WASHINGTON — Wholesale and retail importers are narrowing their focus in their quest to gain additional quota flexibilities this year from the Bush administration, which has denied a request to expand this year’s quota limits.
This story first appeared in the January 26, 2004 issue of WWD. Subscribe Today.
Commerce Secretary Donald Evans sent a letter to importer and retailer groups earlier this month rejecting the associations’ plea for additional apparel and textile quotas this year through a provision known as “carry forward.”
“Providing the suggested quota increases would be inconsistent with the premise upon which carry forward is based, is a benefit beyond what we have agreed to provide and would upset the balance struck in the ATC [Agreement on Textiles & Clothing],” said Evans in the letter obtained by WWD. “In the majority of instances, countries will continue to have growth in their quota categories in 2004 even in instances in which they borrowed against 2004 quotas in 2003.”
The associations also received a similar rejection letter from Alan Larson, undersecretary for economic affairs at the State Department.
For decades, countries that had bilateral textile agreements with the U.S. were able to take advantage of the mechanism, which allows them to borrow 6 percent on average of the next year’s quota for use in the current year. However, there will be no quotas to borrow against this year because the nations of the World Trade Organization are set to drop their quotas on textiles and apparel on Jan. 1, 2005.
Evans noted in the letter that the built-in average growth rate of 11 percent for the majority of foreign suppliers will offset the 6 percent carry-forward provisions.
However, importers claim they are most concerned about countries like Hong Kong, Taiwan and China, which have low annual quota growth rates in the 1 to 2 percent range on many products, unlike other developing countries like Bangladesh, which has an overall quota growth rate of 12.9 percent.
Worried that the absence of carry forward will create quota shortages, price increases, early embargoes and logistical nightmares this year, importers have vowed to press on despite the rejection and re-petition the administration to extend carry forward for a narrower group of countries and products.
“It’s disappointing but not surprising that their initial response was negative,” said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel.
Hughes said the associations are focusing on roughly 50 key categories, such as knit shirts, cotton trousers and shorts, cotton coats, cotton and manmade fiber nightwear and pajamas, and skirts — categories that tend to fill up quickly and often get embargoed.
“We are trying to prevent a crisis later this year,” said Hughes.
A coalition of domestic fiber and textile groups opposed the extension of carry forward and argued that it would open the door to more imports, which have led to massive job losses. The groups claimed annual growth rates would offset the loss of carry forward and also suggested preferential trading partners such as Mexico, Canada, Central America and the Caribbean, which enjoy quota-free access for the vast portion of their textile and apparel exports to the U.S., could provide alternatives to importers.
“We are glad [administration officials] made the decision they made, but that is good governance, not an extraordinary action on behalf of the industry,” said Jock Nash, Washington counsel for Milliken & Co.