WASHINGTON — The U.S. has taken its apparel and textile safeguard action against China to the next level.
Following the Bush administration’s decision in November to take action against explosive imports from China, an interagency governmental group said Monday it has formally requested consultations with China, and has set and imposed quotas on bras and other body-supporting garments, dressing gowns and robes and knit fabric, effective Dec. 24.
China voiced strong opposition to the move to impose safeguard quotas last month, but has so far stopped short of retaliation. The Bush administration — keeping its eye on the flagging employment situation as an election year approaches — also took some heat from critics at home who claimed the action runs counter to its free-trade principles.
Quotas can be levied under the safeguards, which were part of the U.S.-China bilateral trade agreement that paved the way for China’s entry into the World Trade Organization in November 2001. Under the safeguards, consultations with China will begin within 30 days of notification of the request and the two countries have 90 days to reach a resolution.
If they don’t, the U.S. can unilaterally impose quotas for one year, limiting growth of China’s imports in the categories to 7.5 percent above the previous year’s level. China does reserve the right to take the case to the WTO for review.
At the same time that it notified China of the request for consultations, the U.S.-imposed quotas on the selected apparel and textile categories — 7.5 percent above current trade levels — which will stand at these levels until Dec. 23, 2004 if the two sides fail to reach an agreement, according to the Committee for the Implementation of Textile Agreements, the interagency group governing the textile-specific safeguards.
The new quota limit on knit fabrics is 9.66 million kilograms, while the limit on bras and other body-supporting garments is 16.8 million dozen, and the limit on dressing gowns and robes is 4.09 million dozen, according to CITA’s public filing, which also noted that Chinese imports in the specified categories have caused market disruption.
Imports of knit fabrics from China increased 21,307 percent to 9.1 million kilograms for the year ended Oct. 31, while imports of bras and other body-supporting garments rose 291 percent to 15.96 million dozen for the same period and imports of gowns and robes rose 1,484 percent to 4.11 million dozen.Domestic production of knit fabrics fell 27 percent from 2000 to 2002, while production of bras and other body garments fell 2 percent from 2000 through June 2003, and U.S. production of gowns and robes fell 38.6 percent from 2000 through June 2003. In each case, domestic producers also lost market share.
China is now the largest supplier to the U.S. of bras and other body-supporting garments, as well as gowns and robes, and is the fourth-largest supplier of knit fabrics.
The safeguard action comes at a crucial time for the beleaguered textile industry, which has lost tens of thousands of jobs in three years and is facing an expected onslaught of imports from China at the end of 2004 when all quotas on textiles and apparel will be lifted as part of a 10-year phaseout process mandated by the WTO.
A unified coalition of domestic textile and fiber groups is calling for the administration to negotiate a broader textile agreement with the Chinese, which could potentially cover many more categories for a longer period of time. In the face of the anticipated flurry of category-specific safeguard petitions in 2005, the U.S. could opt to negotiate a broader control agreement with China.
Jock Nash, Washington counsel for Milliken & Co., said a broader quota-restraint agreement would be ideal, but he doesn’t give it much chance.
“I don’t want to lose all hope, but I don’t think anybody at Commerce has the juice within the administration to push for such a result,” Nash said.
The safeguard action infuriated retail and wholesale importers that source apparel in China for the low-cost advantages. Many claimed the decision was driven by politics and they also oppose a broader agreement.
“At this point, I don’t see any reason for anyone negotiating a broader agreement based on these three cases,” said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel.
Hughes said the U.S. could run into a big obstacle with the WTO if it attempts to negotiate a broader agreement with China that covers products that are still under quota until the end of 2004. “It wouldn’t comply with the WTO,” she said.
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