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More products are added to the list of goods impacted by the recent re-imposition of quotas

WASHINGTON, DC - 05/20/05 - The US has expanded its list of textile and apparel products from China that are subject to temporary quotas, adding another component to its May 13 decision to re-impose temporary quotas on imports from China in three basic clothing categories - cotton shirts, cotton trousers, and man-made fiber underwear.

In the latest development, the DOC said that an interagency group it chairs - the Committee for the Implementation of Textile Agreements (CITA) - has determined that a "surge" in imports of additional apparel items, namely "certain men's and boy's shirts, trousers, knit shirts and blouses, and combed cotton yarn from China " are "threatening to disrupt the US market."

Increases in imports by quantity of those products ranged from 120% to 328% in the first quarter of 2005 from the same period in 2004, following the expiration of the global textile quotas system on the last day of 2004, the DOC said.

The new quotas will limit the growth of 2005 imports from China in all of the affected categories to just 7.5% above the previous year's level, compared with shipments over a 12-month base period.

Cotton trousers - named in the original May 13 decision - make up the US' single-largest textile and apparel import category, with about $11.3 billion worth of the product imported by US retailers in 2004, according to the Department of Commerce (DOC).

Both actions were made under the terms of the so-called "safeguard measures" in the 2001 World Trade Organization agreement with China which allow members to impose limits on Chinese textile products "if a sharp rise in imports disrupts their domestic markets."

The original decade-old quota structure was dismantled January 1.

"We will enforce our trade agreements to ensure that US companies get a fair deal as they compete in the global marketplace," Secretary of Commerce Carlos Gutierrez said in the release.

Chinese officials and economists have sharply criticized the May 13 decision by the Administration as a violation of the WTO agreement on textiles and apparel, as well as a similar move - announced last Monday - by the European Union to increase its quota rates on apparel and textile imports from China.    

"It is unfair for the US and European Union (EU) to blame China for the fast influx of Chinese- made textiles in their markets and the three sides should work together for an early settlement of the trade dispute," said Minister of Commerce Bo Xilai in comments to the Fortune Global Forum in Beijing earlier this week.

The US and the EU are "pretending to be pragmatic in multi-lateral trade, abusing the rules of the WTO and violating their own principles of free and fair trade, he said.

"It's also unfair for the US and EU to impose, or intend to impose, restrictions on Chinese textile products," he told the conference attendees.
 
Bo said some developed nations "have failed to abide by WTO stipulations that requested for them to gradually ease the quota system for the import of textile and garment products in the 10 years starting from 1995, keeping 70 to 90 percent of the most important quotas in place until the end of last year."

This was why China's exports have soared in the first quarter of the year, he said.

"Escalation of [this] friction will impair the interests of Chinese exporters, increase costs for importers and do little to help their domestic textile industry," said Zhang Xiaoji, a research fellow with the Development and Research Center of the State Council in a telephone interview with the Xinhua News Agency in Beijing.

Importers in many developed nations are increasingly relying on the quality, diversity and cost-effectiveness of Chinese-made textiles, as well as China's unparalleled production capacity, he said.

"A survey conducted by the US International Trade Commission in 2003 said Chinese products are the top choice for US retailers and consumers alike," he said.

"Restrictions on Chinese exports, therefore, will impair these people's interests because they will have to turn to other exporting countries, very few of which can compete with China right now in terms of quality, price and diversity," Zhang said.

The Administration's May 13 decision was made "even though the latest trade data showed that clothing and textile imports from China actually declined in March after surging in January and February, " said Laura Jones, executive director of the New York-based United States Association of Importers of Textiles and Apparel (USAITA), adding the White House "chose to ignore" all the comments filed by US retailers arguing against the action.

"Clearly, the government did not consider the facts," she said. "To make a decision affecting billions of dollars in business less than four days after a public comment period closes only shows how little regard there is for our business."

Despite the rhetoric, however, a spokesman for the Chinese Foreign Ministry urged Washington to resolve the problem "through dialogue and in a constructive manner," according to news reports.

The quotas will take effect when the Bush Administration calls for official consultations with China on a solution, expected by the end of this month.  

"We will consult with the Chinese to find a solution that will permit the orderly development of trade in a quota-free environment," said Gutierrez after the May 13 decision to re-impose the quotas was announced.

If a "mutually satisfactory agreement" cannot be reached by the conclusion of the consultations period, the quota will remain in place through the end of 2005, he said.

The CITA resumed consideration of requests for the imposition of temporary quotas in 12 categories after a federal appeals court lifted a December 2004 injunction placed by the US Court of International Trade on the committee's proceedings related to those requests.

US textile and apparel industries, which claim that they have lost jobs in large part due to competition from low-cost producers in developing countries, actively petitioned the Bush Administration to introduce safeguard actions temporarily restricting certain categories of textile and clothing imports from China.

But, US clothing importers and retailers, who opposed the re-imposition of the quotas, have strongly criticized the Administration's action.

US retailers that rely on apparel from China include Gap Inc.; Perry Ellis International Inc.; Target; Macy's; K-Mart; and Wal-Mart, the world's largest retailer, which, according to industry observers, had expected to save between12% and 15% on apparel costs this year with the January 1 dismantling of the decades-old quota system.

China is the largest producer and exporter of textiles and clothing in the world.

Last year, the country's textile and apparel exports totaled more than $95 billion, or about 16% of the world total.

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