Reaction Mixed as U.S. Imposes Quotas on Chinese Imports

In response to a flood of Chinese clothing imports since the lifting of quotas on January 1, the United States has imposed new limits on some products from that country. After studying the effects of a quota-free world on the American textile industry, the Bush administration decided to invoke its right to impose quotas, or safeguards, because the imports were disrupting the American market. But as you’ll see, not everyone agrees with the decision.

The new restrictions were set at very low levels in compliance with World Trade Organization (WTO) rules and will probably be reached by the end of July or the first part of August. Similar levels will be set in the coming days in nine other categories.

The three new limits will cover imports in categories 338/339 (cotton knit shirts), 347/348 (cotton trousers) and 352/652 (cotton and man-made fiber underwear). The quota period started on May 23 and will end on December 31. The United States will limit any growth in Chinese imports of cotton shirts, trousers and underwear to 7.5 percent a year.

Since January 1, Chinese exports of cotton trousers to the United States have grown by 1,500 percent and by 1,350 percent for cotton knit shirts, according to trade figures. At the same time, the United States textile industry has lost 16,000 jobs and 18 factories have closed, according to government reports. "The fast action to reimpose quotas by the Bush administration has saved thousands of textile jobs in this country and we are extremely grateful," said Cass Johnson, president of the National Council of Textile Organizations, a trade association.

But not everyone was happy with the decision. Retailers had gone to court to block new quotas, arguing that they would raise the prices of clothing for American consumers. They noted that since January 1, the prices of imported Chinese apparel have dropped as the volume has increased.

China, too, has warned the United States and Europe, which is considering its own safeguards against Chinese apparel, that it will resist any attempt to limit its textile and apparel exports. Pascal Lamy, the former European trade commissioner who was picked to become the new head of the World Trade Organization, warned against imposing quotas. Mr. Lamy said that the global trade body had been easing out the quota system over the last decade and that all countries had been given ample opportunity to prepare for the changes. "It is not the law of the jungle, and the W.T.O. rules were clearly set," he said. "Why are some politicians now not recognizing that fact?'

While new quotas may temporarily help U.S. apparel and textile companies, the future of these industries, as has been pointed out here and in other publications, is hardly robust. In a recent column, Bloomberg News columnist Andy Mukherjee notes:

"No safeguard can protect the $9-an-hour apparel-industry wages in the United States when 15 million people in China are cutting and sewing for an average 88 cents an hour. Indian textile wages are even lower. Free trade in textiles is valuable for the world's poor people because it came after three decades of oppressive quotas. Sacrificing it, to fix China or perpetuate a false sense of job security in North Carolina, is too high a price to pay."

He concludes that blocking textile imports from China will not help the U.S. textile industry. It will simply allow other low-cost producers, like India, a chance to step in and fill the gap.

Pietra Rivoli, associate professor at Georgetown University’s McDonough School of Business, notes that from a peak of about 2.5 million jobs shortly after World War II, the industry today employs just 600,000 people. In her book, The Travels of a T-Shirt in the Global Economy, she argues that the industry’s employment picture has little to do with trade and almost everything to do with automation. During the past decade, labor productivity in the industry has doubled due to rapid advances in technology, and production has remained relatively steady. Even if our borders were closed to imports entirely, jobs would likely be disappearing: US firms would still have to compete with one another, and this competitive pressure would lead to further automation and lower employment. The quotas have not, and cannot now she argues, save jobs in the face of advancing technology. Even in countries like China, where production in textiles is booming, employment is falling.