IMPORTERS, RETAILERS VOICE CONCERNS OVER QUOTA CUTS IN NEW CHINA PACT

Byline: Jim Ostroff / With contributions from Stuart Chirls, New York

WASHINGTON — Importer and retailer spokesmen last week aired their unhappiness with the quota reductions in the new U.S.-China textile and apparel trade pact signed Feb. 2 in Beijing.
Industry representatives had generally declined to comment openly until the details of the cuts were released by the Commerce Department last week for publication in the Federal Register.
As reported, the four-year pact, on the whole, provided for a 2.6 percent reduction in quotas on Chinese merchandise coming into the U.S. in 1997 compared with what they would have been had the old pact been extended. It also includes market access provisions for the Chinese market, the first time such provisions have been included in a U.S.-China textile pact.
Significant quota reductions come specifically on 17 categories of Chinese goods and range from 50 percent for woven wool fabrics, category 410, to a 1.25 percent cut on cotton sheeting, category 315. Other reductions include 9.5 percent on cotton underwear, category 352; 2.81 percent in cotton trousers, category 347/348, and 2.52 percent in cotton knit shirts, category 338/339.
“We are pleased there is an agreement that keeps the relationship between the U.S. and China moving forward…but our members are concerned about the [quota] cuts,” said Julia K. Hughes, a lobbyist here for the U.S. Association of Importers of Textiles and Apparel.
Hughes, who served as an industry adviser to U.S. negotiators throughout the nearly four months of discussions with China that culminated in the pact, said importers had told Rita Hayes, the chief U.S. textile negotiator, of their concerns about any cuts in quotas for Chinese trousers, underwear, wool and various types of knit apparel.
Hughes said there is little solace in the fact that some of these key categories were far from filled at the end of 1996, as noted by some spokesman for domestic makers, who applaud the quota reductions.
“Our business is based on the consumer and fashion trends, and we’re particularly concerned about cutbacks because even if [quota utilization] was low in 1996, we’re hopeful this year’s trends will be better,” Hughes said.
Robert Hall, the National Retail Federation’s vice president and international trade counsel, said, “We are disappointed that Ambassador Hayes and her team decided to make quota cutbacks in a number of areas of particular sensitivity to American families and retailers who serve them.”
Hall said retailers are particularly disturbed about cuts in the quotas for cotton polo shirts, cotton trousers, woven shirts and underwear, as well as men’s wool trousers and wool skirts.
However, he reiterated that the NRF was pleased that the pact contains access provisions to China’s markets.
Representing the domestic makers’ view, Seth Bodner, executive director, the National Knitwear and Sportswear Association, countered retailer-importer arguments, claiming the quota reductions “will not hurt, since China is one of maybe 100 countries shipping apparel here.”
Cass Johnson, the American Textile Manufacturers Institute’s assistant director of international trade, said U.S. textile firms should be particularly pleased at the 18.8 percent cutback in China’s quotas for cotton print cloth, category 315.
“This is where our mills might be able to take up some of the slack” from the quota cut, Johnson said, noting China’s shipments account for 38 percent of the import market for this fabric.
Johnson defended all of the cutbacks, moreover, asserting they are a payback to China for alleged transshipping, overshipping and “its use of certain categories as donors to increase shipments in other, sensitive categories.” For example, Johnson noted that China’s shipments here of carded and combed cotton yarns, category 300/301, were in the low, single-digit range last year, but China used the excess quota to “increase exports in sensitive categories, such as women’s wool coats, category 435, men’s wool suits, category 443, cotton skirts, category 341, and cotton pillowcases, category 360.”
The U.S. textile bilateral pacts contain boilerplate language that permits exporter nations to utilize such quota shifts to increase other shipments of growing categories. There are 5 to 10 percent limits on such shifts, though, depending upon the sensitivity of the categories involved.
Meanwhile, Rita Hayes told the 1997 Textile Market Luncheon of the ATMI, held last week in New York, that market access into China was one of her primary objectives when she opened negotiations on the pact in September.
“We wanted access,” she said. “As an industry, [textile and apparel] have to export to survive, and I want foreign markets opened to our yarn, apparel and home furnishings.”
She told the luncheon that unlike past agreements, the U.S. made substantial gains without having to make painful sacrifices. “This one opens China’s market and includes access as a matter of right. You don’t want to pay for it in quotas or any other concessions.”
As for the potential for this trade with China, Hayes said, “China wants U.S. goods. They want T-shirts, tennis shoes and curtains.”

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