Clothing producers sound warning

This follows a request from textile and clothing bodies from 17 countries that the US protect industries and tighten monitoring procedures when its quota limits on Chinese garments and textiles expire at the start of next year.

The bodies were concerned export markets could be overrun by cheap Chinese products. South African quotas on Chinese textiles and clothing also expire at the beginning of next year and the trade and industry department is considering extending the quotas.

SA industry representatives, Abisha Tembo, president of the Textile Federation of SA, and Export Council for the Clothing Industry chairman Jack Kipling, were among the signatories of a letter, sent to US trade representative Susan Schwab and the US Senate and House of Representatives in September, requesting that the US monitor Chinese imports when the quotas expire.

Other signatories included industry bodies in Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Ethiopia, Honduras, Kenya, Lesotho, Madagascar, Mauritius, Mexico, Nicaragua, Peru, Philippines and the US. In the southern African region Lesotho, in particular, is heavily reliant on the US market, with 90% of its clothing exports — by far the biggest industry in Lesotho's economy — destined for American shores.

The appeal from developing country manufacturers has paid off, prompting the House of Representatives' Committee on Ways and Means to request the International Trade Commission (ITC) to monitor Chinese imports when import curbs expire on December 31. The committee said it was concerned that a “market disrupting surge” in textile and apparel imports from China could occur when the quotas expire.

US president elect Barack Obama in a letter to the National Council of Textile Organisations (NCTO) also confirmed his support for the monitoring of Chinese imports.

Moreover, Obama made a commitment to “use all diplomatic means” to induce China to change its foreign exchange policies.

“The massive current account surpluses accumulated by China are directly related to its manipulation of its currency's value. The result is a large imbalance that is not good for the US, not good for the global economy, and likely to create problems in China itself. China must change its policies, including its foreign exchange policies, so that it relies less on exports and more on domestic demand for its growth,” Obama said in a letter to the NCTO.

The US ITC already monitors clothing and textile imports from Vietnam — another non-market economy country with a state-run textile sector — and NCTO chairman Anderson Warlick said the extension of the monitoring programme to China was the most important trade issue facing the US textile industry.

The Committee of Ways and Means in its request to the ITC referred to the dramatic surge in Chinese imports when quotas on the products now under safeguard were temporarily lifted in 2005. Chinese manufacturers then reduced prices 40%, which lead to a 600% increase in imports. This triggered the imposition of the safeguards that expire next year.

The ITC said it would provide statistical reports every two weeks on the volume, value, unit value, and import market share of textile and apparel items currently under quota. The ITC will provide its first report to the House on December 1, and will include an historical compilation of the volume, value, unit value, and import market share of the articles being monitored from January 2003 to the most recent month available.

Subsequently, the ITC will provide the committee with reports every two weeks as data become available. The ITC also will publish an annual data compilation.

The US is an attractive market for developing country exports of apparel and textiles. However, China has gobbled up 60% of the US market share — up from 13% at the start of the decade — in product segments where imports are not limited by quotas.

Chinese textile and clothing exports to the US have increased almost 400%, from $6,5bn to $32bn, in the period.

The expiry of quotas will pose a new threat to other significant developing country exporters and estimates are that up to 1-million jobs could be lost if Chinese exports to the US go unchecked.

Source: Business Day

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