US Government And Industry Pursue Textile Agreement

As US and Chinese government negotiators continue to pursue a comprehensive textile and apparel
quota agreement, a coalition of US manufacturers and labor continues to apply for short-term
safeguard quotas. On September 22, the coalition filed petitions with the Committee For The
Implementation of Textile Agreements seeking safeguard quotas on five new categories, adding them
to the more than 20 petitions in various stages of consideration or implementation. The new product
categories are wool suits, man-made fiber coats, cheesecloth and polyester filament fabric.

The continuing array of safeguard petitions has a two-fold purpose: to encourage China to
negotiate a comprehensive agreement; and to provide short-term protection for sensitive import
categories if a comprehensive agreement is not reached.

As the latest round of negotiations on a comprehensive agreement was suspended last week,
Chief US Textile Negotiator David Spooner said: “We were able to make progress, particularly with
product coverage and quota levels, but we did not reach an agreement.” Spooner noted the US
industry and government have been using a safeguard mechanism to impose short-term quotas on a
product-by-product basis but said “Our preference is to seek a longer-term solution that will
permit the orderly development of textile and apparel trade.

“China apparently has suggested an agreement along the lines of what it has with the European
Union. That agreement allows annual quota growth of 8 to 12.5 percent on 10 sensitive product
categories through 2007. US industry and labor are seeking a much more comprehensive list of
product categories being impacted now and likely to be impacted in the future. The coalition also
is seeking an agreement that would run through 2008 when the ability use the safeguard mechanism
expires. Another sticking point is the base upon which quota growth would be calculated.

With negotiations expected to resume later this month, Spooner warned that “The United States
will have no hesitation in walking away from a bad deal.”

October 2005