Date: October 1, 2008. A bipartisan group of more than 70 House lawmakers last week urged President Bush to begin monitoring imports of Chinese textiles and apparel once the remaining U.S. quotas on those products expire at the end of the year.

“We are asking you to increase enforcement efforts by extending the Textile Monitoring Program (TMP) currently in place with Vietnam to textile and apparel products from China, including the categories covered under the expiring bilateral quota agreement,” 73 legislators led by Reps. John Spratt (D-SC), Howard Coble (R-NC) and Robin Hayes (R-NC) said in a Sept. 26 letter.

The letter is signed by 25 Republicans and 48 Democrats in such textile states as North and South Carolina, Georgia and Arkansas, but also members that are troubled by the overall trade deficit the United States has accumulated, according to one industry source.Administration officials have signaled they are cool to imposing a TMP on China, and there is little chance it will act before leaving office, one importer source said. But one supporter said the White House has to take a “hard look” at the request since it is supported by Republicans who are in tough reelection races, such as Reps. Hayes and Coble.

But the source acknowledged that it is unclear whether the White House will act on the House request, especially in light of the current financial crisis that has pushed most trade issues off the agenda.

Another industry source said that extending the TMP for China will be a “difficult decision” for the White House because of the strong opposition it encountered when it created the program for Vietnam.

The proposal for the TMP has also been floated to both presidential candidates, but the industry has not received a response, said Cass Johnson, the president of the National Council of Textile Organization in a Sept. 30 press conference unveiling the House letter. Also participating in the news conference were the American Manufacturing Trade Action Coalition (AMTAC), the National Textile Association (NTA) and the U.S. Industrial Fabrics Institute (USIFI), as well as the textile workers’ union UNITE.

The U.S. – China Textile Bilateral Agreement, which expires on Jan. 1, 2009, imposes quotas on 21 categories of products that cover “all the major apparel categories” along with a few textiles categories such as coated fabrics, according to AMTAC Executive Director Auggie Tantillo. These include cotton trousers, man-made fiber trousers, knit shirts, and man-made fiber knit shirts, he said.

The Vietnam TMP, which compels the Commerce Dept. to compile preliminary monthly trade data and issue bi-annual reports, also expires in January 2009.

Extending the TMP to trade with China “will send a strong message to importers and retailers that will help steady the market and make sure there is no disruption like we saw three years ago,” said Cass Johnson, the president of NCTO. This refers to the fact that Chinese imports surged and prices declined when the quota system of the Multifiber Arrangement expired three years ago.

The same point is made in the House letter about the MFA phaseout. “Chinese manufacturers dropped prices by an average of 40 percent and China’s apparel exports surged by nearly 600 percent,” it said. According to the letter, jobs of over one million workers world-wide, including 500,000 in the United States, “are at risk if China attempts to once again monopolize the U.S. market due to the removal of quotas.”

Johnson said that the primary reason U.S. industry believes a TMP for China is merited is that “it still has a state-run and state-subsidized textile sector,” which “give them the ability to drop prices to gain market share that no other country has.”

A year-old study conducted by the industry of Chinese government subsidies for its textile and apparel sector uncovered 63 programs, including a number that were clearly in violation of World Trade Organization (WTO) commitments because they were specifically targeted at promoting exports, he said.

According to textile industry sources, updated trade data show that imports from China have been limited to 14 percent market share in 2007 in textile categories that have remained under quota, whereas imports from China take up 54 percent of non-quota textile trade.

As part of the pro-TMP campaign, eleven U.S. national and several state textile groups from such states as South Carolina also demanded the extension of the TMP to China and continuation of the TMP on trade with Vietnam in a Sept. 29 letter to U.S. Trade Representative Susan Schwab and Commerce Secretary Carlos Gutierrez.In addition, sixteen international trade associations from Africa, Mexico and Central America joined NCTO in sending Congress a letter earlier in September advocating extension of the TMP to China (Inside US-China Trade, Sept. 17). The same signatories also sent a letter to administration officials demanding the TMP.

The continuation of the Vietnam TMP and its expansion to China is opposed by U.S. apparel companies, importers and retailers such as the American Apparel & Footwear Association, National Retail Federation (NRF), Retail Industry Leaders Association, and the U.S. Association of Importers of Textiles and Apparel (USA-ITA).

Tantillo professed to be “astounded” by this opposition, and opponents’ threats to fight actively against such as program. It “shows me there must be a greater degree of illegal pricing activity going on than we thought,” he said.

A retail industry source bridled at the characterization of underpricing as an “illegal” activity. “Our dumping law is intended to address unfair trade, but dumping’s not illegal,” he said. “Otherwise, plenty of folks would be hauled off to jail for underpricing their products.”

He charged that the textile industry’s push to impose a TMP on Chinese exports is an effort to “obstruct trade,” Expansion of the TMP would accomplish this because it would be “a de facto antidumping investigation without going through the steps necessary to file one,” according to this opponent.

The information that a TMP would require Commerce to compile can already be obtained by the industry from the department, he said. He alleged that the textile makers won’t file their own antidumping case because of the expense and because they cannot meet the “standing” requirement of U.S. trade remedy law, because textiles and apparel exports from China are not considered like products.

Instead, he said, textile groups want to use the data compiled by Commerce under a TMP to get the U.S. government to self-initiate a trade case, which could solve the textile industry’s problem with the standing requirement.

“Our concern about dumping cases is that this system is so heavily slanted in favor of petitioners (and ) is so arbitrary that it creates great uncertainty for companies that have to plan based on global sourcing of production,” said the retail industry source. “That is the crux of the problem”

Moreover, he argued, the rising cost of operating in China is already having a “demonstrable impact on orders” from there. Most quota categories for imports from China are not filled, he said. That is an indicator, he said, as to whether expanded imports from China should be expected upon the lifting of quotas at the end of the year.

The campaign by the U.S. textile industry and its congressional allies comes on the heels of the release of an August 2008 report by the International Textiles and Clothing Bureau (ITCB) that concludes that, although the elimination of global textile quotas in 2005 did produce “substantial shifts in export fortunes” for different national industries, “it is now apparent that most dire predictions proved ill-founded and did not come to pass.”

The 84-page ITCB study shows that U.S. and European textile imports in the 2005-2007 post-quota period grew less rapidly than in the preceding 1996-2004 quota period. –Scott Otteman.

Source: http://www.chinatradeextra.com

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