- The Washington Times - Thursday, December 16, 2004

The United States, the European Union and China appear poised to settle amicably a dispute over textile and apparel exports. Although the deal has been criticized by both free-traders and protectionists, the agreement demonstrates an acknowledgement of market realities by all parties and a willingness to come to a quick and reasonable resolution.

Beijing agreed Monday to impose its own duties on exports of textiles and apparel, but has yet to make the details public. U.S. and EU officials have responded with cautious optimism given the vagueness of the announcement.

Members of the World Trade Organization agreed 10 years ago that by Jan. 1, 2005, quotas on textiles and apparel that have been in place for about four decades would be eliminated. When China joined the WTO, though, it agreed to allow other member countries to apply some safeguards against a potential deluge of Chinese goods, expected with the end of the quota system. That agreement recognized the awesome ability of China to dominate the global market. China accounted for 17 percent of the world’s textile and clothing trade last year, and that percentage could reach about 50 percent in three years, according to some independent analysts.

U.S. and EU officials preferred not to have to invoke those safeguards and pressed Beijing to take its own steps to slow the pace of its global dominance in textiles and apparel. Beijing’s willingness to do so appears to mark a victory for the United States and Europe. The deal could give industry workers more time to adapt to what inevitably will be Chinese dominance of the apparel market.

Already, about 95 percent of the clothing Americans buy is produced abroad, although some of that clothing is made with U.S. textiles. The U.S. apparel industry is not significant in terms of the overall economy, but remains concentrated in and important to the Carolinas. U.S. textile goods remain more competitive globally because they are less labor intensive to produce and the industry has become highly mechanized.

The agreement with China won’t reverse the inevitable. The apparel industry in the United States has been steadily shrinking, and will continue to do so. As the Cato Institute’s Dan Griswold notes, the future of U.S. competitiveness does not lie in the production of T-shirts and sneakers. Also, China’s advantages in producing apparel and textiles can only be partially offset by the self-imposed duty. Still, the agreement could lessen the pain for workers in the Carolinas and allow a softer decline of the apparel industry in America.

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