US poised to ratchet up textile protectionism
By Luo Man (China Daily)
Updated: 2005-05-23 22:49

The United States could close its borders to more imports of Chinese textiles but may eventually hurt itself as well, industry experts warned yesterday.

A US businessman checks product item at a trade fair for clothing in Hangzhou, capital of East China's Zhejiang Province, May 23, 2005. [newsphoto]

Cotton-knit tops to the US, one of the items affected by tough quotas, surged to 11 million units in the first five months of this year -- up nearly 8 million units for the whole of 2004, which saw 2.8 million units exported.

Such an increase may not leave much room for more imports for the remainder of 2005, said Fawn Evenson, vicepresident of the American Apparel and Footwear Association.

"The resulting quotas could be so small that the US could close the border to these items in July of this year," she told China Daily at a textile trade show in Hangzhou yesterday.

However, other industry experts say such a move would hurt US manufacturers in the long-run.

The US has already closed its borders to Chinese-made socks. The move follows quotas imposed last October when the "issue originally surfaced," said Janet Labuda, US Customs director of Textile Enforcement and Operations.

She did not say when new quotas are likely to be filled, but, "considering the growth of imports so far this year, it will be very soon."

Quotas on Chinese textiles imposed by the US last week are a last-ditch survival strategy by companies and unions to save jobs, said Evenson.

Imports of textiles from China into the US have skyrocketed since quotas were eliminated on January 1, following a deal reached in 1994.

The United States, however, has invoked trade safeguards on that decade-old deal that allow it to impose temporary quotas on some Chinese products.

"Domestic textile companies and unions are going to continue to file these cases (regarding quotas) until 2008" -- when the last safeguards are eliminated," added Evenson.

However, the closed borders may end up hurting US companies more than anybody else since the products blocked are bought and resold by American manufacturers, said Evenson.

Not China's problem

"The question is one of trade. Who is going to fall down? It is not China's problem. It is always American firms and European firms who are placing the orders," she added.

During the Uruguay round of negotiations in 1994 that led to the creation of the World Trade Organization, participating countries -- China was both a participant and an observer -- agreed to eliminate trade quotas within a decade.

They also agreed to the safeguard measures against some Chinese products. Those safeguard measures may be imposed only until 2008. After that, even the temporary quotas will have to be lifted.

"Although they adhered to their commitment to remove quotas, they backlogged everything," Evenson said. "US textile manufacturers were, until January 1, 2005, one of the most protected in the world due to high tariffs. They remain protected today."

Regardless, Evenson said, 1 million manufacturing jobs have been lost since the 1980s, and those jobs are not coming back. If anything, companies will outsource to other countries in Asia or South America, where cheap labour is plentiful.

Despite having a decade to prepare, 72 per cent of textile firms in the United States have lobbied for more protection, and 38 per cent did not prepare for the end of quotas.

The measures imposed last week, which were opposed by many retailers, followed intense lobbying by American textile manufacturers.

Ironically, the quotas sometimes affect US cotton producers. China is the world's largest cotton importer, and the United States provides about 60 per cent of the country's cotton that is used to produce some of the products now restricted.

Ultimately, when all the tariffs on both sides are weighed into the equation, "the manufacturing bases in the United States are the losers, and this is the problem," said William Bettendorf, regional director for Greater Europe of Cotton Council International.

Ultimately, Evenson said, curbing imports from China is not likely to have a significant impact on the market.

"Restraining China will not curb market penetration, only the Chinese percentage," she said, adding that restraining the country is more likely to drive up prices than to bring back any jobs.

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