WASHINGTON — In a tit for tat, a coalition of textile and fiber groups has sent a letter to the President, countering a letter by retailers and importers that are petitioning the government for more quota flexibilities this year.
This story first appeared in the January 20, 2004 issue of WWD. Subscribe Today.
A coalition of 20 textile and fiber associations opposes any increase to apparel and textile quotas this year through a provision known as “carry forward.”
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.
Importers and retailers claim the absence of carry forward will create quota shortages, price increases and logistical nightmares, not to mention empty shelves during the holiday season in the extreme. In their letter to the President, domestic textile groups dismissed the importer-retailer argument as “unfounded.”
U.S. officials have maintained the carry-forward issue should be no surprise to those in the trade community and claimed they will not budge on the issue. With the presidential election ahead, and jobs a key political issue, sources agreed it is unlikely that the current administration would bend on carry forward. The textile coalition claimed the built-in annual growth rates for foreign suppliers will offset the 6 percent carry-forward provision.
Most annual quota growth rates for smaller developing countries are larger than the average carry forward. For instance, Bangladesh’s annual growth rate is 12.9 percent, which means that even subtracting the 6 percent carry forward from its imports for the year, it would still have room to grow, although at a lower rate.
Importers are concerned about China because of that nation’s growth in shipments to the U.S., which was almost quadruple the net increase of U.S. imports in apparel and textiles for the year ended in October. But the domestic groups claimed in the letter that preferential trading partners, such as Mexico, Canada, Central America, the Caribbean and Sub-Saharan Africa, which enjoy quota-free access for the vast portion of their textile and apparel exports to the U.S. could provide alternatives to importers.
“The flood of primarily Asian-produced textile and apparel exports to the U.S. need not be exacerbated by a false carry-forward scheme,” they wrote in the letter. “Granting unjustified and damaging carry forward will destroy tens of thousands of U.S. textile and apparel jobs.”
Cass Johnson, acting president at the American Textile Manufacturers Institute, noted that quotas have increased significantly during the 10-year phaseout period under the World Trade Organization. Typical quota growth rates have doubled during that period, leading to significant quota access in the majority of categories.
“There is more room now than there ever was to make adjustments,” said Johnson, referring to importers. “They are still getting enormous growth rates and it is not as if apparel consumption is increasing by 12 percent or even 6 percent. This doesn’t cut back on the net amount of goods that can be imported.”
Augustine Tantillo, Washington coordinator at the American Manufacturing Trade Action Coalition, said, “We have quota-[free] and even tariff-free preferences for over 80 countries. It’s a stretch for someone to say there will be shortages.”