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From The Editor
James M. Borneman, Editor In Chief

China Safeguard: Policy Shift Or Crowd Pleaser?

James M. Borneman, Editor In Chief

A s China safeguard provisions are enacted in three textile product categories that became quota-free in 2002, the question remains: Just where is US trade policy headed?

Knit fabrics, bras and dressing gowns may not seem like hot topics for conversation — or trade policy — but they represent the strongest concerns for the US textile industry and its potential for standing awash in Chinese imports when quotas are removed at the end of 2004.

As many in the industry shout victory, the question of relief for 2005 looms large: Is this enactment a sign of proactive change in trade policy — one that will prevent surges of imports to the US in 2005 and limit the flow of imports destined to make their way through trade preference levels? Or is this a political tool of the current administration to appease the increasingly influential textile/fiber coalition, pacify congressional letter writers who garnered support from 139 US representatives and 26 US senators, and shore up the endangered votes of thousands of jobless manufacturing workers?

For many, these safeguards come too little, too late. The surge in these categories will be retained, and the applied quota caps future growth at a minimum of 7.5 percent. Don’t worry about retail prices on these goods going through the roof — the supply is not rolled back, import growth is merely slowed going forward.

If this is not the beginning of a proactive shift toward managed trade, concerns remain as to whether a post-2004 US textile industry could survive the onslaught of imports long enough to enact future safeguard provisions in other categories as they explode.

The free trade argument has been oversimplified. It pits US consumer prices against US manufacturing jobs and US manufacturing jobs against a free and open China. Regarding the latter, China’s shift towards a market economy and open society is very positive. The question is whether the US government and the World Trade Organization see any value in managing the export growth of China in a way that enables China to continue accelerated gross domestic product growth and facilitates the rise of China’s domestic consumption.

On the domestic front, the US government and agencies think nothing of managing the way manufacturers do business through both taxation and regulation. A viable American manufacturing base is critical to a sustained position of security and sovereignty. That said, are “everyday low prices” in the short run — and only in the short run — a reasonable argument for a major structural shift in the US economy?

December 2003




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