By and  on February 15, 2002

WASHINGTON -- In a deal that apparently pleased no one, the Bush administration said Thursday that it would provide more than $426 million in apparel quota increases to Pakistan over the next three years, a gesture that falls short of the broad menu of apparel and textile trade breaks the Pakistanis were seeking and U.S. mills were fighting.

Retailers and other apparel and textile importers were hoping for a more expansive offering from the U.S., designed as a thank-you for Pakistan's help in the war in Afghanistan.

"It's a token gesture...and as a commercial matter, it has very little significance," said Erik Autor, vice president, international trade counsel at the National Retail Federation. "In order to have any impact, the U.S. would have had to tackle duties, and given the pressure from the U.S. textile industry, they didn't feel they were able to do that."

Officials at domestic textile mills, as well as Capitol Hill lawmakers who have been pressuring the Bush administration to take the industry's poor health into consideration in trade policy, thought the trade breaks went over the line.

"This is a bad deal. It is bad for the textile workers of my district and bad for the textile industry of this country," said Rep. Charlie Norwood (R., Ga.). The Pakistanis, who wanted $1.6 billion in textile and apparel quota and duty relief, were clearly disappointed by what the U.S. extended, as part of a broader aid package that includes debt relief.

"The Pakistanis were extremely upset with this result," said Michael Hutchinson, acting deputy assistant secretary for textiles and apparel at the Commerce Department. "There was even a question of whether they were going to walk away altogether" and refuse the help. Obviously, our industry preferred not to give Pakistan anything in view of the condition of the industry and we were very sympathetic to that."

The Pakistanis were seeking large trade breaks because they claim their own textile and apparel industries face sharp downturns because of spring orders lost after war broke out in the region. But Pakistan officials seemed pragmatic about the help the U.S. is willing to give."This is a first step and we appreciate the offer," said a source with the Pakistani government. "We need to fine-tune it and try to maximize the benefits," in ongoing discussions.

Charles A. Hayes, chairman of Guilford Mills Inc. and president of the American Textile Manufacturers Institute, said Pakistan's textile and apparel export growth to the U.S. in 2001, up almost 9 percent, shows that trade breaks aren't warranted.

"Make no mistake, this will hurt American textile companies and American textile workers at a time when we are already experiencing our worst economic crisis since the Great Depression," Hayes said.

Julia Hughes, international vice president at the U.S. Association of Importers of Textiles & Apparel, said she's not ready to write off the package as useless to her members.

"While we are disappointed in the scope of benefits offered to Pakistan, which weren't as broad as we would have liked, we still are pleased there were some concessions made to recognize the harm to the Pakistani industry from the war on terrorism," Hughes said.

The specifics of the Pakistan package are:

A 15 percent apparel quota increase in the base levels of seven categories. In addition, these categories can receive a further boost by shifting up to 25 percent of unused quota from textile categories. The seven categories, which could receive a total quota boost of up to 40 percent, are woven gloves; women's and girls' coats; women's and girls' woven blouses; pajamas and other nightwear; manmade-fiber knit shirts and blouses; men's and boys' coats, and manmade-fiber trousers.

An 8 percent quota increase in the largest categories of apparel exported to the U.S. of women's and girls' cotton knit blouses, cotton trousers and men's and boys' cotton knit shirts. This increase would occur by borrowing quota from unused textile categories.

A 25 percent quota increase in underwear and men's and boys' woven shirts, also to be borrowed from unfilled textile categories.

The U.S. has quotas on about 30 textile and apparel categories from Pakistan, which means the Pakistanis are getting a boost in just under half of their quota categories.The Pakistanis, who have been lobbying trade officials here since Monday, asked the Bush administration last fall to suspend U.S. tariffs and quotas on apparel and textiles -- $1.93 billion for the January-to-November period -- through 2004 in exchange for its help in the war on terrorism.

But the Bush administration has been caught in election-year politics. While White House officials wanted to reward a key ally in the war on terrorism, they also had to contend with their promises made to Capitol Hill textile-state lawmakers that they would, among other things, minimize the impact of Pakistani trade breaks.

Such White House pledges were exacted by textile-state lawmakers leading up to the House vote in December on granting the President trade promotion authority. The bill squeaked through the chamber by one vote, thanks to some Republican textile-state lawmakers who changed their vote to "yes."

Rep. Robin Hayes (R., N.C.), one of these lawmakers who ended up voting in favor of TPA, was pleased that the White House offered a much scaled-down version of Pakistan's wish list.

"The fact the package is less than 10 percent of its original size is certainly important to the domestic industry," a spokesman for Hayes said.

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