US textile quotas filled in a month

PUBLISHED : Monday, 04 July, 2005, 12:00am
UPDATED : Monday, 04 July, 2005, 12:00am

Barely a month after the United States imposed caps on seven categories of Chinese textile imports, exporters say the quotas are filling up fast, with some items already exceeding their full-year limits.

As at June 26, the US quota for Chinese cotton knit shirts and blouses had been exceeded by 1.72 per cent and that for cotton trousers and slacks by 8.35 per cent, according to Chinese customs data.

The US quota for Chinese underwear is already 88.58 per cent filled and that for synthetic knit shirts and blouses 87.14 per cent filled.

Imports of products that have exceeded their quotas will be turned away at US ports.

Although global textile quotas expired in January, World Trade Organisation members such as the US are entitled to impose 'safeguard quotas' lasting up to one year on Chinese textile items deemed to disrupt domestic markets.

'I'm surprised at how quickly the quotas filled. I find it very unusual. There must be something behind it,' said Michael Austin, the chief financial officer of brassiere manufacturer Top Form International.

When US quotas were imposed on Chinese brassieres from December 2003 to December last year, trade in the restricted product was orderly with no huge surges, and the quota did not fill until four weeks before it expired on December 23 last year, he said.

Referring to how quickly the seven quotas are filling up, Mr Austin said: 'I wonder if manufacturers have the capacity to push production up like that.

'If shipments really surged that much, US retailers would be holding huge inventory, going against normal practice.'

Another Hong Kong garment manufacturer said the huge surge in shipments of the seven restricted items was not entirely due to increased production.

He believed the problem stemmed from a rash of suddenly truthful declarations of origin, whereas previously these documents had been routinely falsified.

'A lot of goods made in China were exported through illegal transshipments before, but now they are legal. It's an open secret in the industry. You don't see a lot of new garment factories opening in China.'

A French textile trader confirmed that faking the country of origin of mainland-made textile goods was rampant when global textile quotas were in force before January 1.

The rapid filling of quotas was also due to the aggressive export methods of mainland garment manufacturers, especially in Zhejiang province, said Willy Lin Sun-mo, vice-chairman of the Hong Kong Textile Council, citing feedback from international customers.

'Garment factories in Zhejiang produce before they get orders. That's their way of doing business. Hong Kong and Guangdong companies get orders before they produce,' said Mr Lin.

Much of the Chinese socks exported to the US are made in Zhejiang, especially in the city of Datang.

So aggressive were Zhejiang's sock exports to the US that the one-year US safeguard quota on Chinese socks was filled in May, well before the quota's expiration in October.

Moreover, now is the traditional peak shipping season for textiles and garments, and orders for mainland textiles and garments had increased since January, said Mr Lin.

'It's not surprising quotas are filling fast. People want to get their shipments out before the quota is filled to ensure delivery to US customers on time. Everyone is rushing for the door.'

Mr Lin fears that with the European Union restriction on imports of 10 Chinese textile items from June 11 until the end of 2008, these quotas will similarly fill up quickly.

'I've no doubt that by August, a lot of EU quotas will be filled,' he said.