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Washington Outlook Archive
James A. Morrissey, Washington Correspondent

Coalition Seeks Broad Review Of Trade Policies

James A. Morrissey, Washington Correspondent

A larmed by what they see as dire consequences of a continuation of current and projected international trade patterns, a coalition of 90 textile and apparel trade associations in 49 countries has asked the World Trade Organization (WTO) to call an emergency meeting to conduct a broad review of international trade policies. They received a major breakthrough last month when the government of Mauritius, on behalf of a number of less developed sub-Saharan African nations, made a formal request for such a meeting.

Peter Kreig, Mauritius trade official in its US embassy, said his country has weighed in on this issue because of serious concerns in the sub-Saharan African nations that recent gains in developing textile and apparel export trade will be wiped out in a quota-free world dominated by China.

A meeting could take place in September, in time, some officials say, to start addressing problems before the planned year-end removal of textile and apparel import quotas.

As the deadline for removing all textile and apparel quotas draws nearer, there appears to be increasing concern, not only by the US textile industry but also by the industries in less developed countries, that virtually all trade will be taken over by China and perhaps one or two other countries. They contend the entire international trade dynamic has changed as a result of China’s accession to the WTO and a review is urgently needed.

Washington-based National Council of Textile Organizations (NCTO) Chairman Allen E. Gant Jr. said that when the textile trading nations agreed to a 10-year phase-out of textile and apparel quotas, no one anticipated the type of global economies that exist today and what China’s WTO accession would mean to both developed and developing countries. Charging that China has been a shock to the entire system, Gant said textile trade organizations are asking the WTO to step back and do an honest analysis not only of the impact of the quota removal, but also of the entire textile and apparel trade picture.

Meanwhile, US textile manufacturers, while supporting the WTO review effort, are placing increasing emphasis on the need to use the so-called safeguard mechanism provided for in the China/WTO accession agreement to address market disruption in the United States by Chinese imports. Although the US government imposed new quotas last year on three categories of textiles using the safeguard mechanism, US manufacturers contend current practices do not adequately address the problem in a timely fashion. The safeguard mechanism permits imposition of quotas when there is market disruption or a threat of market disruption.

The threat approach has never been used, and industry trade officials say the procedures involved in the actual market disruption approach are so time-consuming as to be ineffective. When a market disruption petition is received, the US Department of Commerce has 15 days to accept or reject it. If the department accepts it, there is a 30-day time period for all interested parties to comment, followed by a 60-day period for evaluation of the comments. If the department feels there is a demonstration of market disruption, the offending party is notified and offered an opportunity for “consultations.” A quota providing for 7.5-percent growth is imposed at that time, and if no mutually agreed-upon adjustments are made in the consultation period, the quotas remain in effect for one year.

Textile industry trade officials say that just doesn’t make it. They want a comprehensive agreement covering a wide range of products, and they also can be expected to file a number of petitions using the threat criteria. It will be interesting to see how the government and importers react to that.

New Lobbying Group Makes Impact In Washington

NCTO is off and running and appears to have become an effective voice for the textile industry in dealing with the federal government on international trade, regulatory and environmental issues. Created last April to replace the American Textile Manufacturers Institute and the American Yarn Spinners Association, NCTO now has 69 members and, according to its leadership, a strong financial base that will permit it to effectively represent all segments of the textile industry and its suppliers in Washington.

Last month, as part of NCTO’s first annual meeting, more than 100 textile industry CEOs lobbied 48 House and Senate members from 25 states in what industry officials called the “largest lobbying effort by the industry in more than 15 years.”

The primary thrust of the lobbyists’ efforts has been in the area of international trade, where they are seeking government assistance in combating what they see as a major threat to the industry stemming from the rapid growth of Chinese imports and the specter of much greater import growth if all textile and apparel import quotas are removed as scheduled in January 2005. In their calls on members of Congress and administration trade officials, textile executives are saying that if the administration does not go to bat for the industry, 75 percent of the 700,000 remaining textile jobs will be lost.

Along with other textile lobbying organizations, NCTO is planning a major grassroots program to educate voters and get them to vote for candidates who share their concerns about the industry’s plight. They see textile-state voters playing a major role in the election — the Carolinas are viewed as key states in both the presidential race and control of the Senate. While NCTO and the other lobbying organizations will not endorse individual candidates, they will publicize their positions on textile trade issues and encourage voters to make up their own minds when they vote in November.

James W. Chesnutt, NCTO’s vice chairman, said: “Our backs are against the wall. We have no choice but to organize our workers, their families and their communities and let them know the consequences of continued government inaction.”

NCTO officials believe they have made some “major strides” in the brief time the organization has been in existence, but they see an urgent need to play an active role in the upcoming presidential and congressional elections if they hope to get meaningful help from the US government.

Both US textile manufacturers and importers have long urged the government to do a better job of policing textile and apparel imports, but with more and more resources being devoted to controlling drug traffic and strengthening homeland security, that is not very likely to happen.

Merger Strengthens Textile Union, Adds Political Clout

The merger of the Union of Needletrades, Industrial and Textile Employees (UNITE) and the Hotel Employees and Restaurant Employees International Union (HERE) adds considerable political clout and resources for organizing activities. The merged union, called UNITE HERE, New York City, has a total membership of 440,000 active members and 400,000 retirees.

UNITE’s President Bruce Raynor, who will serve as general president of the new union, said the merger is a “blueprint for the future of the labor movement,” as he believes bigger, stronger unions will be better equipped to operate in a global economy. He said the unions have many common goals and will have the added strength of members in every state. In addition to textile and apparel employees, the combined unions will represent workers in laundries and retail distribution centers; and the hospitality industry including hotels, casinos, airports, cafeterias and restaurants.

Sub-Saharan Africa Free Trade Pact Approved

Although Congress has been reluctant to deal with international trade issues in this election year, it gave swift approval to — and President Bush quickly signed — an extension of the African Growth and Opportunity Act (AGOA), a free trade pact that could include more than 40 less-developed African nations. The agreement, first approved in 2000, grants duty-free treatment to virtually all products of eligible countries.

Where textiles are concerned, the agreement has a yarn-forward rule of origin that requires products benefiting from the agreement to be made in participating countries. However, it also includes a special provision that permits use of yarn and fabric from third-party countries up to specified levels. That provision will be reduced by 50 percent in the third year with the intention that it will be eliminated after that.

The Bush administration has called AGOA the “cornerstone” of its policy toward Africa and a key part of its effort to open markets and promote economic growth in less- developed countries.

August 2004