WASHINGTON — Imports of textiles and apparel surged 16 percent in April for the 13th consecutive year-over-year, double-digit gain, with China again taking the lead as the country with the largest growth — 136 percent — the Commerce Department reported Friday.

China’s spectacular climb as the largest foreign supplier of apparel and textiles has been ongoing, as global quotas restricting shipments are being removed in advance of being completely eliminated by 2005 for World Trade Organization members.

The mounting evidence of China’s growing dominance as a textile-apparel supplier provides a backdrop to this week’s round of free-trade talks, to be held in Honduras, between the U.S. and five Central American countries.

A Central American Free Trade Agreement permitting the use of non-U.S. or Central American fabric is advocated by U.S. retailers and other importers as a competitive counterweight to China post-2005. Absent a flexible CAFTA apparel rule of origin, retailers claim that Central America, now supplying about 17 percent of foreign-made garments to the U.S., will fade in importance as China and other Asian countries claim its business.

“If the true economics of speed and price don’t add up, retailers and other importers will have to look elsewhere,” said Peter McGrath, president of purchasing at J.C. Penney Inc., who’s also chairman of the U.S. Association of Importers of Textiles & Apparel.

McGrath noted a liberal apparel rule of origin might hurt U.S. textile sales, but the damage would be worse without such flexibility. “The U.S. government will have to make a determination how [Central American] countries will fare in garment production after 2005,” he said.

Meanwhile, importers and retailers are joining forces to lobby Congress to nix CAFTA if it doesn’t contain allowances for non-U.S. and Central American fabric. “Somewhere in there lies a [compromise] between U.S. fabric and generous allowances” for textiles sourced outside the region, McGrath said.

However, the flagging U.S. textile industry is just as adamant about seeing there’s no deviation from a strict yarn-forward rule of origin, requiring U.S. or Central American textiles to be used in garments receiving duty breaks. The retail-textile industry divide is testing Bush administration promises to U.S. mills, aimed at helping them compete with foreign suppliers.At the same time, the White House is pursuing an enormous global free-trade agenda cheered on by importers.

Still, at the onset of CAFTA talks, the administration is advocating a yarn-forward rule of origin, but it hasn’t taken a position on whether certain exceptions will be made. However, domestic mills argue a yarn-forward rule will benefit everyone if China’s limits on destabilizing imports are continued beyond the scheduled 2005 quota phase out.

While other countries by 2005 will be duty-free, China, under its WTO membership agreement, agreed to allow quotas to be imposed anew on imports deemed to be disrupting local markets. The U.S. textile industry is pressing the Bush administration to instate quotas, called safeguards, on dozens of Chinese textiles and apparel categories.

“The only thing that’s going to keep U.S. textile jobs here or apparel jobs in Central America is for the U.S. government to implement China safeguards,” said Cass Johnson, associate vice president of international trade with the American Textile Manufacturers Institute.

Johnson said U.S. textile sales to Central America — and several Central American apparel export categories that enter the U.S. duty-free for using American textiles — are now flourishing because of current quota limits on Chinese products. He cited the two largest apparel import categories experiencing growth in April — cotton trousers and cotton knit shirts and blouses — as examples.

For instance, Honduras in April outpaced other countries with its 22 percent growth in cotton underwear shipments to the U.S., to claim 19 percent of the imported cotton underwear market. By comparison, quotas in China are working to limit cotton underwear shipments to less than 1 percent of foreign imports, an amount that in April was off 24 percent.

For their part, five Central American countries — El Salvador, Honduras, Costa Rica, Guatemala and Nicaragua — are entering CAFTA'sfifth round of talks unified for the first time on the issue of apparel origin.The CAFTA countries are largely siding with their customers, such as The Gap, Liz Claiborne and Wal-Mart, in seeking an agreement with broad allowances for the use of foreign fabric. Being able to use some textiles from existing U.S. or Central American free trade partners, including Mexico, is also key.Miguel Lacayo, Salvadoran Minister of the Economy, said Central Americans, like those in the U.S., want to protect their textile industries, which are slowly developing. He said a balance among domestic producer and retailer positions can be fostered in negotiating a CAFTA by the parties' self-imposed, yearend deadline.

“In order to face China together we need to have flexible rules, in some respects, so that retail industry can continue sourcing in the region,” Lacayo said Saturday, while attending the annual meeting of the American Apparel and Footwear Association in San Francisco."

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