The Hindu : Business : U.S. slaps quotas on some Chinese textiles

Online edition of India's National Newspaper
Sunday, May 15, 2005

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Business

U.S. slaps quotas on some Chinese textiles

Sridhar Krishnaswami

Other petitions filed by the domestic industries are under consideration

WASHINGTON: In a move that has brought forth strong protests from importers and retailers, the Bush administration has revived quotas on certain Chinese textiles. The latest action of the administration will place quantitative ceilings on cotton trousers, cotton knit shirts and underwear that can be imported from China into this country — a move intended to appease domestic producers.

The Commerce Secretary, Carlos Gutierrez, said that an investigation found a surge in Chinese shipments since the global quotas were eliminated on January 1 and this was disrupting the domestic market. The decision to revive quotas on Chinese textiles was taken by the Committee for the Implementation of Textile Agreements (CITA), an interagency group led by the Commerce Department. Other petitions filed by the domestic industries are under consideration, it is said.

"Today's action by the CITA demonstrates this administration's commitment to levelling the playing field for U.S. industry by enforcing our trade agreements," Mr. Gutierrez said in a statement. The action against China means that the shipments in the three categories will be permitted to increase this year by only 7.5 per cent. The three categories identified for action also represent the most important categories of clothing imports on volume basis.

What is being pointed out is that the Commerce Secretary's determination was based on a controversial theory that safeguards could be imposed on imports even in the absence of a flood if there is the "Threat of disruption." This line of reasoning has been challenged and is pending before courts.

The ruling of the inter-agency group came in for praise from the American Manufacturing Trade Action Coalition, a group that represents textile firms. "The unprecedented surge of Chinese imports imperilled tens of thousands of jobs, leaving the U.S. Government no choice but to act," remarked Augustine Tantillo, the Coalition's Executive Director. But as expected the cap on Chinese textiles brought forth criticism from retailers and importers who have said that consumers have lost the opportunity to get cheaper goods. "Clearly, the government did not seriously consider the facts... The only result of this action will be harm to U.S. consumers and to U.S. importers and retailers who are trying to provide Americans with the clothes they want, at the right quantity and at the right price," said Laura Jones, Executive Director of the U.S. Association of Importers of Textiles and Apparel.

Agencies report:

The U.S. government will now request formal consultations with Beijing, but the quota will be imposed regardless by the end of May, officials said on Friday.

"In the event 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,'' the statement added.

The U.S. action comes just six weeks after the US government launched a probe into the main categories of Chinese textile goods that have surged since the 31-year-old global quota system ended on December 31, 2004.

U.S. critics argue that Chinese imports in general have enjoyed a massive boost from an artificially weak yuan currency. Beijing is under mounting international pressure to relax the yuan but has so far stood firm.

A Commerce Department official said that the quota was set at 107.5 per cent of total shipments of the Chinese textile categories, as calculated over 12 of the past 14 months. Any shipment amount that goes over that ceiling will be blocked at customs, she said.

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