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Washington Outlook Archive
James A. Morrissey, Washington Correspondent

Countries Seek WTO Assistance

James A. Morrissey, Washington Correspondent

G overnments from 30 countries have appealed to the World Trade Organization (WTO) to undertake “an urgent review” of the impact of the quota phase-out on less-developed countries and to seek solutions to what they see as a major crisis resulting from China’s dominance of world trade. They have asked the WTO’s Council of Trade in Goods to place the textile trade issue on its permanent agenda, so it would be required to address the problem at all of its meetings.

They would like the WTO to conduct a study and establish a permanent work program to deal with problems identified in such a study. Peter Mandelson, the incoming European Union trade commissioner, added his support, saying China is on target to take over 50 percent of the world’s textile trade market. Admitting it is too late to reverse the decision to remove quotas, Mandelson said steps must be taken to help less-developed countries adjust to the quota removal. He added that China, however, is likely to resist any new quotas and said, instead, that the best way to address the problems of less-developed countries is to enhance the assistance programs of the World Bank and International Monetary Fund, and remove what China sees as impediments to trade found in preferential trade agreements such as the North American Free Trade Agreement, the Caribbean Basin Initiative and the African Growth and Opportunity Act. US manufacturers and others in the Western Hemisphere, on the other hand, see the preferential pacts as the key to their future growth and prosperity.

Administration Cites China Trade Progress

Although a growing number of manufacturing industries are expressing concern over the dominance of China in international trade, the Bush administration has stoutly defended its policies, which it says are producing “real results” and increasing opportunities for US workers, farmers and companies. US Trade Representative Robert B. Zoellick has issued a fact sheet that highlights five areas, including textile trade, where the administration is getting positive results. He said that in the past 12 months, US exports to China grew to $33 billion, and that since President Bush took office, the United States has exported nearly $90 billion in goods and services to China. This, he said, has made China one of the fastest-growing export markets in US history.

Zoellick said the United States has successfully resolved numerous potential cases with China in the WTO, opening markets for high-technology and other manufactured products, and agricultural commodities including cotton. Zoellick added that in four years, the administration has imposed nearly as many antidumping orders against unfair imports from China as the Clinton administration imposed in eight years.

With respect to textile trade, Zoellick said the administration exercised its right to impose safeguards against Chinese imports on robes, undergarments and knitted fabrics. In addition, it has negotiated free trade pacts with 12 countries, and in most cases, they call for a yarn-forward rule of origin — supported by US textile manufacturers — and tariff preference levels that extend the tariff concessions in the agreements to a limited amount of products originating in non-participating countries. That pleases US importers of textiles and apparel.

The fact sheet does not address the burgeoning imports from China and the resulting trade deficit. In the case of textiles and apparel alone, in 2003, the United States had a $13 billion trade deficit with China; and in the first seven months of 2004, the deficit increased by 28 percent.


Under Secretary Of Trade Grant Aldonas

Battle Looms Over Quota Extension

Look for a real donnybrook as US textile manufacturers and others in less-developed countries seek to have restrictions placed on Chinese imports of textiles and apparel after all import quotas are removed Jan. 1, 2005. The debate grew increasingly intense after a top US Department of Commerce official opened the door for textile manufacturers to propose making wider use of the so-called safeguard mechanism in China’s WTO accession agreement. US textile manufacturers want the government to use the safeguard mechanism and impose import quotas in the face of a threat of market disruption rather than waiting for actual market disruption to be proven, as has been the case in the past. Without indicating what the outcome of such an approach would be in specific cases, Under Secretary of Commerce Grant Aldonas said the industry has the right to seek relief on the basis of a threat of market disruption.

That immediately set off a firestorm in the importing community and in China. A Chinese Commerce Ministry official said such an approach would “brazenly breach” WTO rules and “seriously hurt the confidence of Chinese firms and public in the global trade environment.” He said China’s textile and apparel exports to the United States would grow “to a certain extent,” but claimed that would be “normal” in global trade.

US textile importers, who objected earlier to quotas imposed on the basis of actual market disruption, reacted even more sharply to the threat proposal and accused the Bush administration of bowing to political pressure by changing the rules. They said that in the past, the interagency Committee for the Implementation of Textile Agreements (CITA) has repeatedly said safeguard cases could be brought only in situations where disruption of the US market already has occurred and not on the basis of future anticipated disruption. Tracy Mullen, president, National Retail Federation, said it is “simply unacceptable” for a government agency to change rules and policies governing administrative procedures according to the direction of the political wind.

The question of imposing unilateral quotas or reaching a negotiated agreement faces a long, contentious and sometimes bitter route, and it is unlikely that anything will be settled for several months.

Under safeguard procedures, CITA determines whether there is market disruption or a threat of market disruption. If such a determination is found, it would offer to have consultations with China on a bilateral agreement to impose quotas. If agreement is not reached, the United States can impose unilateral quotas for one year with a 7.5-percent growth and has the right to continue quotas if the problem persists.

Plans For New Flammability Standard Moving Forward

Home furnishings manufacturers are concerned about and attempting to shape federal and state regulations that for the first time would create flammability standards for top-of-bed home furnishings. After several years of looking into the issue, California now appears to be close to announcing a standard, and the federal Consumer Products Safety Commission (CPSC) is likely to follow suit.

The proposed standard would affect sheets, comforters, pillows, mattress pads and other filled bedding products.

The National Textile Association is spearheading an effort to make the standards something the industry can live with. The industry and the California Bureau of Home Furnishings and Thermal Insulation appear to be close to developing a standard that will provide consumer safety and not be too much of a burden on the industry. The standard would use a weight loss test method whereby a mock-up of a product would be subjected to an open flame and the amount of weight loss could then be used to measure its flame resistance. In the meantime, CPSC soon is expected to issue an advance notice of proposed rule-making, which would start the ball rolling on a federal standard.

The textile industry would like to see the federal government adopt the California standard as a federal standard to ensure that interstate commerce is not complicated or disrupted.

It also would like to make certain the regulations would apply to imported goods as well as those made in this country.

November 2004