Whatever Happened To Free Trade?

The New York Times has reported that the US is to limit three categories of clothing imports from China. Industry executives expect last week's action to be the first in a string of similar quotas to be put on other categories from China, as the European Union, Turkey and Brazil are moving ahead with their own limits on Chinese apparel and textile imports.

The Bush Administration's decision involves imports of Chinese cotton knit skirts and blouses, cotton trousers, and cotton and man-made fiber underwear, valued at $624.5 million, which will be curtailed to protect U.S. businesses, the Committee for the Implementation of Textile Agreements, an interagency panel chaired by the Commerce Department, said on Friday.

Domestic textile companies viewed the new restrictions as an important buffer from harsh competition and importers saw them as expensive complications to the sourcing process. The government, while coming down on the side of the domestic industry, might also view new quotas as a pawn that could help move the rest of its trade agenda forward, particularly the pending Central American Free Trade Agreement.

CITA's action came after a self-initiated review begun in April and will result in limiting imports in the three categories to a 7.5 percent increase, based on the volume in the last 12 months. For the first three months of the year, imports of cotton trousers from China shot up 1,573 percent to 101.2 million square meters, according to government data. Cotton knit shirts and blouses jumped 1,277 percent to 42.8 million SME, while cotton underwear rose 307.2 percent to 60.6 million SME.

China agreed to the possibility of such constraints, known as safeguards, when it joined the World Trade Organization in 2001. The 30-year global quota system ended on Jan. 1 among WTO member countries after a 10-year phaseout. The European Union is also considering fresh restrictions on Chinese imports and Turkey and Brazil have imposed safeguard quotas on certain goods from China in recent months.

"They're rushing to put quotas in place and we're very disappointed," said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel. "The real losers are going to the consumers, since the early imposition of safeguards will merely push up prices."

Rather than helping U.S. industry, Hughes said it would be other Asian suppliers that would benefit from additional orders when China imports hit their ceiling. Representatives of the domestic textile industry, which has filed petitions for safeguards on several other categories, said U.S. jobs depended on the action.

"The unprecedented surge of Chinese imports imperiled tens of thousands of jobs," Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said in a statement. The U.S. textile industry has closed 18 plants and lost 17,000 jobs since quotas were dropped.