WASHINGTON — The U.S. and China failed to reach an agreement in Beijing this week over safeguard quotas the U.S. has imposed on three apparel and textile import categories, as China continued to increase its overall share of U.S. imports in November.

This story first appeared in the January 15, 2004 issue of WWD. Subscribe Today.

The Bush administration announced in December it had requested consultations with China and imposed quotas Dec. 24 on bras and other body-supporting garments; dressing gowns and robes, and knit fabric.

Both countries, according to the World Trade Organization mandate, must consult on the safeguard action, even though the U.S. has already imposed the quotas.

In the first round of consultations on Monday and Tuesday in Beijing, U.S. officials met with the Chinese in what one U.S. Department of Commerce spokeswoman characterized as a “first step.”

“This was an opportunity for us to go over and start talking with the Chinese and answer any questions, explain to them what the decision meant and how the process works under the World Trade Organization,” she said

However, according to information posted on the Chinese embassy’s Web site, Chinese officials said they “refuse the U.S. proposition and question the legitimacy of the U.S. decision [to initiate the safeguard action].”

The Commerce spokeswoman said there will likely be additional meetings and ongoing consultations to reach an agreement. The two countries have 90 days to reach a resolution. If they don’t, the U.S. will leave in place the quotas on the three categories, which limits the growth in each to 7.5 percent above the previous year’s level. The new quota limits on knit fabrics is 9.7 million kilograms, while the limit on bras is 16.8 million dozen and the limit on dressing gowns and robes is 4.1 million dozen.

China also reserves the right to take the case to the WTO. A unified coalition of domestic textile and fiber groups is calling for the administration to negotiate a broader textile agreement with the Chinese, which could potentially cover many more categories for a longer period of time, and U.S. officials said they are considering it an option.

“The U.S. government didn’t expect to reach an agreement and it had an indication the Chinese were going to be uncooperative. This is typical of a first round,” said Augustine Tantillo, Washington coordinator of the American Manufacturing Trade Action Coalition. “It doesn’t mean they won’t reach an agreement, but the Chinese for their own domestic purposes took a hard line and wanted to show their industry they are angry at the U.S. for taking a safeguard action.”

In the meantime, apparel and textile imports from China rose 46.4 percent in November to 712 million square meters equivalent, according to Commerce’s trade report released on Wednesday. In the first 11 months of the year, imports from China rose 69.3 percent to 7.51 billion SME and China now controls 19.2 percent of U.S. apparel and textile imports.

“We need to remind ourselves that the biggest categories are still under quota,” said Tantillo. “China has shown remarkable growth in categories where quotas were eliminated, and has demonstrated its potential beyond any doubt to capture large chunks of our market in very short order.”

Total apparel and textile imports rose 0.5 percent to 3.16 billion SME in November against a year ago, and rose 10.3 percent over the past 11 months to 38.7 billion SME.

Apparel imports actually fell in November by 7.4 percent to 1.28 billion SME while textile imports rose 6.7 percent to 1.87 billion SME. Over the past 11 months, apparel imports rose 9.8 percent, while textile imports rose 10.7 percent.

At the same time, imports from countries such as Mexico, the Philippines, Hong Kong, Taiwan and Thailand declined for the month, according to Ross Arnold, acting director of the agreements division at Commerce’s Office of Textiles & Apparel.

Imports from Mexico for the first 11 months fell by 10.5 percent, shipments from Thailand fell 16 percent, imports from Hong Kong fell 7 percent and those from Germany fell 11.8 percent.

Conversely, four countries had strong import growth for the year to date, including China, Vietnam with 156.1 percent, India with 8.4 percent and Pakistan with 5.1 percent, according to Arnold.

Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel, attributed some of the import declines to quota categories that filled or nearly filled at the end of the year and restrained countries from shipping more to the U.S.

Hughes said one of the bright spots in the import picture was the Central American region, which just wrapped up a free-trade pact with the U.S. in December that still needs Congressional approval and therefore was not responsible for the rise in trade. CAFTA only includes four of the five countries in the region, but Costa Rica is still negotiating to get in.

Imports of apparel and textiles from the five Central American countries, which includes Costa Rica, Honduras, El Salvador, Guatemala and Nicaragua, rose 5.8 percent through November.