By  on October 12, 2007

WASHINGTON — Imports of apparel and textiles hit an all-time high in August at 5 billion square meter equivalents worth $9.6 billion, but a slowdown in other kinds of imports and a boost in sales of U.S. goods and services to other countries narrowed the total trade deficit.

China, with an economy geared toward exporting, a large labor force and ready access to raw materials, increased its apparel shipments to the U.S. in August by 15.4 percent to 934 million SME, as textile imports were up 4.1 percent to 1.2 billion SME.

Critics maintain that China's dominance across a range of products is derived, at least partly, from several unfair practices, including government subsidies and an undervalued currency that makes its goods cheaper on the open market. After recent product safety recalls, including tainted toothpaste and cat food, and toys with lead paint and children's jewelry with unsafe levels of lead, Americans might be taking a second look at whether to purchase Chinese-made goods.

The August deficit with China in goods shrank to $22.5 billion from $23.8 billion in July. The total U.S. deficit in goods and services narrowed to $57.6 billion from $59 billion, the Commerce Department said. A weak U.S. dollar is another element helping exports.

"These positive trends on the trade deficit are a welcome breath of fresh air," Global Insight U.S. economist Brian Bethune wrote in an analysis. "Trade is expected to make a significant contribution of nearly two-thirds of a percentage point to overall [economic] growth in the third quarter, which is forecast to expand at close to 2.7 percent."

Commerce Secretary Carlos Gutierrez seized on the rise in exports to talk up trade pacts awaiting congressional consideration and to tout the Central American Free Trade Agreement that links the U.S. with El Salvador, Honduras, Nicaragua, Guatemala, the Dominican Republic and, soon, Costa Rica.

"With congressional approval of Peru, Colombia, Panama and [South] Korea trade agreements, U.S. exporters to these countries would benefit from the duty free access to countries with more than 126 million people and with a combined GDP of $1.1 trillion," said Gutierrez, who was traveling in Brazil.In many ways, CAFTA, which began taking effect last year, is still a work in progress.

The people of Costa Rica approved the pact in a referendum on Sunday and the final touches are being put on a deal to ensure that goods qualifying for duty free treatment use pocketing fabric made in one of the signatory countries. Another effort to allow Mexican fabrics into the CAFTA fold is also under way.

The accord is important for U.S. textile mills hoping to sell their goods to Central American apparel producers, but has produced uneven results. Apparel imports from the six CAFTA countries fell 3.9 percent to 304 million SME in August.

Honduras appears to be benefiting from CAFTA, with imports of cotton socks and cotton underwear contributing to a 10.7 percent rise in apparel imports in August to 116 million SME. The Commerce Department, however, is considering duties on socks from the country in order to protect U.S. producers.

On the other hand, the Dominican Republic saw August apparel imports decline 45.4 percent to 31 million SME.

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