It seemed touch and go for awhile, but last month the U.S. and China finally struck a deal that points the way to quota-free trade in 2009.
All it took was a lawsuit in which U.S. importers sued the federal government, a dramatic surge in Chinese-made imports, tight restrictions on those goods and negotiations that took several months.
In theory, once the three-year deal expires on Dec. 31, 2008, Chinese apparel and textile imports to the U.S. will be unrestricted. But U.S. textile concerns, struggling to compete with what they see as unfair competition from a nonmarket economy, are still looking to clamp down on China through other means. Global trade talks under the auspices of the World Trade Organization provide one possible vehicle for further restrictions, though it is unclear how successful those efforts will be.
"If you have a worldwide apparel and textile industry that is completely and 100 percent liberalized, it is a disaster for almost every country in the world except for China and maybe one or two others," said Mark Levinson, chief economist for the union UNITE HERE, which pushed for safeguard quotas that were imposed this year after global quotas were dropped on Jan. 1.
Domestic producers argue that the Chinese government's currency policies, as well as subsidies to its apparel and textile industry, amount to an unfair advantage.
Levinson said the deal "does buy us some time to craft a more comprehensive solution, which is going to have to involve the WTO."
For now, importers are just pleased to be able to plan their businesses.
"We now know what the rules of the game are," said Joe McConnell, vice president of strategic sourcing at Kellwood Co. "We can refine our global sourcing plan with the information we have on China today."
Prior to the deal, China was part of the company's sourcing strategy, but brought with it a slew of unknowns. Given long lead times, Kellwood and other large companies already have placed many of their orders for next year, but McConnell said 2007 plans would place more importance on China.
The scene for the trans-Pacific confrontation was set in 2001, when China joined the WTO and agreed to safeguard quotas, which hold imports to 7.5 percent growth. Safeguards, which need to be petitioned for individually and renewed annually, were intended to ease the transition out of a broader quota system that expired in January after regulating world trade for more than 30 years.
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