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U.S. To China: If No Progress, Quotas Get Slashed Jan. 17

WASHINGTON -- U.S. Trade Representative Mickey Kantor made it official Thursday: The U.S. will slash China's apparel import quotas by 25 to 35 percent on Jan. 17 unless a new bilateral textile pact, including safeguards against transshipping, is...

WASHINGTON — U.S. Trade Representative Mickey Kantor made it official Thursday: The U.S. will slash China’s apparel import quotas by 25 to 35 percent on Jan. 17 unless a new bilateral textile pact, including safeguards against transshipping, is completed by then.

The action will cut quotas on 73 categories of Chinese apparel by 25 percent and another eight categories by 35 percent. It will affect mainly sweaters, knit shirts, cotton trousers and shop towels. Details will be published Monday in the Federal Register.

U.S. trade officials have been threatening such a move since talks for a new pact broke down last month. The old bilateral with China, the largest supplier of apparel imports to the U.S., expired Dec. 31.

At a press conference Thursday, Kantor said the quota reduction would cause the value of Chinese apparel imports into the U.S. to drop from about $4.7 billion in 1993 to about $3.5 billion this year.

He contended the action would have little if any effect on consumer prices for apparel, an argument that was vigorously contested by officials of retailers and importer groups.

“American consumers,” Kantor said, “will be fully able to buy quality products made in the U.S. by U.S. workers, or in some cases, made in other countries.”

Charging that China annually ships $2 billion worth of apparel into the U.S. illegally by circumventing quotas, Kantor said: “Clearly, textile transshipment damages our workers and industry and violates China’s international commitments.”

He added said that in four negotiating sessions held over nine months China refused to accept provisions accepted by 16 other nations to halt transshipping.

The provisions against transshipping permit the U.S. to cut a country’s textile quota by three times the amount of goods shipped illegally and also send inspectors unannounced to apparel plants to determine whether they are capable of producing clothing for export at certain levels.

A senior U.S. trade official who briefed reporters after Kantor’s presentation, however, acknowledged that some other U.S. trading partners, such as Pakistan, India, Thailand and Singapore, have — like China — so far refused to accept the anti-transshipping provisions.

The bilateral with China would also maintain the 25 to 35 percent cuts in quotas until the U.S. is satisfied that China is making progress in stemming transshipments.

Kantor also charged that China chronically overships apparel against its quotas in violation of the Multi-Fiber Arrangement.

He confirmed China had proposed to resume talks in Beijing the week of Jan. 17, but said the U.S. rejected that government’s demand to negotiate with a deputy USTR, rather than Jennifer Hillman, an ambassador and chief U.S. textile negotiator.

The quota reductions would become effective Jan. 17 unless full agreement on a pact is reached, Kantor stressed, saying no extensions would be granted.

Importer and retailer association officials bristled at the government’s stance.

Tracy Mullin, National Retail Federation president, said: “Let’s hope that this action is a negotiating tactic. If it is not and China’s trade is cut by these significant numbers, then the American consumer, particularly the low income consumer, will be severely impacted.

“The American consumer will be forced to pay a higher price for a number of apparel items.”

Laura Jones, the U.S. Association of Importers of Textiles and Apparel’s executive director, characterized the Kantor action as “playing with fire.”

“Past experience indicates China will not bow to heavy-handed pressure tactics,” she said.

Jones said the threatened Chinese quota cuts not only would raise retail apparel prices by $1 billion annually, but put in jeopardy $100 billion in U.S. sales of goods to China, along with 3 million jobs here.

Julia K. Hughes, the Associated Merchandising Corp.’s divisional vice president for government relations and USA-ITA chairman, said it is ironic Kantor announced the China quota cutbacks at the same time he praised its government for living up to a 1992 market access agreement with the U.S.

“At the very moment the U.S. says China has met this important obligation, it threatens to take a draconian action against China’s apparel exports that could imperil all the benefits won by U.S. retailers and exporters in the market access agreement,” Hughes said.

Wang Yan, a spokeswoman for China’s embassy here, said she could not comment on the proposed quota cuts, saying the U.S. had not notified the embassy of the plan.

At her request, a copy of Kantor’s statements on the quota reductions were faxed to the embassy, but no response was forthcoming at press time.

Meanwhile, spokesmen for U.S. textile and apparel manufacturing groups, who have long pushed for a tougher stand on China, hailed Kantor’s actions.

“The Chinese have been stiffing the U.S. at these negotiations for many months so it is time that we did something about it,” said Seth Bodner, the National Knitwear and Sportswear Association executive director.

“Our government says that each $1 billion in trade equals about 20,000 jobs here when they talk about exports, so I presume the same is true about imports,” Bodner said, adding the alleged Chinese transshipments have cost up to 80,000 U.S. apparel jobs.

Bodner said the quota reduction, if implemented, would have little affect on retail prices, reasoning, “department stores don’t pass through savings to consumers anyway.”

The NKSA official, however, predicted China would retaliate against the U.S. for the quota action.

“They will threaten Boeing and anyone who sells anything in China,” he said. “The administration is not stupid. It understands this and will have to deal with it.”

Officials with the American Apparel Manufacturers Association and American Textile Manufacturers Association issued press releases at the conclusion of Kantor’s conference praising the administration’s proposed actions and saying they hoped the threatened quota reductions would bring China to the negotiating table and accept the U.S. demand for anti-transshipping provisions.

Jack Sheinkman, the Amalgamated Clothing and Textile Workers Union president, also applauded Kantor’s remarks, adding he hoped future trade actions would consider China’s failure to adhere to international labor standards.