Textile pact cannot protect US jobs Paul Updated: 2005-11-09 15:56
The U.S. textile industry got its heart's desire on November 8 in London --
an agreement limiting the amounts of shirts, trousers, underwear, fabric and
other textile products that Chinese companies can ship to the United States over
the next three years.
No sooner had the deal been announced by U.S. Trade Representative Rob
Portman and Chinese Commerce Minister Bo Xilai than the U.S. textile industry
began praising it. "US textile and apparel manufacturing workers and their
communities are big winners today," Augustine Tantillo, executive director of
the American Manufacturing Trade Action Coalition, said in a statement.
But it is far from clear that the agreement will do much to halt the steady
erosion of jobs in the battered U.S. sector, much of which is concentrated in
the Southeast U.S. According to some trade and industry experts, the deal could
even hasten the industry's decline, by giving China's export machine greater
incentives to move into the higher end of the market, on which U.S. companies
have staked their futures, the Washington Post said in an analysis.
"This is going to backfire," said Grant Aldonas, who until earlier this year
was undersecretary of commerce for international trade and the Bush
administration's lead negotiator with the Chinese on the issue. "It's the
orthodoxy in certain industries that protectionism is the answer, and it is just
shortsighted in the extreme." For U.S. consumers who have become accustomed
to "Made in China" labels on the clothes they buy, the agreement will at least
slow that phenomenon for a while. Imports of Chinese textiles and apparel will
be allowed to rise at annual rates ranging from 8 percent to 17 percent,
depending on the product and year, beginning on Jan. 1, 2006, and lasting until
the end of 2008.
Winning such an accord with Beijing has been the top goal of the U.S. textile
industry since the demise of a decades-old system of global quotas restricting
the amount of clothing that individual countries could export. Once that system
disappeared on December 31, 2004 -- freeing countries in Asia, Africa and Latin
America to ship as many sweaters, bras and bed-sheets as the market would bear
-- China's network of factories, with its bottomless reserve of low-cost
workers, looked to dominate global markets.
But while the agreement will prevent the Chinese from dominating their
competitors with the swiftness many had feared, the deal's three-year duration
means that a day of reckoning still looms. And after the pact ends, Washington
will no longer have the leverage it has exercised over Beijing in recent months:
the right to impose annual caps, known as "safeguards," on Chinese textile and
apparel imports. Beijing agreed to such restraints until 2008 as part of the
price of its entry into the World Trade Organization.
"Under this new agreement, the U.S. industry will know with certainty that
China will not be able to flood the U.S. market during the next three years,"
said James Chesnutt, president of National Spinning Co. of Washington, N.C., and
chairman of the National Council of Textile Organizations. But, he acknowledged,
"the threat from China is not eliminated by this agreement, only delayed."
Furthermore, instead of shifting production to the United States, whose
manufacturers generally do not compete directly with the Chinese, the agreement
could mean that other Asian countries get more orders from U.S. retailers at
China's expense, some analysts predict.
"There's a balloon effect. You squeeze in one place, and the pressure just
gets transferred someplace else," said Peter Kilduff, a professor at the
University of North Carolina at Greensboro who specializes in the textile
industry. Imports of clothing from China surged 71 percent over the past
year, to $8.2 billion. Imports from India have risen 34 percent, to $2.7
billion; Bangladesh's shipments have increased 24 percent, to $2.23 billion;
Indonesia's have risen nearly 17 percent, to $2.7 billion; and Sri Lanka's have
increased nearly 18 percent, to $1.7 billion. Those countries' sales to the
United States are likely to increase even faster now that China's are
limited.
Chinese trade minister Bo acknowledged that the figures were "a far cry from
our original expectations." He said China could take comfort in that a
three-year negotiated agreement affords greater predictability to its exporters
than does the system of annual caps.
But Aldonas, who is now in private legal practice, asserted that U.S.
manufacturers would eventually regret pushing the administration for
comprehensive caps on imports. With the Chinese compelled to limit their
exports, "they'll move up the value chain, ceding the lower value stuff to the
Pakistans and others," he said. "Those are the longer-term effects I'm worried
about."
The U.S. industry lost jobs at a terrible clip even when the global quota
system was in effect, noted Edward Gresser, a trade expert at the Progressive
Policy Institute. Employment in U.S. textile mills has fallen from about 1
million when the quota system was established in 1974 to about 400,000 when it
ended last year. The number of jobs in garment factories has plunged even more
steeply.
Since worldwide quotas failed to stem job losses, Gresser said, "I'm
skeptical that a quota on China alone will be more
successful."
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