China sparks new textile fears

PUBLISHED : Saturday, 12 February, 2005, 12:00am
UPDATED : Saturday, 12 February, 2005, 12:00am

Lobby group warns of 'critical danger' as mainland grabs record 70pc of US import market in quota-free apparel

Mainland exports of quota-free apparel to the United States, including bras and home furnishing products, surged 55 per cent last year to claim a record 70 per cent share of the US import market.

The figures are likely to further strain bilateral trade relations, coming hot on the heels of US Department of Commerce data showing the US trade deficit increased to US$617.7 billion last year.

An industry lobby group said the rise in mainland textile imports illustrated the 'critical danger' facing the US following the end of global textile quotas last month.

Citing US trade figures released on Wednesday, the National Council of Textile Organisations said China's share of the US import market in 25 quota-free apparel and textile categories reached 70 per cent last year from 10 per cent before quotas were removed in 2001.

Thailand is the second-largest supplier to the US with a 3 per cent market share.

Mainland exports of finished textile products such as luggage, curtains, blankets and bags removed from quota control have increased 970 per cent in the past three years to grab a 61 per cent share of the US import market, according to the council.

'China's surge was fuelled by predatory pricing by Chinese exporters, [while] the Chinese government employs numerous illegal and unfair trade practices to ensure that Chinese exporters can under-price their worldwide competition in textiles and apparel,' the council said in a statement.

Figures released by the Department of Commerce showed China lowered prices on quota-free finished textile and apparel products by 68 per cent from 2001 to 2004.

A council study published in December said prices of mainland apparel products averaged 58 per cent below prices offered by other countries, including Bangladesh, India and Pakistan.

In testimony before the US-China Economic and Security Review Commission last week, the president of the National Council of Textile Organisations, Cass Johnson said: 'The Chinese government has poured tens of billions of dollars into its textile and apparel sector in the form of free capital, direct and indirect subsidies and a host of other 'incentives' to create an environment where no one, including the lowest cost producing countries in the world, can compete with them in world markets.'

The group has warned that the US textile industry will collapse unless the government introduces permanent safeguard measures. Existing legislation introduced at China's accession to the World Trade Organisation will expire in 2008.

'Hundreds of thousands of US textile workers ... are today perched on the very edge of the cliff,' Mr Johnson said.

The US textile industry lost 297,000 jobs in the five years to November last year, according to the US Bureau of Labour Statistics.

But other sectors are also feeling the pinch from China, according to the latest trade figures from the Department of Commerce.

US exports worth US$1.14 trillion and imports of US$1.76 trillion resulted in a goods and services deficit of US$617.7 billion last year, a 24 per cent increase, or US$121.2 billion more than 2003. The deficit is now 5.3 per cent of the US gross domestic product, from 4.5 per cent a year ago.

Robert Scott, an international economist with the pro-labour Economic Policy Institute, said: '[The deficit was] driven largely by a surge in hi-tech and other manufactured imports from China, and helped along by higher oil prices. At current rates of growth, China will surpass Canada and become the largest supplier of US imports in 2006.'