By  on February 2, 2006

WASHINGTON — President Bush's warning against protectionism and effort to spotlight the benefits of global trade in the State of the Union address boosted importers seeking an ambitious trade agenda and disappointed U.S. textile executives pummeled by globalization.

In laying out his domestic agenda — scaled down from previous years — Bush spoke Tuesday night about strengthening American competitiveness and job growth, as well as making his tax cuts permanent and initiatives for energy, health care, immigration and medical liability reform. Facing a trade deficit that may reach $800 billion this year, the president cautioned against taking a more protectionist stance against growing economic superpowers such as China and India.

"In a dynamic world economy, we are seeing new competitors, like China and India, and this creates uncertainty, which makes it easier to feed people's fears," Bush said. "So we're seeing some old temptations return. Protectionists want to escape competition, pretending that we can keep our high standard of living while walling off our economy."

He did not direct his remarks toward specific trade issues and legislation, but they weren't made in a vacuum. Political pressure to restrain China's growth and force further currency revaluation may gain strength in advance of the midterm elections in November, especially if the economy weakens.

China's surge in apparel and textile exports to the U.S. this year resulted in an import restraint agreement between the two countries that restricts more than $6 billion worth of Chinese apparel and textile imports and runs through 2008. The deal pleased domestic manufacturers who charged that they were being forced to unfairly compete with China, and brought certainty to importers' sourcing plans.

The administration is also leading the charge to reach a global trade treaty by the end of the year among 149 countries of the World Trade Organization, who are seeking to reduce and eliminate tariffs on thousands of products. The industry is divided over the current round of global trade talks, particularly on the issues of a formula to cut tariffs on textiles and apparel, the scope of special treatment for Least Developed Countries and developing countries, and whether WTO members will agree to a separate textile pact.

"On trade, [Bush] obviously staked out a pattern that we don't expect him to change dramatically from and that is an aggressive pursuit of the Doha round and proliferation of free trade agreements," said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. "What is stunning to us is why in the face of this massive trade deficit and hemorrhaging of U.S. manufacturing jobs there isn't some questioning of current U.S. trade policy."

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