quality Research Station located at Clemson University, Clemson, S.C., will receive $270,000 to further develop its proposed chemical marker system, which would be utilized as a tagging agent. This technology could be utilized to help Customs readily identify the country of origin of textile imports. The Oak Ridge National Laboratory, Oak Ridge, Tenn., also received $1 million to fund its study of ultraviolet fluorescent markers, microscopic bar codes, and DNA-based markers. The goal is to find the least expensive technology for domestic yarn manufacturers that at the same time cannot be readily duplicated by foreign competition.

One spinner said, “This technology has great potential. Unfortunately, it should have been funded much earlier in the game.” Another spinner observed, “These markers will help Customs to identify imports subject to tariffs after the quotas end in 2005.”

CAFTA Negotiations Result In A Deal

Which countries are going to be the players in the Central America Free Trade Agreement (CAFTA)? This question seems to be up in the air right now.

The trade agreement to eliminate tariffs and other trade barriers between the United States and Central America will come before Congress this summer. However, it seems the negotiations take a step forward, then a step back. The latest setback occurred when Costa Rica backed out of the negotiations and indicated it would not return to the table until January. At the same time, the Bush administration seems to be pushing for inclusion of the Dominican Republic in order to gain congressional support for the agreement.

As one textile executive said, “Not only do we have to worry about TPLs [tariff preference levels] and cumulation, we don’t even know who the players are right now.” Another spinner commented, “We are pinning a lot of our future on the outcome of these negotiations — it offers us an opportunity to compete with China.”

January 2004


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