China Safeguards Draw Praise, Ire

The U.S. government's approval of China safeguard petitions related to imports of Chinese knit fabrics, bras and dressing gowns evoked strong reactions of support and disapproval from the apparel, textile and retail industries.

"This sends a signal to manufacturing workers around the country: If you demand action, you can get it," said Cass Johnson, president of the American Textile Manufacturers Institute (ATMI), a part of the textile/fiber coalition that led the petition effort.

The coalition, which represents 17 industry organizations, rallied tens of thousands of U.S. manufacturing workers and concerned citizens to write to their political representatives and the Bush administration in favor of the China safeguard measures.

Among those objecting to the approval of the safeguards were the American Apparel & Footwear Association (AAFA), the National Retail Federation (NRF) and the International Mass Retail Association (IMRA). The IMRA questioned the validity of facts presented by the coalition in the petitions. Both the NRF and IMRA said the action will drive up prices of bras and robes. The AAFA said no apparel interests, and specifically no manufacturers of bras, dressing gowns and robes, filed comments with the government to support reinstatement of quotas. These groups also said the safeguards will not help U.S. manufacturers but rather shift production from China to other low-wage countries. "This decision is based on politics, not facts," said Erik Autor, NRF vice president and international trade counsel.

The petitions called for the United States to correct a market disruption caused by a sudden surge of imports from China in the wake of quotas' being removed in the three apparel and textile categories. Quotas on imports of knit fabrics, dressing gowns and robes and bras were removed Jan. 1, 2002. In comparing the volume of U.S. imports of Chinese goods in these categories for year-to-date September 2002 vs. year-to-date September 2003, U.S. government data shows the following percentage increases: knit fabrics, up 39 percent; cotton bras, up 53 percent; cotton dressing gowns, up 141 percent; man-made fiber bras, up 78 percent; and man-made fiber dressing gowns up 85 percent. Full-year data reflects higher increases.

With the approval of the petitions, the U.S. government must request consultations with China to resolve the disruption. Possible solutions include reinstating quotas in the categories in question, or negotiating a new unilateral trade agreement.

The textile/fiber coalition that led the petition drive is in favor of the latter option, in other words, creation of a comprehensive trade agreement with China designed to slow the surge, and anticipated future surge, of U.S. textile and apparel imports from China across all categories, and in turn to help stabilize the U.S. textile and apparel manufacturing infrastructure. The coalition also seeks to decrease the U.S. trade deficit with China.

If the U.S. and Chinese governments cannot reach a solution in their consultations, the U.S. government will reinstate quota levels in the three categories to cap imports at approximately the level they had reached at the time the United States requested the consultations, plus an allowance for 7.5 percent growth for the next 12 months. The United States and China could negotiate to allow for a much higher percentage of import growth. Either way, the safeguard measure will be in place for 12 months. After that, new petitions must be filed to prompt another evaluation of whether there is market disruption.

During a press conference hosted by the textile/fiber coalition Nov. 18, the day the safeguard petitions were approved, coalition leaders stressed that their victory in fighting for safeguards in the three categories is only the beginning of a long battle. "If this is all that is done, it's very little," said Mark Levinson, chief economist for UNITE, the textile and apparel industry's largest union and a member of the textile/fiber coalition.

Almost 60 percent of the textile and apparel products China exports to the United States are scheduled to remain under quota until Jan. 1, 2005. The coalition is preparing to file many more petitions to request relief from import disruption when the remaining "big ticket" categories, such as trousers and shirts, come out from under quota protection, said Auggie Tantillo, Washington coordinator for the American Manufacturing Trade Action Coalition (AMTAC). These categories represent tremendous employment in the United States, which has seen textile and apparel manufacturing employment plummet by 316,000 jobs since January 2001, he said. AMTAC estimates there are 1 million U.S. jobs remaining in the textile and apparel manufacturing infrastructure, including those at yarn, cotton and fiber producing companies.

In response to the question of whether China safeguards will help preserve U.S. jobs and in addressing the issue of importers' likely shifting orders from China to other low-cost countries, Tantillo said the safeguard petitions will help because China has the ability on its own to overwhelm the U.S. market. "There are 1 million U.S. manufacturing workers with a gun pointed at their heads because of Chinese imports," he said.