Textiles Weave A Case For Relief

Dec. 21, 2004
NAFTA exports help keep figures from being worse.

As Congress, the Commerce Dept., and the U.S. International Trade Commission continue to eye imports of steel from Japan, South Korea, Russia, and several other countries for sales at less than fair value, illegal subsidies, and financial harm to domestic producers, U.S. textile makers are clamoring for Washington's attention. Like steelmakers before them, the textile producers are pointing to a surge in imports, specifically to U.S. Commerce Dept. data that show nearly 13.5 billion square meters of textiles and apparel were imported during the first half of this year, 7.9% more than during 1998's first six months. (On a value basis, the import percentage increase was less pronounced, at 5.35% to $31.13 billion.) "Our market is still serving as a life-support system for [economies] like Taiwan, South Korea, the Philippines, and Malaysia," complains Doug Ellis, chairman and CEO of Southern Mills Inc., Atlanta, and president of the Washington-based American Textile Manufacturers Institute (ATMI). "These [economies] are still trying to export their way out of their [financial] difficulties and, to our detriment, the U.S. market is the one they rely on as buyer of first and last resort." What's more, as imports are on the rise, U.S. textile and apparel exports are falling, although not nearly as dramatically. During the first half of 1999, the overall dollar value of U.S. textile and apparel exports declined $11 million (less than 1%) to $8.59 billion, Commerce data reveal. However, by ATMI's calculations, exports to the 15-nation European Union plummeted 24% while exports to Taiwan were off 28.7%, to Hong Kong off 18.3%, and to Japan off 13.8%. Textile's biggest problem is global overcapacity in yarns and fabric. And although there's been recent progress in stopping quota-dodging transshipping through Hong Kong and Macao, it's a situation made worse by foreign subsidies to local producers, misplaced international investment loans, and, in the wake of their recent financial crisis, insufficient structural adjustments in some Far East nations, indicates Carlos F.J. Moore, ATMI's executive vice president. The Committee for the Implementation of Textile Agreements, an interagency panel chaired by the Commerce Dept., has already directed the U.S. Customs Service to deny entry of goods from factories that are illegally transshipping, closed, or unable to verify the origin of their products. But other kinds of relief will not come easily. For example, U.S. textile producers have looked at the possibility of filing antidumping cases, actions that charge foreign manufacturers with sales at less than fair value. "But in our particular industry it is so easy for a country to get around a dumping duty because of the way products are defined," says Moore. The textile makers are considering so-called Section 301 filings, which can seek to counter alleged unfair foreign trade practices with such remedies as import duties and quotas. "Many of these countries hide behind their own tariff and nontariff barriers and keep our products out, and yet they take markets away from us," Moore contends. As dozens of manufacturers in other industries can attest, proving the allegations and then convincing Washington to take strong action is tough. And as China moves closer to membership in the Geneva, Switzerland-based World Trade Organization, ATMI wants to see that country remain under quota controls for 10 years after its admission. This even as quotas with other countries are being phased out. Meanwhile, not all the American textile and apparel trade news is bad. Compared with the first half of 1998, exports from the U.S. to Canada and Mexico, its partners in the nearly six-year-old NAFTA, rose 10.1% -- more than $100 million -- during the first six months of this year, figures ATMI. And U.S. textile and apparel exports to the Caribbean and Central American nations covered by the 16-year-old Caribbean Basin Initiative increased 4.5% -- to $100 million. "If it weren't for NAFTA, our exports would be in much worse shape," says Southern Mills' Ellis. "As long as currency weaknesses persist in Asia and South America and countries like India, Pakistan, and China keep their domestic markets completely closed to our exports, we need our trading partners in the Western Hemisphere to provide us with export opportunities."

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