California Apparel News

They may be down, but they’re not out.

Apparel and textile groups trying to curb China’s access to the U.S. market are taking another tack after President Bush decided recently not to pressure China to improve its working conditions or change its currency policy.

The National Association of Manufacturers (NAM) in Washington, D.C., had intended to file a petition with the Bush administration to investigate currency manipulation in China as an unfair trade practice. The petition would have been part of a tactic to slow Chinese imports into the United States after quotas disappear in 2005.

But on April 28, when Bush struck down the AFL-CIO’spetition asking the U.S. government to pressure China to improve working conditions and increase wages, the president said he would not even glance at the petition being prepared by the manufacturing association.

“We’re obviously not filing our petition now because the message was pretty clear, especially when you have four cabinet members standing up there with the president,” said Patricia Mears, NAM’s director of international commercial affairs.

Instead, the manufacturing association, part of the Fair Currency Alliance, met with U.S. Treasury Secretary John Snow and Assistant Treasury Secretary Randal Quarles on April 30 to begin discussing what the U.S. government can do to encourage China to reevaluate its currency.

“We feel good that progress is being made,” said Mears, who is also the executive director of the Fair Currency Alliance. “We are looking for ways to have industries’ viewpoints represented and to convey the issue’s urgency.”

The alliance maintains that the Chinese yuan, pegged at 8.28 to the dollar, is undervalued by 40 percent, giving Chinese exporters an unfair advantage by making their goods artificially cheaper in the United States and other world markets.

NAM had planned to file a 301 petition, brought under Section 301 of the Trade Act of 1974, asking the Office of the U.S. Trade Representative to pressure the Chinese government to let China’s currency float to reflect its true value. But the alliance changed plans after Bush announced he would shelve the labor and currency petitions.

Manufacturers will have to rely on other tactics to slow the flood of Chinese goods into the U.S. market.

Expanding safeguards

Manufacturers are gearing up to seek more safeguard measures limiting the import of apparel and textile items that are set to go off quota in 2005. Already, the Bush administration has granted three safeguard measures restricting the amount of dressing gowns and robes, knit fabrics, and bras imported into the United States this year. These categories went off quota in 2002.

“We have heard rumors that safeguard requests might occur on socks and hosiery this year,” said Jim Leonard, a deputy assistant secretary of commerce in the U.S. Department of Commerce and the chairman of the federal interagency group that deals with textiles and apparel. “We expect to get safeguard petitions next year. We just don’t know when and how many.”

Trade experts predict there will be a flurry of safeguard petitions filed within months of quotas disappearing at the beginning of the year. “We have just seen the tip of the iceberg,” said Jonathan Fee, a Washington, D.C., attorney who specializes in customs and quota issues.

Manufacturers are likely to seek safeguard measures for cotton and manmade fiber trousers, shorts, skirts, knit tops, shirts and blouses, Fee said. In addition, safeguards may be sought for cotton towels, flat goods and linens. “People are watching whether the safeguards work, and they are working,” the attorney noted.

The question now is when new safeguard measures will be sought. Because industry leaders have to show some type of market disruption, they may have to wait until after the first few months of 2005 to make an effective argument.

“We definitely intend to ask for use of the China textile safeguards across the board, in every category where they show a significant increase in imports,” said Cass Johnson, president of the recently formed National Council of Textile Organizations, the Washington, D.C., lobbying group that replaced the American Textile Manufacturers Institute, which closed down earlier this year. “I know there are things like woven trousers, knit shirts and knit underwear that will be addressed.”

Once implemented, the safeguard measures would be in effect for one year. The measures would allow the United States to unilaterally impose quotas limiting growth in Chinese imports to no more than 7.5 percent above the previous year’s level. Once expired, the safeguards could be renewed through Dec. 31, 2008, by new petitions.

“Just the threat of safeguards being imposed has caused a lot of importers not to put all their eggs in the Chinese basket,” Fee said.

Safety in numbers

While safeguard action is heating up, various trade organizations and interested parties are banding together to form a beefed-up lobbying effort.

After 37 years of operation, the American Yarn Spinners Association, headquartered in Gastonia, N.C., will shut down in August and join forces with the National Council of Textile Organizations to limit textile and apparel imports and fight for fair trade policies. “Hopefully, uniting folks and getting some attention will help us,” said Steve Dobbins, the current AYSA president and the president and chief executive of Carolina Mills Inc., a $100 million company in Maiden, N.C.

Dobbins has seen his company’s revenues decline by 50 percent in four years. In that time, the company has closed 10 plants and laid off 1,400 people.

Dobbins said everyone has to work together to save the industry. “Sometimes people have been worrying about the headaches in their own industries,” he said, “and not worrying about the heart attacks.”