U.S. to Put Quotas on Textiles From China

The Bush administration announced plans Tuesday to impose quotas on Chinese textile imports, protecting another U.S. industry from foreign competition and increasing pressure on Beijing to address a growing trade imbalance.

The decision, which applies to Chinese-made brassieres, dressing gowns and knit fabrics, is expected to roil relations with a country that has become a lightning rod for anxiety about U.S. trade deficits and job losses.

Administration officials said the move would protect American textile and apparel makers from an import surge that has disrupted U.S. markets and endangered industry employment. The administration offered a similar rationale last year for imposing tariffs on imported steel.

“This decision demonstrates the Bush administration’s commitment to our trade rules and America’s workers,” said Commerce Secretary Don Evans. “This will advance our future dealings with China, for no market operates fairly without open dialogue.”

China’s Commerce Ministry said today that the government “firmly opposed” the U.S. decision and that it might appeal to the World Trade Organization.

In the United States, critics said it appeared that domestic politics played a big role in the trade action, which could shore up support for Republicans in textile-producing states. U.S. importers predicted that the quotas would increase prices paid by consumers and undermine America’s leadership in global trade negotiations without halting the long-term decline of domestic fabric makers.

The quota decision came at a sensitive point in U.S. trade relations. This week, at talks in Miami, administration officials will try to overcome other countries’ reservations about a proposed Free Trade Area of the Americas, which would expand the North American Free Trade Agreement -- which covers the United States, Mexico and Canada -- to virtually the entire Western Hemisphere.

At the same time, President Bush is facing pressure to rescind last year’s steel tariffs, which were ruled illegal last week by the WTO. Analysts said that a compromise appeared to be in the works to accelerate the planned phase-out of the tariffs. But it was unclear whether a faster timetable would appease the European Union and other nations that have threatened to retaliate with restrictions of their own.

On those issues and others, the administration has been roundly criticized for pushing its trading partners to open their markets, even as it has erected barriers to protect beleaguered U.S. industries. And its latest move to impose textile quotas came under immediate fire from some groups.

“Not a single job is going to come back to the United States as a result of this decision,” said Laura Jones, executive director of the U.S. Assn. of Importers of Textiles and Apparel, a New York-based organization. “Slapping the quota on China will merely shift the trade to other countries, mostly in Asia.”

America’s trade deficit with China reached a record $12.7 billion in September, and economists predict it could top $125 billion for the year. Many U.S. firms and workers in industries such as garment, furniture and electronics have cited China’s growing economic prowess as a big factor in the loss of 2.5 million manufacturing jobs during Bush’s presidency. The issue is expected to figure prominently in the 2004 presidential campaign, and the administration has promised to crack down on abusive trading practices by the Chinese.

The textile quotas will be imposed under a “safeguard” provision that accompanied China’s acceptance into the WTO. That provision authorized the United States to impose temporary restrictions, limiting annual imports to 7.5% above the previous year’s levels, if imports from China disrupted U.S. markets. The United States is required to enter into discussions with China to try to reach a negotiated solution within 90 days, and the quotas would take effect if those talks fail.

Since previous quotas were lifted last year, imports of brassieres, dressing gowns and knit fabric have soared. Shipments of Chinese synthetic-fiber bras were up 76% during the first nine months of this year, cotton bras rose 32%, synthetic-fiber dressing gowns were up 58%, cotton gowns jumped 96% and knit fabric rose 32%, according to the American Manufacturing Trade Action Coalition, a Washington-based advocacy group that filed petitions seeking the safeguards.

Meanwhile, employment in the U.S. textile industry has continued to slide as labor-intensive production shifts to China and other countries where wage rates are much lower. The number of American textile and apparel workers fell from 1.045 million in January 2001 to 729,000 last month, a decline of 316,000. California, a major center of garment design and production, has lost about 21,000 manufacturing jobs in that industry in that time.

The three categories covered by the quotas account for only $497 million of China’s $10.7 billion in textile and apparel exports to the United States. But supporters of the quotas said the effect could be much wider if U.S. importers limit future purchases, fearing that similar safeguards would be applied to other Chinese goods.

“This decision sends a message that you cannot expect to move all your orders to China ... because you may have comprehensive quotas or category-by-category quotas on those goods,” said Cass Johnson, president of the American Textile Manufacturers Institute, a Washington organization that promotes the interests of U.S. textile mills. “It does set up a real sense of uncertainty.”

Supporters said they hoped that prospect would persuade the Chinese to negotiate a broad, voluntary agreement to limit exports of other textile and apparel products, many of which are scheduled to become quota-free this year and next. They acknowledged, however, that import restrictions were likely to increase the cost of goods purchased by U.S. consumers.

Gary C. Hufbauer, a senior fellow at the Institute for International Economics, a nonpartisan economic research center in Washington, estimated that the combination of tariffs and quotas applied to all categories of U.S. textile and apparel imports cost an average American family of three from $400 to $500 per year.

Hufbauer said the administration’s decision represented a triumph of politics over economics. “What the administration is saying to the textile industry is, ‘We feel your pain. Don’t beat up on us in the 2004 election. Bring your petitions in, and we’ll take care of your problems,’ ” he said.

The quotas are expected to help Republican lawmakers in areas where textile manufacturing is concentrated, particularly North and South Carolina and, to a lesser extent, Georgia, Alabama and Virginia. Bush, in turn, will need their support to pass future trade pacts sought by the administration.

“The reality is it’s an election year,” said Auggie Tantillo, Washington coordinator of the trade action coalition that brought the petition for the quotas. “We have 12 months between now and when our elected officials have to go and face the voting populace. If we’re going to get relief, it’s going to be within that 12-month time frame.”