Textile Lobbyists Attack China Trade

At a hearing before the International Trade Commission (ITC), Washington lobbyists for the US
textile industry painted a bleak picture of trade with China, saying that the burgeoning trade is “
the single greatest trade problem confronting the United States as a whole and the US manufacturing
base in particular.” The ITC is conducting the hearing, “China: Government Policies Affecting US
Trade in Selected Sectors,” in order to evaluate the trade and investment implications of trade
with China and other nations in Asia.

The leading organizations representing textile and other manufacturers in Washington launched
a scathing attack on US trade with China, charging that China’s heavily subsidized manufacturers
are threatening to completely dominate world trade in textiles and apparel.

Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition
(AMTAC), told the ITC that China has been able to gain a dominant position in the global textile
and apparel marketplace because its government has “designed and implemented a sophisticated plan
including both general and specific subsidies to ensure that they can penetrate and destabilize key
markets.” He said it is time for the US government to acknowledge that it is virtually impossible
to compete with Chinese manufacturers who “have the benefit of lax environmental standards,
pennies-per-hour labor rates and substantial government subsidies.”

Cass Johnson, president of the National Council of Textile Organizations, testified that
China has 73 subsidies that prop up its textile sector including such things as subsidized land
grants, subsidized loans and loan forgiveness, brand development grants, exemptions from value
-dded taxes, raw material rebates and worker benefit exemptions. He also cited currency
manipulation as a major subsidy.

Johnson warned that with the Chinese textile and apparel safeguards due to expire next year,
textile and apparel manufacturers throughout the world “are in jeopardy.” He said that if China
follows past history, it will take over 65 percent of US and European Union apparel markets once
the remaining safeguards setting quotas in sensitive imports are removed. In addition, he said, the
economies of Central America, Sub-Saharan Africa, Pakistan, Sri Lanka, Indonesia and Jordan will be
particularly vulnerable once safeguards are removed.

Johnson cited the following key facts:

• With four times the size of any other country’s exports, Chinese textile and apparel
exports are growing at an annual rate of 20 percent.

• China’s $12-billion gain in apparel exports in 2006 was greater than the total exports of
46 of the top 50 exporters of apparel to the world.

• Through government intervention, China’s textile industry has invested $85 billion during
the last ten years with the biggest increases coming in 2006 and 2007.

Johnson called on Congress to pass “meaningful legislation” to address issues related to
China trade.

November 6, 2007