Industry Divided on China Safeguards Issue

Kudos Ms. DesMarteau:

Your article in Apparel Magazine [see "U.S. Government Should Say 'Yes' to Safeguards," November 2004] couldn't be more on target. My company manufactures cotton industrial work gloves. China has all but destroyed my markets by already flooding the United States with cheap gloves. I have to admit, though, that their quality has greatly improved [in recent years].

However, as you state, the playing field is nowhere near level. We have strived to pay our people well - $4 to $6 on average above minimum wage - but after adding taxes, insurance, workers comp and so forth, you find yourself not just behind the eight ball, but under it as well.

We too fear that America will wake up one day only to find its manufacturing base gone and at that time completely vulnerable to China's or other countries' price determinations. Someone once said: "There are only three ways to create wealth. You either mine it, manufacture it or grow it. All other endeavors only transfer wealth that is already there."

If we, as a nation, continue to mine all our natural resources to extinction, and transfer all of our manufacturing capabilities to other nations, then the only way left for us to create wealth in this nation will be to grow. This seems futile since our government is already paying farmers not to grow crops on their land.

Maybe my simplistic views are way off base, but I often wonder how much better this country could be if our politicians thought less of "dollars and cents" and more of "constituents and common sense."

Dear Kathleen:

As a member of the Apparel Editorial Advisory Board, I was extremely disappointed to read the November editorial: "U.S. Government Should Say 'Yes' to Safeguards."

This article is neither reflective of my position nor in the best interests of the vast majority of makers, retailers and consumers of apparel. Moreover, I object to a trade magazine's taking one position or another on an issue as controversial as this one.

Accordingly, I hereby tender my resignation from the Editorial Advisory Board of Apparel Magazine, effective immediately.

To the editor:

In the November 2004 issue of Apparel magazine, the editor in chief urged the U.S. government to "say yes" to a series of China safeguard petitions filed by several domestic textile groups.

We take strong issue with both the content and the tone of that editorial for many reasons. In our mind, three stand out.

First, as one of its chief justifications for endorsing the safeguards, Apparel magazine pointed to the public relations and lobbying campaign that the domestic textile industry undertook over the past year. In essence, it argues that, because the textile industry complained well with "billboards on highways" and "bumper stickers," they have made their case.

We disagree. The safeguards should be determined by the facts, plain and simple. If imports from China are the cause of market disruption in the United States, they should be invoked. But if those imports are not the cause of this market disruption, no amount of restriction on China will make the market disruption diminish.

While the domestic textile industry has indeed done a remarkable job in raising the profile of this issue, by milking populist notions on China, they have not yet shown specific facts that link real or imagined surges from China with market disruption in the United States. The petitioners have pointed to a number of very general concerns in China relating to currency policies and subsidies, but have not made a link to show how imports in a specific category have adversely impacted the domestic industry. In the case of cotton trousers, for example, 21 other countries ship more of this product to the United States than China and, in the most recent 12-month period, imports from China have actually declined. To suggest that these trade flows from China are the cause of market disruption in the United States is ridiculous.

Moreover, the petitions and the accompanying public relations campaign have done nothing to show how full application of the safeguards will actually benefit the textile industry. The safeguards carry no incentives for U.S. production or for the use of U.S. textiles. Although they may restrain China, safeguards will not restrain any of the other countries that have a demonstrated capability to ship large quantities of various categories of goods to the U.S. market. Thirty years of quotas on dozens of countries has not made the U.S. textile industry more competitive. We do not see how four more years of quotas on just one country, as all other players go quota-free, can now be expected to accomplish that job.

This is a key point because the politicization of this issue has only fueled expectations that cannot be met - regardless of what happens. If the safeguards are not invoked, the textile industry will be outraged because they feel they deserve the protection. But if the safeguards are invoked, the textile industry may achieve a political victory, but will likely see no economic gain for the reasons stated above.

Second, Apparel magazine endorses the use of the safeguard tools even while admitting that the safeguards will fail. Specifically, it notes that the Chinese textile and apparel industry "will continue to grow and excel regardless of whether safeguards are implemented." In this admission, Apparel magazine appears to be advocating the use of the safeguards for the simple reason that we have the tools in the toolbox. This is an irresponsible policy prescription that undermines our own trade policy and creates a bad precedent that can be mimicked by our trade partners, who may chose to capriciously attack U.S. exports because of some domestic political imperative they may feel. Moreover, it ignores the fact that there are other tools that are better equipped to handle the specific complaints raised in the textile petition. For example, China's currency policies are best addressed through a dialogue through the Treasury Department that will likely see the adoption of a more market-oriented exchange rate.

Third, the editorial loses an important opportunity to advocate for policies and programs that will actually advance the U.S. textile and apparel industry. As it has done in the past, Apparel magazine should be working to promote those initiatives, such as the U.S.-Dominican Republic/Central American Free Trade Agreement or the Haiti trade program, that promote greater export opportunities for U.S. textile mills and more integration between U.S. and other hemispheric textile and apparel industries. In the case of safeguards, Apparel magazine should be advocating for a process that is predictable, transparent and that ensures fact-based conclusions. In the case of China, it can promote better protection of intellectual property rights, market access and distribution rights and fuller adherence to WTO obligations - all moves that will make China a more reliable trade partner for U.S. textile and apparel firms in the future.

The end of quotas and the presumed role that China will play in the coming years create both challenges and opportunities. Apparel magazine should play a role in helping the industry learn and share strategies and tactics to compete in this environment. In the past, Apparel magazine has distinguished itself by being at the forefront of policies and initiatives - be they educational, technological or operational - to bring about a more competitive industry. Sadly, in this case, Apparel magazine abandoned that tradition to advocate for a hasty, but ineffective, populist fix.

Kathleen,

I commend you for your editorial stand on the textile safeguards. Having spent 35 years in textiles, I have watched as the AAMA [American Apparel Manufacturers Association] morphed into the AAFA [American Apparel & Footwear Association], and then yet again, into an association of nothing more than sourcing companies. You say that the people they represent are nervous about what is happening, but I'm not sure you read them correctly. Some may say they are, but they are all slaves to the market. Wal-Mart leads, everyone else follows. No consideration is even given to the fact that the United States can no longer provide one of the three basic human needs for her own people. The NRF's [National Retail Federation] and the AAFA's constant belittling of the efforts of our industry to save itself has gone beyond mere criticism. As one of the nearly 700,000 employees remaining in textiles, I take it as a personal insult.

There Is More to 3-D Story

Dear Kathleen,

I read your article about 3-D technologies presented at the Tech Conference 2004 in Los Angeles last week with great interest. [See "3-D Tools Gaining Ground," posted online Nov. 23, "Featured Articles" section, www.apparelmag.com.]

3-D technology is a hot topic at present and has the industry buzzing. The question is, though, have companies been able to transcend the hype and slide ware to create a functional commercial application that offers real value to users?

Despite the undisputed potential benefits offered by 3-D technology, simulating a garment in real time is perhaps the most complex simulation topic due to several formidable challenges:

1. Simulating a human body.

2. Simulating a wide array of fabrics over a specific body.

3. Simulating garments in real time.

There is a big difference between presenting an application in a trade show to having a commercial application that really works in design and product development environments at commercial companies.

Browzwear has over 60 commercial clients in 25 countries, making it the only company in this space with a proven commercial application. Clients such as Benetton, Adidas, Nike, Russell and Desmonds are the best evidence of our leadership in the market.

I realize that Browzwear could not be mentioned in this article as it was not represented directly at the conference (though Gerber did present our application there). However, I did want to bring our story to your attention.

Industry's Growing Divide Is Already a Chasm

Dear Kathleen,

You wrote, "Beware of Industry's Growing Divide" [see Apparel, July 2004], and cited many of your concerns. You were right on with your conclusion that unless the larger firms are willing to find avenues to work with the smaller concerns, there will be a loss of creative product coming to market. I would like to add to your concerns by covering a few areas you did not touch upon.

As consolidation has accelerated, a void has been left in the ability (or desire) of companies to service start-ups and small emerging brands. We specialize in short-run domestic and overseas custom manufacturing, and receive nearly a quarter-million hits a month on our Web site, resulting in 50-60 inquiries a week. The bulk of these inquiries are entrepreneurs seeking advice and assistance in launching new products. From pet products to medical devices to new forms of apparel, the ideas are born every day, and the individuals position themselves to bring their ideas to fruition. Unfortunately, there are not many companies that are willing to deal with these concerns. Those that are face escalating minimums within the supply chain, a lack of sample goods in the required fabrics or colorations and a malaise in the attitude of a good many domestic mills. When these channels die off altogether, the pipeline for these creative products will be cut off entirely, save for the few with very deep pockets.

The large retailers and catalogs make entry into a supplier environment something north of daunting. From their nine-page "vendor information forms" to their 20-page "vendor compliance manuals," they have turned the term "relationship" into a one-way affair. You must stay up with their changes, you must duplicate and triplicate paperwork, you must use specific-sized boxes and pallets and place the multitude of stickers in exact positions or face financial slaps on the hands. This "willingness to make the relationship work" has been bred out of the purchasing and "vendor relationship" managers by corporate dictate for optimal efficiencies. The human factor is a tertiary consideration at best.

The "growing divide" is already a chasm, and as much as I would like to believe that your warning will somehow awaken our trade to the necessity of a thriving base of small- and mid-sized service-oriented companies, it is likely to be drowned out by the flood of low-cost products and anxious stockholders.