WASHINGTON — In the final year of the quota system in 2004, China easily outpaced all foreign suppliers and rapidly increased its share of the U.S. apparel and textile import market to 25 percent.
Imports to the U.S. from China last year helped drive the biggest rise in December apparel and textile volume, to 3.62 billion square meters equivalent, and year of shipments, which reached a record 46.6 billion SME, according to a Commerce Department report released Thursday. On a value basis, total apparel and textile imports rose to $82.8 billion from $77.43 billion in 2003.
The 148 member nations of the World Trade Organization lifted quotas on apparel and textile trade on Jan. 1 and the uncertainty surrounding such a big change in international trading rules has triggered widespread concern about China’s ability to decimate industries around the globe and in the U.S.
The U.S. Customs & Border Protection Bureau began staged entries on Jan. 24 for three Chinese categories under safeguard quotas, including bras, dressing gowns and robes, and knit fabric, that were shipped over their quota limits in 2004. The government is allowing in 5 percent of each embargoed category’s limits per month. For all other embargoed categories, Customs allowed in 5 percent, beginning in February.
Six embargoed categories were overshipped by more than 5 percent and Customs has again closed those categories. Imports of knit fabric and bras from China were closed until Feb. 24. Closed until March 1 were: sateen fabric from China; a group of products including yarns, fabrics, socks and underwear from India; cotton and man-made fiber underwear from Pakistan and shop towels from Pakistan.
While worldwide exports of textiles and apparel to the U.S. rose 10.4 percent in 2004 to 46.6 billion SME, Chinese exports to the U.S. increased 40.7 percent to 11.6 billion SME. China exported $14.5 billion worth of apparel and textiles to the U.S. in 2004 compared with $11.6 billion in 2003.
China’s share of U.S. textile imports went up to 32.2 percent during the year, while its share of all U.S. apparel imports rose to 15.1 percent. Commerce’s trade data also revealed the apparel and textile trade deficit with China deepened in 2004 by 25.3 percent to $17.5 billion. The overall textile and apparel trade deficit worsened to a record $73.1 billion, compared with $67.2 billion in 2003.
The U.S. trade deficit on all products with China grew to $162 billion, which underscored the calls from business associations and lawmakers for the Bush administration to take aggressive action against China’s alleged unfair trade practices. Several lawmakers have introduced bills in an attempt to counter China’s unfair trade practices.
“It goes to show how powerful China’s subsidy scheme is in the market,” said a spokesman for the American Manufacturing Trade Action Coalition. “If you are willing to subsidize your industry at the rate China is willing to subsidize its industry, you can take enormous chunks of market share away from other players.
AMTAC is among several domestic textile, fiber and apparel associations that filed 12 China safeguard petitions for further quota restraints this year. A lawsuit filed by the U.S. Association of Importers of Textiles & Apparel in December and a subsequent preliminary injunction have suspended the government’s review of the pending petitions at a time when imports are flowing into the U.S. unrestrained.
The Justice Department this week asked the U.S. Court of Appeals to stay the preliminary injunction, pending a formal appeal filing.
China ended 2004 with a 70 percent market share among 25 apparel categories no longer under quota last year, said Cass Johnson, president of the National Council of Textile Organizations. Johnson said China had a 61 percent share of U.S. imports in the home furnishings and made-up categories no longer under quota in 2004.
“There is a massive surge going on,” he said. “The industry stands on the edge of a cliff and it needs the government to move quickly if hundreds of thousands of jobs are not to be lost.”
Despite China’s major growth, a handful of other foreign suppliers also posted big import gains in 2004. Imports from Pakistan increased 10.3 percent, or 276 million SME, while imports from India rose 14.9 percent, or 248 million SME. Apparel and textile imports from South Korea gained 9.7 percent or 204 million SME, while imports from Mexico went up 4.1 percent, or 161 million SME, and imports from Indonesia increased 10.7 percent, or 123 million SME.
Cambodia had a strong showing in 2004 and increased its import volume by 19.9 percent to 112 million SME.
“Obviously, there is an awful lot of business going in that direction [to China],” said Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association.
“Still, while it is increasing, I believe the smart companies in the apparel business will diversify sourcing.”