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Washington Outlook Archive
James A. Morrissey, Washington Correspondent

Textile Industry Mounts New Lobbying Effort

James A. Morrissey, Washington Outlook

I n an unusual display of unity, six major fiber and textile trade associations have formed what they hope will be a powerful new lobbying coalition to seek congressional and Bush administration support to combat what they view as a "disastrous" rise in Chinese textile and apparel imports. Coalition officials say they have made "an unwavering commitment to take any and all political steps to ensure the industry's survival."

Allen Gant, second vice president of the American Textile Manufacturers Institute (ATMI), said, "This will be a political hot potato, but we are prepared for that."

Comprising the coalition are the American Yarn Spinners Association, National Cotton Council, National Textile Association (NTA), American Trade Action Coalition, American Fiber Manufacturers Association and ATMI.

In view of the recently negotiated bilateral trade agreement with Vietnam and the administration's failure to take prompt action to stem the flow of Chinese imports, textile industry lobbyists have become increasingly concerned that the Bush administration is not living up to its many promises to safeguard the interests of the textile and apparel industries and their 1 million workers. Textile manufacturers claim the Vietnam pact grants the largest quotas in history for the most sensitive products made by the US industry, and they accuse the administration of failing to use tools at its disposal to curb the rapid growth of Chinese imports.

With Chinese imports at record-breaking levels, the coalition will focus initially on three areas. It will insist that the United States implement the safeguard mechanism in the US-Chinese bilateral textile agreement "promptly and effectively." That mechanism permits the United States and China to negotiate new bilateral quotas in cases where market disruption can be shown; if that is not successful, the United States may impose unilateral quotas.

Secondly, coalition officials say the United States should not agree to the inclusion of so-called Tariff Preference Levels (TPLs) in future bilateral or regional trade agreements. TPLs permit a given amount of imports from third countries - such as China and other Asian nations - to enjoy the duty-free treatment given to products made in the participating countries.

Thirdly, the coalition will urge the US government to pressure China into correcting a currency imbalance that industry officials say amounts to a 40-percent price advantage for Chinese manufacturers.

Karl Spilhaus, NTA president, summed up the goals of the coalition: "We want to ensure that interests of our textile industry are at the heart of trade negotiations. We are unified in insisting that the administration lives up to its promises."

Many Countries Maintain Barriers Against US Exports

Although they generally don't admit it, many countries maintain tariff and non-tariff barriers to trade that restrict, and in some cases virtually shut out, US exports of textiles and apparel. Many of these barriers are documented in US Trade Representative Robert B. Zoellick's annual National Trade Estimate Report on Foreign Trade Barriers. That report, covering trade with 56 nations, underscores just how pervasive tariff and non-tariff barriers are in world trade. Where textiles are concerned, among the worst offenders are China, Brazil, India, Egypt and Pakistan - countries that have liberal access to the US market.

Zoellick said that while some countries have made some progress toward opening their markets, many others still use such trade barriers as high tariffs, unscientific sanitary standards, burdensome customs procedures and "opaque regulations." Here are just a few examples of textile and apparel trade barriers:

• Egypt - Bans on textiles and apparel have been lifted in recent years in accordance with World Trade Organization (WTO) requirements, but tariffs on textiles and apparel often are more than 50 percent, and garments are subject to specific rate-per-piece duties ranging up to as much as $300 per item. The United States views the high effective rate of Egyptian tariffs as a violation of Egypt's WTO obligations. Egypt's trade practices virtually close its markets to any textile imports.

• Pakistan - The report says Pakistan's tariff regime is "generally characterized by complexity, broad bureaucratic discretionary powers and very limited transparency." Of particular concern to textile manufacturers is the way Pakistan also subsidizes its raw cotton, giving its textile manufacturers a significant price advantage. Last year, Pakistan established 15,000 quality control standards for textiles and other products, which amount to trade barriers. Moreover, Pakistan has become the fourth-largest source of counterfeit and pirated goods, including textiles and apparel, seized by the US Customs Service.

• Brazil - While Brazil has liberalized some of its trade practices, it still retains high tariffs on some textiles and apparel. It also has multiple add-on taxes, such as warehouse taxes and harbor maintenance taxes that add significantly to the price of imports.

• India - Despite a WTO ruling that it is not eligible for special treatment as a developing country, India maintains a broad range of restrictions including multi-tiered tariffs and broad and discretionary government powers that still amount to a virtual ban on many imports.

• China - According to the report, China's lack of protection for intellectual property rights is a major problem, as is its currency manipulation that amounts to a 40-percent price subsidy. In addition, the Chinese government owns 50 percent of its textile manufacturing and 25 percent of its apparel sector, and as a result can set prices at any level it wants.

Weak Dollar Won't Help US Textiles

Although Bush administration officials and some economists say a weakening dollar will make US industries more competitive and help reduce the trade deficit, that claim just doesn't hold water where textiles and apparel are concerned. Even though the dollar has weakened against the euro and the Canadian dollar, that does not make much difference to US textile manufacturers because most of their trade is with Asian nations that tie the value of their currencies to the dollar. As a result, Asian currencies have declined as well. As a matter of fact, it appears that some countries that have the biggest trade surpluses with the United States, such as China, are likely to be the biggest winners.

The currencies of Hong Kong and Malaysia are officially pegged to the dollar, and China manipulates its currency to follow the dollar as well. Other countries such as Singapore, Thailand, Indonesia and Taiwan also have methods for pegging their currencies to the dollar. This means that their exports to the United States remain cheap regardless of the dollar's value, and US exports are more expensive than they would be in an entirely free-floating currency market.

In recent congressional testimony, the National Association of Manufacturers (NAM) predicted that the overall US trade deficit with China could triple to more than $330 billion in five years if current trends continue. NAM blamed currency manipulation, "massive counterfeiting by Chinese manufacturers and lax enforcement of US anti-dumping trade remedies" for what it sees as a continuing and increasing problem. The US trade deficit in Chinese textiles and apparel continues to rise every year. In 2001, it was $9.4 billion; it rose to $10.8 billion in 2002; and it currently is running at a rate of $13.7 billion, even as the dollar has weakened.

July 2003