Washington Post : Caps on Chinese Textiles Revived

Caps on Chinese Textiles Revived
U.S. Move Limits Surge of Imports That Began in January

By Paul Blustein Washington Post Staff Writer
Saturday, May 14, 2005; E01

The Bush administration said yesterday it will impose new caps on imports of clothing from China, responding to appeals from U.S. textile companies for protection from a rising tide of Chinese apparel that began to cross the Pacific after global trade rules were changed Jan. 1.

The action, taken by a U.S. interagency panel, will limit the cotton trousers, underwear and cotton knit shirts and blouses that China can export to the United States this year.

Those are by far the most important categories of clothing imports in terms of volume, so the action signals that a widely anticipated flood of Chinese apparel into U.S. and other foreign markets will be stopped, possibly for several more years.

Less than six months ago, textile and apparel makers in the Carolinas, Central America and Bangladesh were preparing for devastating competition from China. A system of quotas on international textile and apparel shipments that had been in effect for three decades was expiring in December, which meant that countries would no longer be restricted in the amount of clothing they could ship to the United States, Europe and other big markets. With its efficient and low-cost apparel factories, China was expected to bulldoze competitors around the world.

That may still happen, but freer trade in clothing had a catch. Under the terms of its entry into the World Trade Organization, Beijing agreed to allow for the possibility that "safeguard" caps would be imposed on imports of its clothing into the United States and other countries, if such imports rose so rapidly as to disrupt those nations' markets. The deal, which lasts until 2008, provided that the safeguards could limit annual growth in Chinese imports to as little as 7.5 percent a year.

In announcing yesterday's decision by the Committee for the Implementation of Textile Agreements (CITA), Commerce Secretary Carlos M. Gutierrez said the move "demonstrates this administration's commitment to leveling the playing field for U.S. industry by enforcing our trade agreements." He cited evidence that Chinese imports were already flooding the U.S. market, but he said the action was also based on a more controversial theory that safeguards could be imposed even in the absence of such a flood, if a "threat of disruption" clearly existed. The latter argument for imposing safeguards has been challenged in the courts, and the case is still pending.

Based on Commerce Department data, Chinese shipments of cotton trousers rose 1,505 percent in the first quarter, compared with the first quarter last year, while imports of Chinese cotton shirts rose 1,346 percent and imports of underwear rose 347 percent. Chinese officials argued that the increases were not surprising, given the artificially low ceiling that had been imposed while the quota system was still in effect. But administration officials interpreted the data as indicating that the surge of Chinese imports was materializing.

That decision was praised by textile makers. "The unprecedented surge of Chinese imports imperiled tens of thousands of jobs, leaving the U.S. government no choice but to act," said Augustine D. Tantillo, executive director of the American Manufacturing Trade Action Coalition, a group that represents a number of textile firms.

But the announcement drew condemnation from retailers and other importers, who have argued that consumers will lose the opportunity to buy cheaper goods if caps on Chinese imports are imposed. They noted that on April 4, CITA announced plans to investigate whether safeguards were appropriate, and the deadline for public comment passed on Tuesday.

"All pretense of legitimate deliberation was clearly dropped today," said Laura E. Jones, executive director of the U.S. Association of Importers of Textiles and Apparel. "Clearly, the government did not seriously consider the facts . . . The only result of this action will be harm to U.S. consumers and to U.S. importers and retailers who are trying to provide Americans with the clothes they want, at the right quantity and the right price."
The European Union is also considering imposing safeguards.

By taking aggressive action on behalf of the textile industry, the administration may enhance the chances for passage of the Central America Free Trade Agreement, a centerpiece of President Bush's trade agenda. The industry has been divided over CAFTA, and lukewarm lawmakers from southern states where the industry is concentrated may feel more comfortable supporting the accord.