[borders/disc4ahdr.htm]

New US Quotas Against China Will Benefit Other Low Cost Countries Rather Than the US Textile Industry

From: ASAP

Comments

The imposition of new quotas against China will provide few benefits for the US textile industry, according to the latest issue of Textile Outlook International. Instead, most of the gains are likely to go to China’s low cost competitors such as India and Pakistan.

The aim of the new quotas, put in place in November 2003 by the US Committee for the Implementation of Textile Agreements (CITA), is to protect the US industry from market disruption by restricting imports from China.

US textile and apparel imports from China surged in volume by 125% in 2002 alone, and by a further 72% in the first ten months of 2003. By comparison, imports from all other sources during the first ten months were up in volume by only 2.7%.

Chinese exporters have also slashed their prices in order to gain market share. In 2002 the average price of US textile and apparel imports from China fell by more than 40%. And yet the average price of US imports from other sources fell by less than 9%.

These increases have coincided with one of the worst periods in the US textile industry’s history. Faced by growing industry pressure, the authorities have felt obliged to take action.

The new quotas restrict US imports from China of five categories of products, namely: knitted fabrics; cotton dressing gowns; man-made fibre dressing gowns; cotton brassières; and man-made fibre brassières. The US authorities were allowed to impose the new quotas under a special safeguard instrument incorporated in China’s WTO accession agreement. And those authorities took the view that there was little point in having a safeguard instrument and not using it.

The five categories represent only a minuscule percentage of total US imports, and will therefore have little direct impact on overall import growth. More important is the psychological impact of establishing quotas during a period when global quotas are being eliminated. Having successfully imposed quotas on five categories, the US authorities will feel more confident about imposing quotas on imports of other products from China whose volumes are more significant.

Furthermore, the mere threat that quotas may be extended to imports of other products could cause US buyers to take fright and significantly reduce their purchases from China. With a wide range of sources to choose from, many buyers will prefer to shop elsewhere rather than take the risk that orders may not be fulfilled because quotas are applied unexpectedly and with little or no warning.

The latest move appears to form part of a wider US policy of slowing the excesses of Chinese growth in order to allow exports from least developed countries to grow in an orderly manner. Before Congress, for example, is a bill to extend the provisions of AGOA (African Growth and Opportunity Act), which provides special access to textile and clothing imports from lesser developed countries in Sub-Saharan Africa.

The new quotas are unlikely to provide much protection to the US industry. They will not make the industry more cost competitive, which is what the industry really needs. Instead, the shortfall in supply which the quotas are expected to create will simply be met by other low cost countries.

Even if the US industry does meet some of the shortfall, the overall gains can only be small. Imports from China covered by the new quotas accounted for only 1% of total US textile and apparel imports in the first nine months of 2003.

The US textile industry will continue to face major problems in competing with lower cost countries, especially China. Furthermore, the industry’s problems can only get worse when global quotas are finally eliminated at the end of 2004. To survive this “Big Bang”, they will need to re-examine their production strategies and transfer more of their production to lower cost countries. Whatever strategies are adopted, it seems that further closures and cutbacks in the US industry are inevitable.

Ends.

“Impact of New US Textile and Apparel Quotas Against China” and “Chinese Quotas and a New AGOA Could Give Poorer Countries Another Chance” were published in Issue No 108 of Textile Outlook International. Other reports published in the same issue include: “Profile of the Maquila Apparel Industry in Honduras”; “Survey of the European Fabric Fairs for Autumn/Winter 2004/05”; “Innovations in Fibres, Textiles, Apparel and Machinery”; and “Profiles of Liz Claiborne and Jones Apparel Group”.

Textile Outlook International is a bi-monthly publication from Textiles Intelligence Limited covering strategic issues in the global fibre, textile and apparel industries. The report is available in printed and electronic format, and costs Euro435. To order a copy, please send your full contact details and payment to: Belinda Carp at Textiles Intelligence, International Subscriptions, 10 Beech Lane, Wilmslow SK9 5ER, United Kingdom. Tel: +44 (0)1625 536136; Fax: +44 (0)1625 536137; Email: info@textilesintelligence.com

ASAP Fashion News Fast - Fashion news for the apparel industry and consumers to learn more about the clothing business.

Apparel Search  ASAP News

[borders/disc4aftr.htm]