QUOTA SQUEEZE STILL ON, USAITA FORUM WARNED
Byline: Valerie Seckler
NEW YORK — Despite the promise of liberalized trade under the GATT agreement, apparel importers should be looking aggressively for new source nations. Over the next four years, the impact of GATT on quota will not allow them to satisfy projected U.S. market growth.
This advice came from Clint Stack, president of International Development Systems, a Washington-based consulting firm in international trade, who spoke at a quota conference last week sponsored by the U.S. Association of Importers of Textiles and Apparel.
“The U.S. apparel market is expected to grow about 3 percent annually over the next few years,” he said. “Domestic production is expected to grow about 1 percent annually over that period.”
Given this projected increase in demand, Stack told importers, “You’re going to need 7 to 8 percent annual growth in apparel imports to supply the U.S. market and the GATT growth-on-growth rates for quota won’t satisfy that need. The quota squeeze is still here.
“So you’re going to need to develop new source countries not covered by quota.”
In addition, he predicted, “You’ll have quota for some items sitting around unused in larger, older source nations due to the rising costs of operating in those markets.”
As a result, Stack said apparel importers need to develop sourcing in places such as South America and Africa. He added that countries such as Vietnam and North Korea “may come through as strong source countries.”
Noting the Multi-Fiber Arrangement will be phased out in three tranches, Stack said the first stage, which began Jan. 1, comprises items that never were subject to quota.
Further, he estimated that a hefty majority of the products to be integrated in the second and third stage never were covered by quota. The second tranche runs from January 1998 through January 2002, the third from 2002 through 2004.
The list of items included in the second and third tranches was announced Monday by the Committee for the Implementation of the Textile Agreement.
“Basically, we consider this a non-event,” Stack remarked. “Apparel importers have to consider the amount of quota now available and assume it will remain around that level for a while.”
While the U.S. is slated to become a quota-free market for apparel and textile products on Jan. 1, 2005, Stack reminded importers that the domestic industry will continue to lobby the government for an extension beyond 2005.
Stack, who foresees a push for a five-year extension, said, “It’s very well possible we’ll have a new Congress and administration in 2002, and there will be an effort to blunt the impact of the phaseout on existing business.”
He also acknowledged the domestic industry has a “decent arguing point” for the extension, in stressing to importers the importance of finding new sources.
Moreover, Stack noted that quotas have value to both their administrators and holders. Exporting countries aren’t necessarily opposed to quotas, he explained, because they can create less supply than demand, thereby propping up prices and bolstering business. — Fairchild News Service
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