*EPF107 10/25/2004
Bush Administration to Impose Quota on Sock Imports from China
(Petitions pending for similar action in other textile/apparel categories) (730)

By Andrzej Zwaniecki
Washington File Staff Writer

Washington -- The Bush administration, citing market disruption concerns, has decided to impose quotas for up to one year on sock imports from China.

The interagency Committee for the Implementation of Textile Agreements (CITA), chaired by the Commerce Department, announced October 22 it will request consultations with China "with a view to easing or avoiding such market disruption," which it determined has occurred in the U.S. market and threatens to worsen due to imports from that country.

In a fact sheet issued on the same day, the department said that as soon as such a request is made CITA will impose quotas 7.5 percent higher than the current level of U.S. imports for cotton and man-made fiber socks and 6 percent higher than the current level for wool socks.

"The United States will make every effort to reach a mutually satisfactory agreement with the government of China ... within 90 days of such request," the department said.

If talks fail, the quota will remain in effect for one year, it said.

Such quotas can be levied under safeguards approved as part of the 2001 U.S.-China bilateral trade agreement, the pact under which the United States approved China's entry into the World Trade Organization (WTO). Consultations with China must begin within 30 days of notification of the request for consultations and the two countries have 90 days to reach a resolution.

In November 2003, the Bush administration imposed quotas on three types of textile products imported from China.

During the week of October 10, the U.S. textile industry petitioned the Bush administration to limit U.S. imports of Chinese textiles and apparel in nine categories including socks, cotton and synthetic trousers, wool trousers, cotton and synthetic knit shirts, and underwear.

In the 12 months ending in August, U.S. sock imports from China amounted to $170.6 million, 13 percent of the $1.3 billion worth of Chinese imports covered by the industry's petition.

The president of the National Council of Textile Organizations, one of the industry groups that supports the petition, said that Chinese imports threaten to "destroy the textile and apparel manufacturing complex, one of the largest employment sectors in the United States," according to news reports. He said that the petition is backed by similar industry organizations in 51 countries also concerned about Chinese competition.

However, retailers, large manufacturers and importers criticized the sock decision as politically motivated, according to news reports. The executive director of the U.S. Association of Importers of Textiles and Apparel said that the administration's ruling only "perpetuates the failed protectionist policies that have discouraged the U.S. textile industry from becoming competitive."

Trade, particularly growing imports from China, has become a political issue during the current presidential campaign. Democratic nominee Senator John Kerry has repeatedly said the administration is not doing enough to protect U.S. workers from unfair foreign competition. President Bush, who calls Kerry an "economic isolationist," argues that his policy of opening foreign markets through free-trade agreements represents the best approach to creating jobs and making the U.S. economy more competitive.

The controversy may signal more confrontations as industries across the globe try to adjust to the new trade regime for textiles and apparel that will take hold after the WTO quota system expires December 31.

The U.S. International Trade Commission (USITC) said in a February report that China is poised to become a dominant player in the U.S. textile and apparel market because it has the ability to make almost any type of textile and apparel product at any quality level at a competitive price.

Many developing countries worry that their textile industries will be unable to compete with Chinese and Indian producers. A group of developing nations led by Mauritius has asked the WTO to assess the impact of phasing out a textile and clothing quota system on individual countries. A 2004 WTO study said that China could triple its share of U.S. textile and apparel imports to 50 percent and India could quadruple its own to 15 percent from 2002 levels.

Developing countries also have asked the WTO for advice on how to manage adjustment problems, according to an October 7 WTO news release.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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