NCTO Applauds New 3-Year Bilateral With China

Regarding the announcement in London
by the U.S. government that a three year bilateral agreement has been signed with China, NCTO
Chairman Jim Chesnutt said:

“This agreement is a victory for hard working U.S. textile workers. NCTO would like to thank
our congressional supporters for insisting that China be kept to tight limits and that a textile
agreement is beneficial to U.S. textile workers. We want to especially thank Congressman Robin
Hayes for giving this effort momentum and for working with us to place it squarely on the
Administration’s radar. Finally, we want to thank Ambassador Rob Portman for negotiating a tough
agreement that provides relief for U.S. textile companies threatened by China’s predatory pricing
practices, currency manipulation and unfair trade practices.”

“NCTO appreciates the Bush Administration’s continuing commitment to work closely with the
industry to ensure that important decisions affecting textiles will benefit the U.S. textile
industry as a whole. Earlier this year, NCTO worked with the Administration to ensure the quick
imposition of safeguards against an enormous flood of Chinese imports. More recently, NCTO worked
with our member companies, congressional allies and USTR to achieve necessary changes to the CAFTA
agreement that enabled it to receive critical support among members of Congress from
textile-producing regions. We appreciate the positive and productive relationship that has been
established between NCTO and the government and look forward to working together on textile issues
in the Doha Round as well as other matters.”

“This agreement is good news for the U.S. textile industry. It actually cuts China’s market
access in 14 core apparel categories during 2006 by 2.5 percent compared to what the U.S. industry
could have expected under a best scenario “safeguard reapplication” process. In addition, this
agreement places 20 new textile and apparel categories under three-year quota control. This
includes a number of categories for which safeguards were either not an option for the industry or
where safeguard cases were problematic. These categories include combed cotton yarn, knit fabric,
swimwear, sweaters, fiberglass fabrics, vegetable fiber (ramie) trousers, industrial fabrics and
textile blinds, among others.

All told, 34 categories of Chinese textile and apparel products will now be controlled. Over
the life of the agreement, China’s access in core apparel categories during the next three years
will increase by only 3.8 percent (in square meters equivalent) over what it would have under a “
best case safeguard renewal scenario” for 2006, 2007, 2008.”

“Under this new agreement, the U.S. industry will know with certainty that China will not be
able to flood the U.S. market during the next three years. It will also not have to rely on an
uncertain safeguard process that would have required dozens of cases to be filed each year over the
next three years with no guarantees on the outcomes of each of the cases. In addition, the industry
has retained its right to use the safeguard if China floods the market in categories not covered by
the agreement.”

“In comparison to the EU agreement, the U.S. government was able to secure lower actual
growth rates for the most sensitive products, guaranteed coverage through the end of 2008 (compared
to EU, through 2007) and avoided any granting of “flexibilities” such as “swing or shift”. Again,
we applaud Ambassador Portman and our congressional supporters for insisting that any deal must be
a good deal for American industry and workers.”

Chesnutt concluded by noting that while the agreement is important, “The threat from China
is not eliminated by this agreement, only delayed. The central fact remains that China continues to
heavily subsidize its textile and apparel industry, manipulates its currency and employs multiple
unfair trade practices – all in violation of its WTO commitments. NCTO urges the U.S. Treasury
Department to cite China as a currency manipulator in its upcoming November report and looks
forward to working with the Administration and the U.S. Congress to take strong steps during the
Doha Round negotiations to safeguard the welfare of U.S. textile workers.”

Core categories

Cotton trousers, man-made fiber trousers, cotton knit shirts, man-made fiber knit shirts,
underwear, woven shirts, brassieres.

Additional three-year quotas

Socks, sweaters, swimwear, knit fabric, wool suits, wool trousers, ramie trousers, sewing
thread, combed cotton yarn, cotton towels, polyester filament fabric, synthetic filament fabric,
fiberglass fabric, textile blinds, industrial fabrics

Press Release Courtesy Of NCTO

November 2005