U.S. Pushing for Broad Limits on Chinese Textile and Clothing Imports

WASHINGTON (AP) - When U.S. and Chinese textile negotiators sit down Tuesday, the Bush administration's effort to help beleaguered American manufacturers could end up costing consumers some of the sweet deals they have been enjoying on clothing prices.

Some experts say America's clothing bill could rise by $6 billion US or more annually if domestic producers get what they want - a comprehensive deal limiting a broad array of Chinese imports.

Gary Hufbauer, a top trade expert at the Institute for International Economics, said the $6 billion estimate would translate into roughly $20 more on a U.S. consumer's annual clothing bill. But he cautioned that this could end up being a low estimate, given the tremendous impact Chinese imports have had in pushing clothing prices down in recent years.

"A comprehensive trade agreement would take the downward price pressure off not only for American producers but for other countries selling into the U.S. market," he said.

For the three months ending in June, clothing prices at the retail level were falling at an annual rate of 5.9 per cent, reflecting in large part the surge in Chinese imports that has occurred since Jan. 1 when a three-decade old system of global quotas was lifted.

American textile and clothing manufacturers contend that 19 textile plants have shut down this year because of the import surge and 26,000 jobs in textile and clothing plants have disappeared.

The administration has already re-imposed quotas on several key clothing categories including trousers, shirts, underwear, socks and combed cotton yarn with decisions scheduled to be made in coming weeks on a number of other categories, limiting growth in Chinese imports to 7.5 per cent annually.

But the U.S. industry is pressing for a broader approach that would impose limits on import growth across all categories of products where Chinese imports threaten the U.S. industry. American manufacturers contend they won't settle for the deal the European Union reached in June because the growth that agreement allowed in imports - up to 12.5 per cent annually - is too high.

"The EU agreement in our opinion was incredibly weak," said Missy Branson, a spokeswoman for the National Council of Textile Organizations, an industry group.

"No comprehensive deal is better than a bad deal," said Lloyd Wood, spokesman for the American Manufacturing Trade Action Coalition, another group representing clothing and textile manufacturers.

On the other side, American retailers, who like the low-priced imports, went to court last year in an effort to stop the quotas from being re-imposed. But now they say they would support a comprehensive deal if it allowed for growth in imports beyond the 7.5 per cent cap, which has already been reached this year in several categories of Chinese imports.

"For the importers, this has been a race to the dock to try to get shipments in as fast as possible. Most of the major categories are now closed," said Laura Jones, executive director of the United States Association of Importers of Textiles and Apparel.

This week's talks, which will take place Tuesday and Wednesday in San Francisco, are expected to be just the beginning of new discussions. Some industry officials predict the aim is to strike a deal by the time Chinese President Hu Jintao visits Washington in September.

Some trade experts wonder how many U.S. jobs can be saved even if a comprehensive agreement is reached. They note that since 2001, U.S. clothing and textile manufacturers have lost 389,400 jobs - 37 per cent of the total work force.

Those job losses have the attention of Washington politicians. Many Republican legislators from textile states refused to support the Central American Free Trade Agreement until the administration of U.S. President George W. Bush promised to seek broad caps on Chinese imports.

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The textile battle is not the only trade dispute the administration has with China. America's trade deficit with China hit $162 billion last year, the largest imbalance ever recorded with a single country. This year's deficit with China is running 32 per cent above last year's pace, reflecting the 58 per cent surge in clothing and textile imports through the first half of 2005.

Many economists believe America's trade deficit with China will not significantly improve until China goes much further to allow its currency to rise in value against the dollar. They contend that China's initial 2.1 per cent revaluation of the yuan last month was tiny compared to the 30 per cent to 40 per cent revaluation needed to make American goods more competitive against Chinese products.

"There needs to be continued and significant further revaluation of the yuan," said Mark Zandi, chief economist at Economy.com.