WASHINGTON — J.C. Penney Co., seeking to exert influence over the debate on lifting quotas Jan. 1, said it would reconsider doing business in Bangladesh if the government failed to withdraw a request for the World Trade Organization to review the quota policy and its implications.
Penney’s sent a letter to the Bangladesh Garment Manufacturers & Exporters Association on Tuesday urging it to pressure the government, which fears that the end of quotas will result in China dominating apparel manufacturing.
“We are so far down the road here,” Peter McGrath, chairman of J.C. Penney Purchasing Corp., said in an interview. “We can’t go back without causing a major disruption to U.S. importers, so we are talking tough to people who want to bring up any issue at all.”
Penney’s planned to expand its business in Bangladesh after quotas on apparel and textiles are lifted.
“We want to keep doing business there because you can’t put it all into China,” McGrath said. “But we will have to question our business relationships with our partners if they continue to act like this.”
The quota issue has been a thorny one for the WTO, whose members agreed a decade ago to drop their limits on fabric and clothing imports, and have been phasing them out since then. No nation has formally called for the quotas to be extended.
However, Mauritius sent a letter to the WTO director general requesting an emergency meeting to address the implications of the phaseout, and Bangladesh sent a letter seeking a resolution to the anticipated economic upheaval.
Developing countries, as well as the U.S. textile industry, are concerned China will overwhelm the competition when quotas are removed, potentially displacing 30 million apparel workers around the world and causing economic upheaval in countries dependent on apparel exports.
Bangladesh employs some 1.8 million people in 3,600 factories producing apparel. Its $4.6 billion in apparel exports account for 85 percent of the country’s total exports of $6.5 billion to $7 billion, Embassy of Bangladesh officials said. For the year ended May 30, U.S. apparel and textile imports from Bangladesh totaled $1.8 billion.
An official at the embassy declined to comment.
The Bangladesh garment manufacturers’ group, responding to Penney’s letter, said the association does not support an extension of quotas, has not joined a coalition of textile and apparel trade associations calling for a resolution and will work to have its government withdraw its request, McGrath said.
“This letter shows this is a very rough game and there are people who will stop at almost nothing to achieve their ends,” said Cass Johnson, president of the National Council of Textile Organizations, a member of a larger U.S. and international coalition of apparel and textile trade associations calling for a WTO meeting to discuss ways to reduce the impact of quota elimination. “It has happened before and we expect we have very tough and even ruthless opponents.”
Meanwhile, the U.S. Association of Importers of Textiles & Apparel sent a letter Wednesday to Supachai Panitchpakdi, director general of the WTO, expressing its concern about the requests for a WTO resolution.
“The restrictiveness of the quota system limited U.S. companies from maximizing the potential that exists in many countries,” the association said. “Any re-imposition of the quota regime or even an announcement of a WTO review of other similar options, will have serious commercial consequences as companies cut back on their 2005 growth plans.”
The group said it will volunteer its time to the WTO Secretariat to work on positive development strategies to assist developing countries through the transition.
Panitchpakdi has scheduled an informal consultation on Tuesday with 17 countries and the European Union to discuss a request from Mauritius for an emergency WTO meeting.