HONG KONG — The shifting winds of global trade — from the industrial evolution of China to political wrangling in the U.S. — are likely to get even more turbulent in coming months.Issues in China, including new labor and environmental regulations, rising costs and geographical movement of factories are combining with ongoing actions in Europe and the U.S. aimed at protecting domestic industries to create an uncertain environment in manufacturing circles. But top sourcing executives attending the Prime Source Forum here on Tuesday said there are still growing production opportunities throughout Asia and in Eastern Europe, and that China, with all its problems, will be a manufacturing power for some time to come.William Fung, group managing director of sourcing giant Li & Fung Ltd., delivered the keynote address and delivered a far-ranging assessment of how he sees the global sourcing industry in the next three years: "The globalization of manufacturing and outsourcing is unstoppable. Young people in the West are no longer willing to work in factories."With China accounting for more than 30 percent of Li & Fung's sourcing needs, Fung emphasized a number of issues it faces, including new labor and environmental regulations, factory movement and protectionist measures imposed by other countries."We're facing the end of the quota regime, but other things will happen," he said, referring to the possibility of further restraints, such as countervailing duties and antidumping measures, following the end this year of quotas the U.S. imposed in a 2005 U.S.-China accord.He said the upcoming U.S. presidential election makes predicting the future even more difficult."[Sen. Barack] Obama is criticizing things like NAFTA," Fung said. "I don't understand that. I don't know how much is rhetoric, but there will be a big change of government in America."Speakers on several panels elaborated on some of the issues Fung highlighted. Thomas Glaser, president of VF International, argued that the reasoning behind U.S. protectionist measures is specious. He highlighted what he called "five big fat trade lies," including his number one: "cheap Asian imports equal deficits."Steve Lamar, executive vice president of the American Apparel & Footwear Association, said: "We've been kicking around the word protectionism like it's a bad word, but in Washington that label is worn as a badge of honor."
Scott Quesenberry, special textile negotiator for the Office of the U.S. Trade Representative, defended the U.S. position."The policy of the U.S. is toward free trade," Quesenberry said. "The President feels strongly about this."He acknowledged the country's bilateral trade agreements can cause what Fung called the "spaghetti bowl" effect, but said more such agreements are in the works. The U.S. is currently waiting approval from Congress of bilateral trade deals with South Korea, Panama and Columbia.When positing how trade could become freer, Quesenberry said, "Our biggest hope is Doha — it's not dead, but we have a problem. We have to see real market access in developing countries."The Doha Round of global trade talks, aimed at lowering tariffs and other barriers to international commerce, have been stalled over agricultural subsidy issues, notably cotton, and the tariff-dropping formulas.Quesenberry added, "At the end of this year, the U.S. will end its quota with China and we don't see a follow-on. We don't see how it would happen given the rules set by the WTO."The volatility and viability of Chinese manufacturing were analyzed from various angles. John Cheh, chairman and chief executive officer of Esquel Group, who also is chairman of the Foreign Advisors of the Textile & Apparel Committee of China, said it was vital for foreigners to have a voice in China because outside investment is responsible for more than 40 percent of production there.The group has helped develop transparency, equity and value-based credit in China, but Cheh sees a bumpy road ahead with the possibility of antidumping action in Europe under a monitoring program put in place this year, new labor laws in China, the appreciation of the yuan coupled with a weak U.S. dollar, new environmental standards and labor shortages. Trumping them all, however, is the global economic situation."We're faced with difficult growth in production and export," Cheh said. "The cost pressure on the supply side is tightening and on [the other] side retail sales are weak among the major markets, especially in the U.S. We have the makings of a very difficult time."
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