Textile pact cannot protect US jobs

Opinion / Forum Digests

 Textile pact cannot protect US jobs
By Paul
Updated: 2005-11-09 15:56

The U.S. textile industry got its heart's desire on November 8 in London
-- an agreement limiting the amounts of shirts, trousers, underwear,
fabric and other textile products that Chinese companies can ship to the
United States over the next three years.

No sooner had the deal been announced by U.S. Trade Representative Rob
Portman and Chinese Commerce Minister Bo Xilai than the U.S. textile
industry began praising it.
"US textile and apparel manufacturing workers and their communities are
big winners today," Augustine Tantillo, executive director of the
American Manufacturing Trade Action Coalition, said in a statement.

But it is far from clear that the agreement will do much to halt the
steady erosion of jobs in the battered U.S. sector, much of which is
concentrated in the Southeast U.S. According to some trade and industry
experts, the deal could even hasten the industry's decline, by giving
China's export machine greater incentives to move into the higher end of
the market, on which U.S. companies have staked their futures, the
Washington Post said in an analysis.

"This is going to backfire," said Grant Aldonas, who until earlier this
year was undersecretary of commerce for international trade and the Bush
administration's lead negotiator with the Chinese on the issue. "It's the
orthodoxy in certain industries that protectionism is the answer, and it
is just shortsighted in the extreme."
For U.S. consumers who have become accustomed to "Made in China" labels
on the clothes they buy, the agreement will at least slow that phenomenon
for a while. Imports of Chinese textiles and apparel will be allowed to
rise at annual rates ranging from 8 percent to 17 percent, depending on
the product and year, beginning on Jan. 1, 2006, and lasting until the
end of 2008.

Winning such an accord with Beijing has been the top goal of the U.S.
textile industry since the demise of a decades-old system of global
quotas restricting the amount of clothing that individual countries could
export. Once that system disappeared on December 31, 2004 -- freeing
countries in Asia, Africa and Latin America to ship as many sweaters,
bras and bed-sheets as the market would bear -- China's network of
factories, with its bottomless reserve of low-cost workers, looked to
dominate global markets.

But while the agreement will prevent the Chinese from dominating their
competitors with the swiftness many had feared, the deal's three-year
duration means that a day of reckoning still looms. And after the pact
ends, Washington will no longer have the leverage it has exercised over
Beijing in recent months: the right to impose annual caps, known as
"safeguards," on Chinese textile and apparel imports. Beijing agreed to
such restraints until 2008 as part of the price of its entry into the
World Trade Organization.

"Under this new agreement, the U.S. industry will know with certainty
that China will not be able to flood the U.S. market during the next
three years," said James Chesnutt, president of National Spinning Co. of
Washington, N.C., and chairman of the National Council of Textile
Organizations. But, he acknowledged, "the threat from China is not
eliminated by this agreement, only delayed."

Furthermore, instead of shifting production to the United States, whose
manufacturers generally do not compete directly with the Chinese, the
agreement could mean that other Asian countries get more orders from U.S.
retailers at China's expense, some analysts predict.

"There's a balloon effect. You squeeze in one place, and the pressure
just gets transferred someplace else," said Peter Kilduff, a professor at
the University of North Carolina at Greensboro who specializes in the
textile industry.
Imports of clothing from China surged 71 percent over the past year, to
$8.2 billion. Imports from India have risen 34 percent, to $2.7 billion;
Bangladesh's shipments have increased 24 percent, to $2.23 billion;
Indonesia's have risen nearly 17 percent, to $2.7 billion; and Sri
Lanka's have increased nearly 18 percent, to $1.7 billion. Those
countries' sales to the United States are likely to increase even faster
now that China's are limited.

Chinese trade minister Bo acknowledged that the figures were "a far cry
from our original expectations." He said China could take comfort in that
a three-year negotiated agreement affords greater predictability to its
exporters than does the system of annual caps.

But Aldonas, who is now in private legal practice, asserted that U.S.
manufacturers would eventually regret pushing the administration for
comprehensive caps on imports. With the Chinese compelled to limit their
exports, "they'll move up the value chain, ceding the lower value stuff
to the Pakistans and others," he said. "Those are the longer-term effects
I'm worried about."

The U.S. industry lost jobs at a terrible clip even when the global quota
system was in effect, noted Edward Gresser, a trade expert at the
Progressive Policy Institute. Employment in U.S. textile mills has fallen
from about 1 million when the quota system was established in 1974 to
about 400,000 when it ended last year. The number of jobs in garment
factories has plunged even more steeply.

Since worldwide quotas failed to stem job losses, Gresser said, "I'm
skeptical that a quota on China alone will be more successful."

The above content represents the view of the author only.

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