Alarmed by 1,000 percent-plus surges in Chinese textile and apparel imports, the U.S. government approved three safeguard cases against China. The cases cover cotton shirts, cotton trousers and cotton and man-made fiber underwear.
The approvals, announced on May 13, came much faster than anticipated by the textile manufacturing and labor organizations that sought them because of concerns that Chinese exports would skyrocket after textile and apparel import quotas expired Jan. 1.
National Cotton Council officials also applauded the decision announced by the U.S. Commerce Department, saying it was “gratified by the administration’s swift and decisive action to impose safeguards on certain categories of textile and apparel imports from China.”
The safeguard provisions, which are permitted under the special China Textile Safeguard Authority contained in the China World Trade Organization Accession Agreement, will limit the growth of Chinese imports to 7.5 percent of the previous year’s total for 12 months.
The safeguard period can be extended if U.S. manufacturers can prove that failing to do so would expose U.S. manufacturers to another surge of Chinese exports. The initial 12 months begins when the U.S. government asks for consultations with China. The special safeguard provisions were designed to assist other countries in adjusting to increased competition in textiles and apparel occasioned by China’s WTO entry.
“The 1000-percent-plus increase in imports in the textile and apparel categories covered by the administration’s actions demonstrate the capacity of China to dominate world trade in textiles and apparel before adjustments can be made by competitors in developed and developing countries,” the NCC said in a statement.
“The decision to utilize safeguards is authorized by the agreement, appropriate under the circumstances, and should enable the U.S. textile industry to better adjust to this competition,” Mark Lange, the Council president and CEO, said.
“While the safeguard authority is temporary and is based on current levels of trade, it is an important tool the administration can use to help improve the trade imbalance that currently exists in textiles and apparel. This action by the administration provides the U.S. textile industry an opportunity to adjust to the current competitive environment.”
Although the approvals came faster than expected, the safeguards were still a while in coming, according to Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, an umbrella group for textile manufacturing interests.
“We are pleased that the U.S. government approved these cases,” he said. “The unprecedented surge of Chinese imports imperiled tens of thousands of jobs, leaving the U.S. government no choice but to act.”
Tantillo said the textile industry actually began pursuing the so-called threat-based safeguard provisions last summer when it became apparent that Chinese manufacturers were expanding production capacity in anticipation of the expiration of quotas on Jan. 1.
“Today’s safeguard announcements validate that work,” he said.
Through the end of April, the U.S. Office of Textiles and Apparel said, U.S. imports of cotton trousers from China jumped 1,505 percent; cotton shirts, 1,346 percent; and cotton and man-made fiber underwear, 347 percent, compared to the same period in 2004.
“Unfair trade practices like export tax rebates, non-performing loans, currency manipulation and other subsidies fuel China’s export surge,” Tantillo said. “Failure by the U.S. government to discourage these practices would make a mockery of America’s free markets.”
AMTAC and other organizations are urging the U.S. government to approve additional safeguard cases that have been filed in recent months. “This isn’t the end,” he said. “The U.S. textile industry plans to file several more safeguard cases in the near future.”
Analysts said the administration’s quick response may be explained by its determination to win approval for the Dominican Republic-Central American Free Trade Agreement. The agreement was signed by negotiators in December 2003, but has not been scheduled for a vote in the House or Senate.
Agriculture Secretary Mike Johanns, Agricultural Trade Representative Allen Johnson and other administration officials have stepped up their efforts to persuade more members of Congress to support the agreement.