China's Textiles Flood U.S. in First Months After Quotas; Government to Monitor Imports

When the worldwide system of quotas ended on December 31, everyone expected China to flood the shores of the United States with apparel and textiles like never before.

From the “no surprises here” category, everyone was right. And now, there is evidence to prove it.

Textile and apparel imports to the United States from China jumped about 75 percent in January, the first month after the lifting of quotas. The U.S. trade deficit also soared that month to a whopping $58.3 billion, the second highest level on record. And In February, according to China’s own statistics, apparel exports to the United States were up 147 percent, with growth rates much higher in quota-freed categories.

In response to the surge, the Bush administration has called for special monitoring to keep track of imports now that quotas have ended. The new system will provide reports every other week instead of the current six week interval and will be posted on a website that will be maintained by the Office of Textiles and Apparel, a division of the International Trade Administration. The monitoring system should be in place by the first week in April.

Textile manufacturers, long critical of the elimination of quotas, hailed the announcement, saying they hoped it would lead to their ultimate goal of persuading the administration to reinstitute quotas on Chinese imports. “The data will help us prove that China is disrupting the U.S. market,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “It will also make it clear that the government must act quickly to impose safeguards.”

In January, the United States imported more than $1.2 billion in textiles and apparel from China, up from $701 million a year ago. Imports of major apparel products from China jumped 546 percent. Last January, for example, China shipped 941,000 cotton knit shirts, which were limited by quotas; this January, it shipped 18.2 million, a 1,836 percent increase. Imports of cotton knit trousers were up 1,332 percent from a year ago, according to the New York Times.

The elimination of quotas was touted as a way for poorer countries to compete in the global marketplace. Additionally, it was viewed as the solution to apparel prices, which opponents of quotas viewed as artificially high due to trade restrictions.

But in the few short months since quotas have been lifted, many of those countries have balked at China’s dominance. Bangladesh, Cambodia and Sri Lanka are pressing Washington to pass legislation giving them lower tariffs to help support a crucial source of their livelihood. Moreover, trade experts have suggested that China has achieved its power status by providing questionable bank loans and subsidies to its industry, and therefore should not be rewarded for these practices.

While consumers may favor lower apparel costs, they are, at least in the U.S., paying for it with their jobs. In January alone, 12,200 jobs were lost in the United States apparel and textile industries, according to the Bureau of Labor Statistics. Without safeguards or the re-institution of quotas, it is predicted that China could capture as much as 70 percent of the American market in the next two years.

Safeguard petitions were filed by textile groups in the second half of last year and were accepted for consideration by the U.S. administration. However, since petitions were based on the threat of market disruption and not on concrete data, they were easily dismissed. The lifting of quotas has given the U.S. the evidence it needs, many believe, and they are hoping the administration will initiate new safeguard investigations. The textile industry has asked the government to cap the growth in various categories of Chinese textile and clothing imports at 7.5 percent this year over last year’s level. “The wolf is at the door and only the U.S. government can slam it shut, and it needs to do it right now,” said Cass Johnson, president of the National Council of Textile Organizations, a trade group that is pressing for immediate limits on Chinese imports. “The action the government takes or doesn’t take will affect 30 million workers around the world and perhaps half a million in this country.”

Many in the industry believe that action could come as early as mid-summer. UniformMarket will continue to monitor this issue and update readers accordingly.