WASHINGTON — The U.S. International Trade Commission has a big question to answer: Who will win and lose when quotas are lifted on apparel and textile products in 2005?
Apparel and textile executives weighed in on the impact of a quota-free world at an ITC hearing Wednesday and reached consensus on only one point: China will dominate apparel and textile trade in 2005 and beyond. The heart of the disagreement lies in different perspectives on how sourcing patterns will change once quotas are removed.
Meanwhile, the Dominican Republic — the only country to testify Wednesday — took the opportunity to make a separate, unrelated pitch to the U.S. for a bilateral free-trade agreement. Dominican Republic officials are worried not only about 2005 and a quota-free world, but about being excluded from the recently launched trade negotiations between the U.S. and five Central American nations.
ITC commissioners questioned a number of complex issues related to global textile and apparel trade, including:
The effectiveness of tariff preference programs, such as NAFTA or the Caribbean Basin Trade Partnership Act.
The impact of strict rules of origin on trade and foreign suppliers.
Recent import surges on products where quotas have already been lifted, particularly from China.
Progress on the American Textile Manufacturers Institute’s request to reimpose quotas on five Chinese categories.
Just-in-time inventories, proximity and shorter production cycles helping Western Hemisphere suppliers compete with Asia, and the factors importers consider when developing sourcing plans.
The jury is still out on what effect global phaseout of apparel and textile quotas will have on developing countries. The ITC, which investigates trade issues but does not set trade policy, is focusing its fact-finding investigation on major apparel and textile suppliers, including Bangladesh, China, Egypt, Hong Kong, India, Indonesia, Korea, Malaysia, Macao, Pakistan, the Philippines, Sri Lanka, Taiwan, Thailand and Turkey. It is also including in its investigation Mexico, Israel and Jordan, as well as the four Andean countries and beneficiary countries under the African Growth & Opportunity Act and CBPTA.
U.S. Trade Representative Robert Zoellick has asked the ITC to investigate the long-term effect the elimination of apparel and textile quotas will have on foreign suppliers. The ITC will submit its confidential report to the USTR by June 30. The report will convey the ITC’s objective findings and independent analysis, but the Commission makes no recommendations on policy or other matters in its general fact-finding reports.Domestic textile executives and trade groups at the hearing continued to paint a grim picture of global trade dominated by China in the post-quota world. Many claim China will eliminate most of the current 125 countries that are suppliers of textiles and apparel, leaving only a handful to compete.
Importers conceded there will be a consolidation of suppliers, but insisted companies will not place all of their production in one or two countries. They claim social responsibility, quality, proximity and timely deliveries also factor into the equation.
Peter McGrath, president of purchasing at J.C. Penney Co. and chairman of the U.S. Association of Importers of Textiles & Apparel, claimed at the hearing that quota limitations are just one element considered in sourcing strategies. The core considerations for selecting a supplier and country for each product include speed, quality, legal compliance, logistics and product costs, he said.
He dismissed the domestic textile industry’s contention that China will eliminate most major suppliers, although he conceded that Mexico, which was just surpassed by China as the number-one supplier to the U.S. on an annual basis, "will have a tough road" ahead. McGrath conceded that China has the potential for significant growth, "but as a practical matter, the major importers in the U.S. will limit the amount of business they place in China."
He also dismissed ATMI’s claim that recent import data shows how China will dominate in 2005 and beyond and warned that restrictive rules of origin will further hurt countries in the Western Hemisphere already grappling with higher wages.
Kevin Burke, president of the American Apparel & Footwear Association, claimed Central American countries will remain competitive with "full package" production. He noted, however, that it is "unclear" whether Caribbean Basin countries will continue to attract business due to strict rules of origin under CBTPA.
"Undoubtedly, the apparel industries in some countries will not survive because they owe their very existence to the fact that their larger competitors still operate under quota restraints," said Burke.
Citing huge surges in apparel and textile imports from China in 2001, a domestic textile executive claimed China will take over imports to the U.S."Our concern is that our trading partners will not just be devastated but eliminated with the elimination of tariffs…and the U.S. textile industry will cease to exist," said Jerry D. Rowland, chief executive officer of National Textiles.
ATMI, in written testimony, claimed that imports of textiles and apparel in 2005 and beyond will be dominated by China, with Vietnam, India, Pakistan and some countries that enjoy preferential access to the U.S. market playing secondary roles. The group supports its claims by pointing to astronomical import increases — such as a 24,270 percent boost in knit fabrics since Jan. 1, 2001 — from China on products where quotas were lifted.
ATMI has filed a request under the textile-specific safeguard that was part of China’s World Trade Organization entry agreement and allows the U.S. or any other WTO member to reimpose quotas on Chinese apparel and textile imports for one year through 2003. The Committee for the Implementation of Textile Agreements is reviewing the request for import quotas on bras, knit fabric, gloves, nightwear and luggage, all of which had quotas wholly or partially removed on Jan. 1, 2002.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty