GARMENTS & APPAREL LOGISTICS 2005 - Chinese apparel embargoed-for now

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US safeguards means manufacturers can’t ship some products. Safeguards last only to 2008.By Peter A. Buxbaum, AJOTThe quota system for apparel and textiles was supposed to have met its demise at the beginning of this year under World Trade Organization rules. But even before 2005 was half over, the United States government began limiting imports of specific categories of Chinese clothing, a list that is getting longer with the passing months.
Safeguards built into China’s accession agreement with the WTO allow US domestic manufacturers to file petitions with the Committee for the Implementation of Textile Agreements (CITA), an interagency group chaired by the Department of Commerce, claiming that the US market is being disrupted by Chinese imports. The recent torrent of activity relating to safeguards is explained by the 1,500% surge in imports of Chinese cotton pants and the 1,300% growth in imports of cotton shirts since the quotas were lifted. US trade data indicate that China exported $24.4 billion in clothing and garments to the United States from January through May, up 17.2% from the same period a year ago.
In May, CITA imposed import limits on seven categories of Chinese apparel, including T-shirts, cotton pants, and underwear, allowing Chinese imports in those categories to increase by only 7.5% this year. In recent weeks, CITA found that Chinese imports are disrupting the US market for synthetic filament fabrics and bras, and imposed temporary quotas on those two categories. At the same time, CITA announced that it will continue to review four other product categories, including sweaters, dressing gowns, men’s and boys’ wool trousers, and knit fabric.
Manufacturers have already hit the limits imposed on T-shirts, cotton pants, and underwear. “The safeguards imposed on some very popular categories of Chinese goods have created an effective embargo on these products as of July,” said Thomas Travis, the Miami-based managing partner of the international trade law firm of Sandler Travis & Rosenberg. “Once the limit is hit, additional shipments on those categories of goods are not allowed.” These limits also force importers to search for new sources of supply.
The Bush Administration has been seeking a broad-based agreement with China that would control the surge of their apparel and textile exports. “The US and Chinese governments have tried to negotiate an overall agreement that would regulate trade for the next two or three years,” Travis said. Recent rounds of negotiations in San Francisco and Beijing did not produce such an agreement, but the talks are expected to reconvene in Washington in late September, according to Travis.
“I expect an agreement that will limit the export of textiles and apparel to the United States similar to the agreement reached with the European Union,” Travis said. “The bottom line is that there will be some sort of restraint on textile and apparel imports at least through 2007, and possibly beyond.” China and the European Union agreed to limit certain categories of textile exports to an increase of about 10% over last year. The agreement averted the possibility that the EU would start imposing safeguards to benefit its domestic manufacturers, as the US is doing.
For Travis, the US safeguards have implications beyond the apparel and textile industries. “Domestic industries are often threatened by imports,” he said. “The success that domestic industry has had with the Chinese safeguards may encourage some to file anti-dumping petitions with respect to other products. A number of importers are concerned about that.”
Restraints imposed on Chinese imports means that other countries will benefit from China’s losses. “Whenever one country is shut out of competition, others will obviously benefit,” Travis said.
India, which, like China, is known for the efficiency of its operations, is an obvious candidate to reap the advantages of the limitations on Chinese trade. “The Indians are not operating under any quota restraint, nor will they h

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Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as [em]Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly[/em]. He was educated at Columbia University.