US/China Textile Trade Deficit Hits New High

As the US government announced the textile and apparel trade deficit with China reached a new
record high of $31.8 billion in 2007, textile industry lobbyists and their friends in Congress
launched a renewed effort to enact legislation designed to help offset China’s trade advantage
stemming from its undervalued currency. At a news conference on Capitol Hill, members of Congress
and representatives of some 25 trade associations, the American Federation of Labor and Congress of
Industrial Organizations, and the China Currency Coalition sounded an alarm and called for passage
of legislation sponsored by Reps. Duncan Hunter, R-Calif., and Tim Ryan, D-Ohio, that would
discourage currency manipulation by China and other countries that undervalue their currencies. The
legislation would permit injured parties to seek remedies under US countervailing duty laws.

Claiming that the trade data are “further evidence that this problem is getting worse, not
better,” Ryan said: “Our economy is at risk of recessing, we continue to lose manufacturing jobs
and need to have the courage to do something about it.” He said the coalition backing his
legislation is the broadest he has seen, as it includes Democrats and Republicans, manufacturers
and labor, and representatives from throughout the nation. “They have come together to support
common sense legislation which will only ask China to live up to the standards it agreed to when it
joined the World Trade Organization,” he said.

Calling for quick passage of the Hunter-Ryan Currency Reform and Fair Trade Act of 2007, Cass
Johnson, president, National Council of Textile Organizations, said: “When foreign governments play
dirty to gain a competitive advantage, our government should respond, and at the very least,
provide US companies with adequate tools to defend themselves.” He said action on the currency
issue is particularly important in view of the fact that all import quotas on Chinese textiles and
apparel are due to be removed at the end of this year.

Auggie Tantillo, executive director, American Manufacturing Trade Action Coalition, said
failure of the House of Representatives to pass meaningful anti-currency-manipulation legislation
in 2007 was “deeply disappointing” to US manufacturers and pointed out relief is needed “now more
than ever before.” Tantillo predicts if the House were to hold a vote on the Hunter-Ryan bill
tomorrow, the bill would pass overwhelmingly.

As the trade data were announced, the chairmen of the House Ways and Means Committee and its
Trade Subcommittee issued a press release that was highly critical of what they said are the “
misguided trade policies of the Bush administration,” stating, “Too often our trading partners are
allowed to break international rules to keep US exports out of their markets and engage in unfair
trade practices.” They charged that currency manipulation by China and other countries to gain a
competitive advantage is “a flagrant and long-standing breach of international rules.” Those
comments by the key members of Congress who deal with trade matters have taken on new significance
in view of the soaring trade deficit and the continuing loss of manufacturing jobs.

February 19, 2008