US Pursuing Import Quotas On China

Despite the vehement protests of retailers and other importers of textiles and apparel, the Bush
administration is taking steps that could result in the imposition of new quotas on imports of
Chinese textiles and apparel. The actions are being taken under the safeguard mechanism provision
in China’s accession to the World Trade Organization that permits quotas to be imposed where it can
be demonstrated that imports are causing or threatening to cause market disruption. A coalition of
US fiber, textile and apparel manufacturers has petitioned the government to use the safeguard
mechanism on more than a dozen textile and apparel categories.

In 2002, the interagency Committee for the Implementation of Textile Agreements (CITA)
imposed one-year quotas with 7.5%-percent growth on three product categories – knit fabrics, cotton
and man-made fiber dressing gowns and robes, and cotton and man-made fiber brassieres. That
decision was based on a finding by CITA that there was actual market disruption. The textile
coalition is expected to fill a new petition asking for a one-year extension of those quotas. CITA
also has determined that imports of cotton, wool and man-made fiber socks are both disrupting and
threatening to disrupt the market, and it has notified the Chinese government that a unilateral
quota will be imposed unless some agreement can be reached through bilateral consultations.

In October, the coalition took a new tack and started filing petitions based on a threat of
market disruption in view of the fact that all quotas are scheduled to be removed by Jan. 1, 2005.
CITA then accepted for review a petition based on a threat of market disruption for four categories
of mens and boys, and womens and girls trousers. Once a petition qualifies on a technical basis,
CITA will publish a notice asking for public comments on the proposal for 30 days. After that, CITA
has 60 days to reach a decision, and if the decision is favorable it will notify the Chinese
government that it wants to engage in consultations on a bilateral agreement. If agreement is not
reached after the consultations, the administration can impost a one-year quota with a 7.5-percent
growth rate.

The coalition has filed five additional petitions based on a threat of market disruption for
wool trousers; men’s and boys’, and women’s and girls’ cotton knit shirts; men’s and boys’, and
women’s and girls’ man-made fiber shirts; non-knit cotton and man-made fiber shirts; and cotton and
man-made fiber underwear.

Retailers have sharply attacked the threat-based petitions charging that they will continue
what they call the failed protectionist practices of the past 40 years. Eric Autor, vice president
and international trade for the National Retail Federation, said, “If US retailers cant get
sufficient merchandise from China, they’ll simply turn to other foreign manufacturers, not US
manufacturers. Domestic manufacturers in the United States who have trouble competing with China on
the products in question refuse to acknowledge that the apparel market today is global, and they
need to engage in that market. The only people who would benefit from continued quotas are a
handful of Chinese businessmen who hold quota allocation rights.

Calling the governments action on safeguard petitions misguided, Laura E. Jones, executive
director the US Association of Importers of Textiles and Apparel, said US manufacturers are making
a bogus attempt to blame others for their failure to compete. She accused textile manufacturers of
attacking their own customers and said a better approach would be to create partnerships between
the mills and their customers.

November 2004