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House Moves to Extend Apparel Monitoring Plan

The House Appropriations Committee has approved a $56.9 billion spending bill and instructed the administration to extend a Vietnam apparel monitoring...

WASHINGTON — The House Appropriations Committee has approved a $56.9 billion spending bill and instructed the administration to extend a Vietnam apparel monitoring program for a year and expand it to include apparel and textile imports from China.

The surprise move on Wednesday could be a roadblock for apparel retailers and brands that anticipated quota-free trade with China and less scrutiny of imports from Vietnam.

The U.S. textile industry has made its top policy initiative either securing a legislative solution or help from the administration to restrain imports from China and Vietnam, two of the biggest suppliers to the U.S. The countries shipped a total of $36.9 billion worth of textiles and apparel to the U.S. in the year ended April 30.

“The Committee expects [the International Trade Administration, a division of the Commerce Department] to undertake apparel import monitoring, including socks, focusing on prices of imports from China and Vietnam, and whether their state-run industries are illegally pricing products and dumping in the U.S. market,” according to a report accompanying the legislation.

The spending bill, which funds Commerce and the U.S. Trade Representative’s Office for the 2009 fiscal year, will go to the House floor for a vote. The companion bill in the Senate does not include the monitoring provision, which means the two bills would have to be reconciled in conference. If the bills are not completed this year, the next Congress will have to draft and introduce new measures next year.

“This is a strong posture on the part of the U.S. Congress in regard to this critical issue confronting the U.S. textile industry, namely what happens when China becomes quota free on Jan. 1, 2009,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “A need for this language is supported by the incredible surge that we saw in 2005 when quotas were first removed on China.”

Although Commerce has not found adequate evidence of dumping in the imports from Vietnam, Tantillo said the program has served as a disincentive for producers to slash prices. The Vietnam monitoring program was initiated to see whether goods were being sold in the U.S. below market value or the cost of manufacturing.

The bill was sure to cause concern among apparel sourcing executives who have been trying to recalibrate their strategies in anticipation of the U.S. lifting quotas on Chinese apparel and textile imports at year’s end and the expiration of the Vietnam monitoring program. The total value of textile and apparel imports under quota from China was $8.65 billion for the year ending April 30, representing 27 percent of the total annual apparel and textile imports from China.

The Vietnam monitoring program is set to expire at the end of the Bush administration in January and officials have said they will not renew it.