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Protecting the American Textile Industry from Chinese Imports

  • Amy Katz

In early April, the Bush administration took action to re-impose quotas on several categories of made-in-China clothing, to protect the American clothing and textile industry from a flood of Chinese imports. The industry says that does not go far enough. It has asked the administration to re-impose quotas on many more types of Chinese textile products.

The quota system on textiles was completely eliminated on January first of this year, the end result of years of trade liberalization negotiations. And Chinese clothing and textiles poured into the U.S. at higher rates than ever before.

Gary Hufbauer of the Institute for International Economics, a non-profit, non-partisan research group based in Washington, D.C., says that is because China can produce the goods at significantly lower costs. He says there are several reasons for that, more than just low wages.

Mr. Hufbauer explains, "There are a lot of countries with very low cost labor, India, Pakistan, much of Africa, et cetera. What does China have on top of that? Well, China is very organized in terms of industrial development. As everybody knows, and in this particular industry, where the organization shows up is that China is able to have very rapid delivery of clothing items in response to fashion demands." Mr. Hufbauer adds that China can deliver clothing to the U.S. much faster than neighboring Mexico can.

Shala Talassi owns a company called Design Knit in Los Angeles, California. She says she is already seeing the impact of the recent flood of Chinese imports.

"As we see so many showrooms are closed. So many knitting mills are closed and that's really bad for the textile industries," says Ms. Talassi.

American textile manufacturers say that means lost jobs. To stem that tide, the Bush administration has moved to reinstate quotas on some Chinese clothing. The industry has filed petitions asking the government to take action on even more categories of goods from China. The European Union also recently instituted a system to monitor China's surging textile and clothing exports. That system has a series of trigger points that could lead to more formal limits on goods from China.

The agreement that led to the lifting of restrictions on Chinese exports was made before China was admitted to the World Trade Organization (WTO). Membership gave China far greater latitude to export its goods. It also meant the U.S. and other countries could reimpose some restrictions on its exports, if needed.

Gary Hufbauer says industries in other countries besides the U.S. are paying the price for the huge increase in Chinese exports.

"China is a big competitor with Central America, Brazil, India, you name it, China competes with them and so a lot of these countries are quietly, and I have to emphasize the word quietly, quite happy for the U.S. to be limiting Chinese exports," says Mr. Hufbauer.

He adds that calculations made by the Institute for International Economics show` between half and two-thirds of China's exports to the U.S. are displacing exports from many other countries, including Indonesia, Thailand, the Philippines, India, Pakistan and Brazil.

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