Textile Firms Oppose End of Quotas
U.S. textile and apparel manufacturers have launched a last-ditch effort to prolong global quotas that limit low-cost foreign competition.
The manufacturers fear that without the quotas, China will dominate the textile and apparel market, triggering the loss of hundreds of thousands of U.S. jobs and millions of others around the world.
U.S. producers persuaded more than 100 Republican and Democratic congressional representatives to send a letter to President Bush last week calling for an emergency meeting of the World Trade Organization. They want the Geneva-based trade group to consider extending the quotas -- set to expire at the end of this year -- to 2008.
On Tuesday, they will meet in Brussels with business leaders from Mexico, Turkey, Bangladesh and a dozen other countries to work on a strategy for expanding a global campaign to extend the quotas. So far, 81 trade associations from 43 countries have signed on to the so-called Istanbul declaration.
The effort is seen as a long shot because the Bush administration and WTO have vowed to proceed with the quota phase-out. But by banging its drums loudly in an election year, the U.S. textile and apparel industry hopes to increase the pressure on the administration to use bilateral measures, such as import surge protections or anti-dumping laws, to slow China’s exports.
Throughout history, textile and apparel manufacturing has played a crucial role in moving people from the farms to the factories, which is why it has been one of the world’s most closely managed industries.
Decades ago, the U.S. and many other countries issued quotas that set annual allotments for imports. With their market share guaranteed, poor countries in Southeast Asia, Latin America and Africa developed textile and apparel industries. In 1994, the WTO negotiated an agreement to gradually phase out all quotas over a 10-year period.
U.S. textile and apparel makers say that will mean the loss of as many as 30 million jobs, primarily in those poor countries that depend heavily on apparel exports. Also at risk, they charge, are more than 75% of the 709,500 jobs in the U.S. textile and apparel industry, including thousands of jobs in Southern California.
U.S. retailers and importers, which support the phase-out, dispute the notion that China will monopolize the world’s trade. They argue that U.S. importers will be reluctant to depend on just one country for their goods and will want to continue relationships with longtime suppliers.
The threat of trade sanctions will slow the shift of production because U.S. retailers will be unwilling to risk having their goods caught in a U.S.-China trade war, said Brenda Jacobs, an attorney for the U.S. Assn. for Importers of Textiles and Apparel. Importers also argue that consumers should benefit from the quota phase-out through lower clothing prices.
The stakes are high for the American Manufacturing Trade Action Coalition, which is dominated by large Southern and East Coast textile manufacturers in the most heavily protected sectors of the U.S. economy.
Even after the quotas are lifted, the U.S. will still impose duties on some imports. But competitive pressures remain fierce. Since 1997, the U.S. textile industry has shut down 250 plants and laid off more than 200,000 workers.
West Coast textile and apparel manufacturers tend to be smaller and more niche-driven than the rest of the industry. Though they have also been hit hard by the shift of production to Mexico and Asia, Southern California firms have focused on high-fashion, quick-turnaround production to position themselves for competition in a post-quota world.
Studies by the World Bank and the U.S. government support the argument that China, India and Pakistan are likely to be the major beneficiaries of the quota phase-out. That’s because those countries boast large, modern factories, a cheap labor force and access to locally produced cotton and other raw materials.
The most vulnerable are countries such as Cambodia and Bangladesh that have relied on quotas to give their less-efficient manufacturers a boost into competitive world markets.
Lloyd Wood, a spokesman for the American manufacturers, said the quota phase-out could create a “national security” issue for the United States by destabilizing economies of Islamic countries such as Egypt and Turkey that are allies in the war against terrorism. He said apparel and textile exports represented 23% of Egypt’s merchandise exports and one-third of Turkey’s foreign sales.
China has already demonstrated its competitive clout. U.S. imports of apparel and textiles from China rose 85% last year, and that country now supplies 19% of the U.S. market, according to the American Textile Manufacturers Institute. After the quotas were lifted on Chinese brassieres, imports from that country soared to 10.5 million in 2002 from 4 million in 2000.
Supporters of a delay in the phase-out argue that China’s entry into the global trading arena has drastically changed the nature of global competition. Chinese firms benefit from unfair trade practices, they contend, including government subsidization of land and utilities, tax rebates and manipulation of the currency to keep exports artificially cheap.
The Bush administration did agree last year to use so-called anti-surge provisions negotiated as part of China’s WTO accession agreement to restrict imports from that country in three categories, including brassieres.
But Neena Moorjani, a spokesperson for the U.S. trade representative’s office, said that the “U.S. intends to abide by its international obligations” to phase out the remaining quotas by year-end.
In meetings in Washington this year, Chiedu Osakwe, director of the WTO’s textiles division, told business leaders that the organization planned to move forward with the quota elimination. Under the rules of the WTO, which operates by consensus, only member governments can propose rule changes.
Jeffrey Schott, a WTO expert at the Institute for International Economics in Washington, warned that any effort to amend the textile and apparel agreement would open the door to challenges from other groups wanting to rewrite trade rules.
