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WASHINGTON — Six months away from quota-free trade with China, apparel retailers and brands should be celebrating, but are instead gearing up to lobby against a bill in Congress that could put their imports from China and Vietnam back under the government’s spotlight.
Importers are considering their options after the House Appropriations Committee approved a spending bill last week that instructs the administration to extend a Vietnam apparel monitoring program for a year and expand it to include apparel and textile imports from China.
“We’re going to obviously oppose this strenuously,” said Erik Autor, vice president and international trade counsel for the National Retail Federation. “We’ll have to spend shoe leather lobbying against this and line up our allies [in Congress] to do that. We’ll make sure we have a backstop in the Senate to keep this from moving forward.”
Importers shipped a combined total of $36.9 billion worth of textiles and apparel made in Vietnam and China to the U.S. for the year ended April 30.
The Vietnam apparel monitoring program and Chinese quotas that have been in place on 34 categories of apparel and textile imports for three years are set to expire in six months. The Vietnam program was initiated to see whether goods were being sold in the U.S. below market value or the cost of manufacturing, known as dumping.
The Commerce Department has twice failed to find sufficient evidence to initiate a dumping case against products from Vietnam. A third review is scheduled this fall.
Despite the promise of fewer restrictions on apparel trade next year, importers have said they were wary of shifting production back to China, the world’s largest supplier of apparel, because of the hit they took in 2005 when the Bush administration reached a three-year quota agreement with China, at the behest of the domestic textile industry. High inflation and rising costs in China have also made sourcing executives more dubious.
The U.S. textile industry has made restraining imports from China and Vietnam a top policy initiative and has hired a Washington-based law firm to explore its options. Textile groups are weighing such options as filing antidumping and subsidy cases against China, and enlisting the help of other countries to file a case against China at the World Trade Organization.
This story first appeared in the July 1, 2008 issue of WWD. Subscribe Today.
“It sure created a lot of uncertainty when the monitoring program was created for Vietnam and we had been expecting the textile industry to push for expanding the monitoring system to China,” said Autor. “Yes, it will create more unpredictability for sourcing executives doing business in China, but quite frankly, new orders have already starting leaving China because of increasing costs, particularly fuel and transportation costs.”
Julia Hughes, senior vice president of trade for the U.S. Association of Importers of Textiles & Apparel, said her group will work hard to convince lawmakers the textile industry does not have any evidence of dumping to justify continuing the Vietnam monitoring program and expanding it to include Chinese imports.
“The monitoring program was created because of the fear that prices would fall for imports from Vietnam when quotas were lifted in 2005, but that didn’t happen with Vietnam and one of the most unanimous views in the industry today is that prices in China are only going up,” said Hughes. “There is really no indicator that would suggest we need to be concerned about enormous price decreases when quotas are finally lifted.”
The domestic textile industry argues otherwise.
“What we saw in 2005 was a surge of dumped goods into the U.S. market and prices fell by an average of 40 percent from China — that’s what subsidies are for,” said Cass Johnson, president of the National Council of Textile Organizations. “China can do that because it gives its textile industry dozens of subsidies so they can drop the price virtually at will to destroy its competition. We want to make sure that cannot happen again.”
The NCTO and the American Manufacturing Trade Action Coalition have taken the lead in pressuring Congress and the Bush administration to address their concerns. Johnson said another justification for the monitoring of imports from China and Vietnam is that it forces importers to shift production out of the region and back to the Western Hemisphere, which could help boost U.S. textile exports.
“If you get high duty margins on dumping, you are able to roll back some of the damage China has done,” Johnson said. “I think you would see a resurgence in the production of textiles in the U.S. and a resurgence of apparel production in the Caribbean.”