U.S. manufacturing groups have filed seven new safeguard petitions covering 14 categories of textile and apparel products that have seen spikes in shipments from China since textile import quotas expired on Jan. 1.
The filings came as the Bush administration announced that the U.S. trade deficit hit a record $61 billion for the month of February. The February trade deficit with China of $29.1 billion accounted for nearly half the total deficit.
Representatives of the U.S. manufacturing groups said combined U.S. imports in the 14 categories covered by the new petitions totaled $14.24 billion in 2004 with imports from China accounting for $1.45 billion. U.S. imports of those products from China rose an average of 266 percent in the first three months of 2005 after quotas expired on Jan. 1.
“China's export surge in these categories released from quota on Jan. 1 is directly attributable to the illegal and unfair subsidies given their producers in an effort to drive all other competitors out of the market,” said Cass Johnson, president of the National Council of Textile Organizations.
“These subsidies include illegal currency manipulation, non-performing loans, state-owned enterprises, reduced or free utilities, shipping and property taxes, free land and factories and export tax rebates. No industry playing by free-market rules can compete with an industry allowed to sell into a free market, but not play by free-market rules.”
Johnson and other industry leaders filed the petitions with the Committee for the Implementation of Textile Agreements, a five-member interagency group with representatives from the U.S. departments of commerce, state, labor and treasury and the Office of the U.S. Trade Representative.
CITA recently announced it was self-initiating safeguard proceedings for cotton trousers, cotton shirts and underwear after Chinese shipments of those categories of products to the United States rose by up to 1,300 percent in the first three months of the year.
China's accession agreement to the World Trade Organization allows the United States to invoke special safeguards if the government determines the U.S. market is threatened with disruption that will impede the orderly development of trade between the two countries.
“Our customers are simply asking the U.S. government to act within the rights granted to it by China's accession agreement to the WTO,” said Gaylon Booker, trade consultant to the National Cotton Council.
“The import data now available as a result of the U.S. government's improved monitoring system makes it clear that CITA made the right decision when, weeks ago, it accepted for further review the industry's threat-based safeguard petitions,” Booker said.
“CITA also made the right decision in announcing earlier this week that it would self-initiate safeguards on six apparel categories. This was an extremely important initiative on the part of our government to use the authority granted under China's WTO accession agreement to minimize U.S. market disruption. We believe our government also will act favorably on any new petitions filed by the industry that make the case that market disruption is occurring.”
The categories for the latest filings (and the percentage increase over January-March 2004) include: cotton and manmade fiber non-knit shirts (284 percent), sweaters (204 percent), brassieres (35 percent), dressing gowns (37 percent, other synthetic filament fabric (770 percent), manmade fiber knit shirts (331 percent) and manmade fiber trousers (269 percent).
Once CITA accepts a safeguard petition, the growth in imports in that category is limited to 7.5 percent of the previous year's total for one year after the petition is accepted.
At least one of the categories — brassieres — covered in the latest petitions has been under safeguard protection in the past, according to Karl Spilhaus, president of the National Textile Association.
“Since that safeguard expired near the end of 2004, the preliminary data shows huge increases in import volume from China — 35 percent growth on top of its already existing 35 percent share of the U.S. import market,” said Spilhaus. “At these rates, there will be nothing left of the fabric producers in the United States or of our garment-making partners in the Caribbean/Central America region.”
More petitions will be filed in the weeks ahead, said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.
“We will keep filing petitions until the United States and China reach a comprehensive agreement to moderate the growth of Chinese textile and apparel imports to a reasonable level,” he noted.
He urged the government to act quickly. “In the past, the U.S. government has taken four months to decide cases filed by U.S. industry when the safeguard procedures allow the U.S. government to take a decision in as little as six weeks.
“The U.S. industry will lose tens of thousands of jobs if the U.S. government waits the full four months to act. We need the U.S. government not only to approve these cases, but to approve them as quickly as possible, which they could do by mid-to-late May.”
Speaking at a press conference in Washington, Johnson said Chinese Customs data indicates that China's exports to the United States in the most sensitive apparel categories are up 349 percent for the first two months of this year while prices are down 31 percent.
“Many of our members have worked hard over the last three years to develop marketing programs with U.S. retailers,” he said. “The first year the retailers bought what they had promised to purchase. Last year they bought less and this year, with prices down 31 percent, our members were lucky if they got even a small amount of business from the retailer.”
Since China entered the World Trade Organization in January 2001, U.S. textile and apparel employment has fallen from 1,047,200 to 665,900 as of March 2005, according to the trade groups. The loss of 381,300 jobs represents 36.4 percent of the January 2001 workforce.
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