WASHINGTON — U.S. importers and retailers clashed with the textile sector on Thursday over limiting China’s imports next year, one day after the disclosure that the industry next week plans to file safeguard petitions against about 20 categories valued at $2 billion last year.
This story first appeared in the October 1, 2004 issue of WWD. Subscribe Today.
The opponents of the safeguards said there were few surprises on the textile industry’s target list, which represents 17 percent of all Chinese imports last year on a per-dollar basis. They continued to challenge the Bush administration’s right to review the petitions based on threat of market disruption instead of actual disruption under China’s agreement to join the World Trade Organization.
Meanwhile, a second effort at getting the Bush administration to force China to bring its currency in line with world markets — it’s widely viewed as undervalued by as much as 40 percent — was launched Thursday on Capitol Hill.
The unfair trade practices petition was filed by 30 lawmakers, all Democrats except Republican Sen. Lindsey Graham of South Carolina, and asks for talks between the U.S. and China to begin immediately. If no progress is made, the petition asks the White House to file a complaint at the WTO against China.
The global textile and apparel industries are battling the Jan. 1 lifting of quotas among all 147 WTO members, which is expected to have a major impact on global trade. The U.S. is the world’s biggest textile and apparel importer. Each side has drawn a line in the sand as the Bush administration gears up to process the anticipated safeguard petitions.
“We certainly agree China’s market share is going to increase after the end of quotas, but we don’t think China will capture as large a portion of the market as the textile industry makes out,” said a spokesman for the National Retail Federation. “This list is very similar to what the textile industry laid out at the beginning of the month. We would be concerned that they are already asking for another year of quotas on bras and dressing gowns.”
Among the products that the textile industry wants to restrict for a year are men’s and women’s cotton and man-made fiber trousers, men’s and women’s cotton and man-made fiber knit shirts, cotton and man-made fiber underwear, wool trousers and cotton yarn, according to people familiar with the situation. WWD disclosed the safeguard petition plan on Thursday.
“China’s penetration to the U.S. is not great, but there is a potential to create more disruption if China moves from a 3 percent share to 70 percent quickly,” which is what happened to many of the 29 apparel categories removed from quota in 2002, said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.
“No one thought China would go from 7 to 9 percent of the U.S. market in the categories released from quota in 2002 to 72 percent, and that’s exactly what happened,” he said. “For the importing community to argue there is no possibility China experiences that type of phenomenal growth would be to ignore the reality of China’s expansion into the U.S. market.”
The Bush administration imposed safeguard quotas on Chinese imports of bras, dressing gowns and robes and knit fabrics last year and those quotas are set to expire at the end of December.
“If you look realistically at whether or not there is any market disruption or even threat of disruption, it’s hard to see how they can make a strong case,” said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel.
She noted that, in some of the targeted categories, China now has small import share.
However, the Committee for the Implementation of Textile Agreements considers several criteria, including domestic production and prices, in determining market disruption cases. The Bush administration last month determined the industry has a right to file petitions based on the threat of market disruption, rather than waiting for actual disruption to occur, which was a key victory for the U.S. textile sector.
“The industry is well within their rights to file petitions based on market disruption or threat of market disruption, and the administration will consider each petition on a case-by-case basis,” a Commerce Department spokeswoman said. “When the industry presents solid evidence of market disruption or threat of market disruption, we will enforce our trade laws-agreements on their behalf.”
Among the targeted categories, imports of cotton sheets from China have increased 55 percent in the past 12 months, while imports of cotton underwear increased 20.9 percent during that period.
“The cases will be brought in our bread-and-butter categories,” said Cass Johnson, president of the National Council of Textile Organizations. “If China takes over these markets, our industry will be out of business.”