White House Considers China Petition

Michele SanFilippo, September 6, 2004

Washington — In a break from common practice, the Bush administration will consider the petition for a China safeguard that is being filed by textiles and apparel trade groups later this month, the Commerce Department confirmed on Sept. 2.

The petition — filed by the American Manufacturing Trade Action Coalition, National Council of Textile Organizations and National Textile Association — is intended to keep in place existing quotas that limit the amount of goods which can be brought in from China. The request is based on the threat of market disruption once quotas are lifted on Jan. 1, rather than actual market disruption as outlined in the procedures.

According to Commerce Department Spokeswoman Mary Brown Brewer, the Committee for the Implementation of Textile Agreements reviews every petition received very carefully and makes its decisions on a case-by-case basis. She stated, "In reviewing petitions, we consider whether (it) includes the information required in our published procedures and whether it includes sufficient specific factual data necessary to make a determination as to whether imports are disrupting or threatening to disrupt the U.S. market."

Attorney Diane Weinberg, a partner at Meeks & Sheppard in New York, commented, "It seems unlikely based on the safeguard process that safeguards will ultimately be put in place due to a threat-based petition. However, the timing is designed to compel the Bush administration to accept this petition before the election. It’s definitely a political move."

Another trade attorney, who requested to remain anonymous, added, "The industry has a very uphill battle right now, and I’m sure they are going to fight as hard as they can to win. I believe China will take steps when it is politically expedient for them to do so."

Weinberg continued, "The procedure is based on market disruption, that is what China and the United States have agreed to and is the way the process works. Petitions that prove actual market disruption have a better chance of resulting in safeguards." She explained that if CITA decides to accept the petition, it will solicit comments from the public, namely firms and individuals from the industries involved.

"This is a do-or-die effort on the part of our industry," explained Karl Spilhaus, NTA president. "We can’t afford to wait for market disruption to occur. It is tantamount to calling the fire department after the house has completely burned to the ground."

If the petition is filed before Oct. 1, as trade groups are planning, it forces the U.S. government to make its decision rather quickly and implement a potential safeguard by January for a virtually seamless transition. Otherwise, minimum trade growth will be held at its current level of 7.5 percent, based on the previous year.

The industry groups involved will file the threat-based safeguard petitions with CITA — an interagency group comprising the Departments of Commerce, State, Treasury and Labor, as well as the Office of the U.S. Trade Representative.

"It is clear that the special textile China safeguard allows for the filing of threat-based safeguard petitions by textile manufacturers of inputs for apparel products," said AMTAC Executive Director Auggie Tantillo. "We intend to exercise the right to file threat-based petitions in mid-to-late September to prevent China from causing irreparable damage to the U.S. textile industry and the textile and clothing market."

A newly updated NCTO study based on import data indicates that China now controls 72 percent of the U.S. market in the 29 apparel categories released from quota in 2002. A new analysis of home furnishings products shows that China is taking 70 percent of that market as well.

"History has proven that China can capture as much as 30 to 40 percent market share in a single year. We cannot and will not allow China to do the same thing in the categories still under quota," said Cass Johnson, NCTO president. "If China captures a similar amount of market share in the categories still under quota, much of the world’s textile and clothing industry will cease to exist."

Approximately 702,500 U.S. textiles and apparel manufacturing jobs remain as of July 2004.

According to Spilhaus, apparel inputs comprise a substantial portion of the U.S. textiles industry’s output. U.S. manufacturers exported $13.8 billion worth of textiles and clothing products to Mexico and the Caribbean Basin Initiative countries in 2003. "Most of those exports were inputs for textile and clothing destined for re-export back to the United States. That is one reason why threat-based China safeguard petitions are vital to the survival of the U.S. textile industry," he said.

The United States imported over $77 billion of textiles and clothing products in 2003. Of that, more than $61 billion — $53 billion in apparel and $8 billion in textiles — was in categories where quotas are scheduled to expire in 2005. These product sectors include all of the major apparel categories, such as men’s and women’s trousers, men’s and women’s shirts, and women’s blouses, skirts and dresses.

Key home furnishing categories, such as towels and sheets, also will be released from quota on Jan. 1. Many of these products are made from materials produced domestically.

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