In its 2007 year-end textile trade and economic review, the National Council of Textile Organizations (NCTO) cited the Commerce Department’s decision to overturn a 20-year precedent and allow companies to file subsidy cases against China as one of the most significant events for all U.S. manufacturers in 2007.
This decision is important because at the end of 2008, the current U.S.-China textile agreement expires and the industry will be seeking new restraints to prevent a devastating flood of subsidized textile and apparel products from China in 2009.
Other events of significance to the industry in 2007 include the implementation of the Vietnam monitoring program and the passage of China currency legislation by two major Senate committees.
NCTO Chairman Harding Stowe commented, “2007 was a transitional year for the U.S. textile industry. As imports from China continued to surge and DR-CAFTA entered into force for all the major textile and apparel producing countries, the industry worked to secure trade opportunities in this hemisphere as one part of a strategy for remaining competitive against China. We also began looking ahead to 2008 and preparing for the expiration of the U.S.-China textile agreement.
Let’s take a look at the hard facts of our trade relationship with China. In 2007, the U.S. trade deficit with China was $256.2 billion, up 10 percent compared to 2006. With respect to textiles and apparel, the U.S. trade deficit with China grew from $26.6 billion in 2006 to almost $31.8 billion in 2007.
This represents an almost 20 percent increase and occurred despite the fact that China is under quota in a large number of products. And in those products where China is not under quota, China has already taken an average 60 percent of the U.S. market.
2007, while a very difficult year for the industry, also provided us with several new tools, in addition to existing trade remedies, with which to address the China issue. This includes a decision by the U.S. government to finally allow companies to file subsidy cases against China, which is clearly the world’s largest subsidizer of industry.
NCTO, along with other manufacturing sectors, pushed hard for this change in policy which overturned a 20-year precedent regarding subsidy cases against China.
In this context, an analysis by NCTO shows that there are at least 63 subsidies made available by the Chinese government to China’s textile industry. Because of this change in policy regarding China and its subsidies, these subsidies can now potentially be attacked and, indeed, many of them have already been successfully attacked by companies in other sectors, including one case on textile products.
