Groups File Quota Petitions

Brent Felgner, October 18, 2004

Mass retailers are opposing them outright. And during last week's New York Home Textiles Market, petitions filed on behalf of trade groups to slow the impact of Chinese imports were met with skepticism and indifference in some showrooms along Fifth Avenue.

The safeguard petitions are being filed with the Bush Administration on nearly $2 billion in U.S. textiles and apparel imports, covering 15 of 91 categories scheduled to have quotas removed Jan. 1. Among the first categories included are cotton sheets, knit fabrics and synthetic filament fabric.

A six-member coalition of trade associations and a labor union announced the filings with CITA, the Committee for the Implementation of Textile Agreements, a U.S. government interagency group that includes the Commerce, State and Treasury departments. If the petitions are accepted, a final decision could come at the end of January.

The timing is critical. The trade groups said they pushed the timetable into January in order to sidestep challenges that they were preemptive instead of based on real threat. But others complain that two weeks is hardly enough time to adequately assess any threat, assuming there is one.

The petitions won support from the Global Alliance for Fair Textile Trade, a coalition of 96 textiles and clothing trade associations from 54 countries, many in Europe, South America and Indonesia. Missing from that group, however, were India and Pakistan, and countries in Southeast Asia and the Caribbean Basin.

But the petitions were immediately opposed by the Retail Industry Leaders Association, formerly IMRA (International Mass Retailers Association), representing mass merchants. RILA's membership includes Wal-Mart, Target and others that already have massive sourcing operations in China and other countries. Wal-Mart, alone, accounts for nearly 12 percent of all exports from China.

“They've had 10-plus years to prepare for this day,” Jonathan Gold, RILA's vice president of international trade policy, said. “To spend all this time now on protectionist measures, as opposed to looking for other market opportunities for themselves — you know, it's just a little too late.”

But the coalition insisted past practice will predict future behavior. The lifting of the quotas as scheduled and under present conditions will create unfair competition, its members said.

“All imports are not created equal,” complained Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, during a press conference here last week. “China has proven dramatically that they have the ability to artificially price their product … . It has dropped its price on 29 apparel categories released from quota in 2002 by 53 percent.”

The group said it wants the government to insist on reasonable growth that prevents China from obtaining “monopoly status” in the U.S. market.

“The long-term goal is for China to play fairly in the textile and apparel trade and until that goal is achieved there needs to be some restriction on China's ability to distort the textile apparel trade and take over world markets,” said Cass Johnson, president of the National Council of Textile Organizations.

CITA has 15 days to accept or reject the petitions based on technical merit, a time frame that will take the decision on the first petitions to the period immediately around Election Day. If it issues a favorable ruling, it could bring China back to the negotiating table. If not, the United States could limit Chinese exports in the safeguard categories to a 7.5 percent growth ceiling.

“Quite frankly, I hope the Chinese don't come to the negotiating table,” Tantillo said. “I hope they're obstinate. Because, under the system that's in place, we can limit their imports to 7.5 percent. If we sit down and negotiate it may end up being something else.”

So far, there has been no indication from the Bush Administration of its position on the threat safeguards.

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