U.S., China struggle for deal on textile trade

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U.S. and Chinese negotiators yesterday appeared unlikely to strike a deal managing the apparel and textile trade, thus leaving in place a system of safeguards that creates an uncertain market for American retailers.

"We have made good progress in our discussions over the past couple of days and, although we still have differences, we feel that additional time to work on the issues would be beneficial," said David Spooner, the U.S. trade representative's special textile negotiator, before returning to talks last night.

China's exports of some types of clothing to the U.S. have skyrocketed since Jan. 1, when a global system of quotas expired under a decade-old World Trade Organization agreement.

To counter the surge, U.S. manufacturers have petitioned the Bush administration for a series of new quotas, known as safeguards, covering more than 40 percent of all Chinese clothing imports by value, according to an industry tally.

But petitions create uncertainty for U.S. retailers, who through July bought almost one-third of their imports from China -- $13.1 billion worth of shirts, pants, socks, towels and other wares. That is 65 percent more, in value, than the same period last year.

The petitions force retailers to buy products elsewhere or face the possibility of quotas filling up and their orders getting blocked at U.S. ports.

"It has been very disruptive. China is the place most people want to be -- not just because of price, but because of quality, ease of doing business. If it were just price, everyone would be in Bangladesh," said Laura Jones, executive director of the U.S. Association of Importers of Textiles and Apparel.

Retailers have shifted orders to other Asian nations or countries in the Western Hemisphere to counter the safeguards.

Ms. Jones said that sometimes means higher prices, lower quality or less choice for consumers, but could not quantify the cost.

U.S. manufacturers see the diversion as an effective way to stop China from dominating the market, and to boost cutting and sewing operations in the Americas that buy U.S. fabrics.

"We ship components to the Western Hemisphere. So this is a big deal for us," said Lloyd Wood, spokesman for the American Manufacturing Trade Action Coalition, one of the groups that filed the petitions.

AMTAC says the rise in imports is responsible for plant closures and layoffs. The textile industry has shed 31,200 jobs this year, leaving it with 651,900, the Labor Department said.

The safeguards limit imports to 7.5 percent growth over export levels from the previous 12 months and only last until the end of the calendar year. China agreed to allow the safeguards when it joined the WTO in 2001.

Industry groups want imports on a wide variety of categories limited to roughly 7 percent through 2008, while China is pushing for a better deal.

China and the 25-nation European Union in June struck a deal limiting imports on 10 clothing categories, but the new quotas quickly filled, creating shortages for some retailers.

Europe earlier this month effectively raised the quotas by applying this year's Chinese imports to next year's quota.