WASHINGTON — Grant Aldonas, undersecretary of commerce for international trade, said Tuesday the U.S. plans to pressure the Chinese for greater textile and apparel market access, though a broader quota agreement has been ruled out.
Aldonas said at a trade association event that the Bush administration will choose its textile battles with China and focus on urging the country to stop providing subsidies in the form of export tax rebates averaging 17 percent to textile and apparel exports to the U.S., as well as eliminating intellectual property theft.
“The Chinese have been categorical with our industry and in discussions with us about a comprehensive agreement,” Aldonas told reporters after a breakfast sponsored by the Washington International Trade Association, which focused on the Bush administration’s report and recommendations on how to help the flagging manufacturing sector stay competitive.
“They are not interested in a comprehensive agreement,’’ he said. “The reaction on the Chinese side is they still don’t feel like there is enough of a threat’’ with individual safeguard actions “there that they can’t live with the uncertainty.”
In December, the U.S. imposed one-year safeguard quotas on three apparel and textile categories under an agreement China reached upon entering the World Trade Organization. A 90-day consultation period over the three current quota safeguards expired while a U.S. delegation led by Aldonas was in China, and no agreement was reached on a more comprehensive quota deal. As a result, a 7.5 percent growth cap will remain on imports of knit fabric, dressing gowns and robes and bras from China until Dec. 23.
Until Tuesday, it was unclear whether the U.S. would continue to push the Chinese for a quota agreement.
“My guess is we’ll see continuing trade friction as industry decides to file cases, whether it is under a safeguard mechanism, a dumping action or a countervailing duty action or through the Customs area,” Aldonas said. “That doesn’t mean [we] won’t continue to work on the Chinese to try to make sure we’ve eliminated market access barriers and intellectual property problems in China with respect to textiles.”
Cass Johnson, president of the National Council of Textile Organizations, said outside of the safeguards the textile industry doesn’t have the tools to go after China, which is a nonmarket economy.
“The government is an essential partner in attacking these unfair trade practices,” Johnson said. “It is disappointing. If the government chooses not to play a proactive role, it bears a large measure of responsibility if jobs around the world are lost.”
Anxiety is growing as the year-end WTO deadline for the phaseout nears. China is expected to become a global powerhouse, at the expense of apparel and textile workers at home and around the globe, once quotas are removed. This has created a backlash in the U.S. during a presidential election year focused on the shift of U.S. jobs overseas and job losses at home.
On the manufacturing front in general, Aldonas touted the administration’s steps in creating a number of councils and advisory groups to analyze the problems and implement solutions to help U.S. manufacturers. The administration recently announced an executive from a carpet manufacturer will take the key manufacturing post.
“I want to put to rest the [notion] manufacturing is being hollowed out,” Aldonas said. “Nothing could be more wrong.”
Aldonas characterized the domestic textile industry as going through an adjustment period after operating under 40 years of quota protection. He stressed more protections would not help.
“I think we’ve got to stick with our obligations [to eliminate quotas],” he said, responding to a question about extending global quotas on apparel and textiles among all WTO countries, for which dozens of trade associations are clamoring. “At some point, you have to acknowledge that further protection has left the industry in a very fragmented state and that’s not healthy.”
Augustine Tantillo, Washington coordinator of the American Manufacturing Trade Action Coalition, said repealing global quotas will lead to the loss of tens of thousands of additional textile jobs.
“When you look at the sheer number of people who are involved in this, you would hope our government would have a better answer than it’s time to adjust,” Tantillo said.
Aldonas said he will leave the domestic industry’s “adjustment” process to run its course and focus instead on dealing with unfair trade practices.
“The far more important aspect of this is you still have in China a great deal of state-owned manufacturing capacity that is subsidized by nonperforming loans,” he said. “There are a couple of ways to come at the problem: either eliminate the subsidies to rationalize supply and demand or I’d like to see U.S. fabric used, so we are at least a part of the food chain.”
The U.S. will have an opportunity to continue the dialogue with China on bilateral trade issues at the U.S.-China Joint Commission on Commerce & Trade meeting here set for April 21-22.
Aldonas said his top agenda items are intellectual property protection, as well as continuing the discussion on what is required of China to become a market economy.
“To the extent we accelerate the pace of China moving to a market economy, good things could flow out of our relationship,” he said. “To the extent the pace slows down, we will have real problems in our trade relationship.”