- The Washington Times - Tuesday, November 18, 2003

The Bush administration will cap surging apparel imports from China in a move to help U.S. industry survive an onslaught of cheaper clothes from the Asian nation, officials said yesterday.

The decision sends “a message that China, with its bevy of anticompetitive job-destroying trade practices, can no longer take this market for granted,” said Jim Chesnutt, chief executive officer of National Spinning Co., a North Carolina yarn manufacturer.

The new limits on knit fabric, robes, dressing gowns and bras are likely to irritate sensitive U.S.-Chinese economic relations. The tariffs come amid intense political pressure from U.S. industries and allies in Congress, who see the textile decision as a test case for administration policy toward manufacturers and China’s growing presence in the U.S. market.

Grant Aldonas, U.S. Commerce Department undersecretary for international trade, yesterday said that the decision reflects severe distortion in trade because of heavy state investment in China’s economy.

Retailers, who sell the imported goods to willing consumers, said the move would simply make clothes more expensive.

“This ruling will create shortages that could lead to dramatic increases in prices for American consumers while doing nothing to protect American jobs,” said Erik Autor, vice president at the National Retail Federation, an industry group that represents companies like the Gap, Sears Roebuck and Saks Inc.

“This decision is based on politics, not facts,” he added.

Last month, 139 U.S. representatives and 26 senators signed letters urging the administration to invoke the special textile-China safeguards. Letter organizers cited the number of signatures as leverage over White House trade policy, including votes expected next year on free-trade agreements.

“You always have to be mindful of where you get the votes” for future trade agreements, Mr. Aldonas acknowledged.

“I have never thought … there is something inconsistent with being a free trader and going after practices that distort investment and trade,” Mr. Aldonas added.

The White House has downplayed China’s effect on job losses but is concerned about the trade imbalance and some trade practices, especially since the Asian nation joined the World Trade Organization in December 2001.

China sends about a quarter of its exports to the United States. Its trade deficit reached a record-breaking $89.7 billion as of September. U.S. imports were $108.6 billion through September, up 21 percent from 2002, and exports were $18.9 billion, up almost 19 percent, according to Census Bureau numbers.

Chinese clothing and fabric exports to the United States more than doubled in 2002, and through August 2003 those exports have jumped 75 percent for the year.

In July, industry groups filed petitions in four products areas — knit fabric, gloves, dressing gowns and robes, and bras. The U.S. government accepted three of the petitions, ruling out gloves.

Since 2001, exports of dressing gowns from China increased by 905 percent, exports of bras by 382 percent and knit fabric by 28,000 percent, according to the American Textile Manufacturers Institute (ATMI), an industry group.

This week’s decision allows the United States to cap growth at 7.5 percent above current levels for one year unless the two sides can negotiate an agreement, probably in the coming three or four months.

“We need to have a discussion with the Chinese about how we approach the textile trade,” Mr. Aldonas said. He did not say when negotiations would begin.

China’s embassy in Washington did not return phone calls seeking comment.

The industry groups blame the foreign competition for job losses — about 30 percent of all textile and apparel manufacturing jobs in the United States have been lost since January 2001, ATMI said. The industry still employs 730,000 workers in the United States.

The textile safeguards are the only sector-specific safeguard negotiated as part of China’s WTO accession. But other avenues are available to block trade for other goods and other industries, such as furniture makers, want relief from Chinese competition.

Mr. Aldonas cautioned against reading too much into this week’s ruling.

“I don’t think we’re setting a new precedent or breaking new ground,” he said.

The textile decision rippled through markets. It was one of several factors contributing to a falling dollar, rising crude oil prices and falling stocks.

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