Textile Imports Battle Heating Up

The textile trade war is getting nasty.

As US textile manufacturing interests and some of their allies in less-developed countries
appear to be making progress toward reconsideration of the Jan. 1, 2005 removal of textile quotas,
importers are fighting back with political and economic pressure. Four trade associations
representing major importers of textile and apparel have written to US Trade Representative Robert
B. Zoellick urging him to stick by a US government commitment to phase quotas out by the end of
this year. Saying the US textile and apparel interest have eagerly awaited the quota phase-out, the
associations said: “We must ensure that the United States and all other World Trade Organization
members countries adhere to their international obligations, including the timely elimination of
the global quota regime on textiles and apparel.The importers say elimination of quotas will
provide companies with the ability to improve efficiencies in their sourcing and global operations,
and they say this will accrue to the benefit of American consumers.

 Admitting there are some concerns in less-developed countries regarding the quota
removal, the importers say those countries need to look for other opportunities to help them
compete successfully in the post-quota global marketplace. They believe this can be accomplished by
means of regional free trade agreements and other preferential programs.

Responding to a request by the government of Bangladesh for an emergency meeting of the World
Trade Organization (WTO) to reconsider removal of the textile and apparel quotas, J.C. Penney fired
off a letter to the Bangladesh Garment Manufacturers & Exporters Association threatening to
reconsider doing business with Bangladesh unless its government withdraws its support for such a
meeting. The American Trade Action Coalition (AMTAC) immediately blasted the Penney letter,
pointing out that Bangladesh is heavily dependent on textile and apparel manufacturing just to feed
its people every day. The coalition also noted that Bangladesh is an Islamic country on the front
line of the war on terrorism.

The firestorm developed after the governments of Mauritius and Bangladesh formally petitioned
the WTO for an emergency meeting to evaluate the impact of the proposed quota removal and other
trade practices in what is likely to become a quota-free world. The WTO has responded by calling a
meeting of the Heads of Delegations of several countries involved in textile trade to determine
whether an emergency meeting should be called. AMTAC’s executive director, Auggie Tantillo, said
such a meeting is a critical first step towards finding solutions to what some textile
manufacturers see as a major crisis associated with the quota phase-out. He said, “Failure to act
now will mean massive job displacement in practically all countries involved in textiles and
apparel production.”

August 2004