WASHINGTON -- The Bush administration is considering the possibility of separating textile discussions in on-going multilateral trade negotiations amid warnings by U.S. textile groups that China will soon monopolize the textile industry.
New data compiled by the National Council of Textile Manufacturers shows that at China's current growth rate it will have 70 percent import market share in the United States and European Union in categories not covered under the current U.S. comprehensive textile agreement reached in 2005.
"The China textile safeguard mechanism that has preserved millions of jobs around the world will expire at the end of 2008," said Cass Johnson, president of NCTO. "As of today, there is no means for either the United States or the European Union to stop China once the safeguard mechanism expires."
U.S. manufacturers have been calling on negotiators to handle talks separately in non-agricultural market access discussions in the Doha Development Round in order to prevent a greater loss for U.S. textile companies and prevent China from monopolizing the entire market.
They claim without any action by WTO negotiators to curb China's growth, surging cheap imports will dissolve other export markets for the developing world after the three-year quota system expires.
"Unless something is done about China in the Doha round, the developing world will lose tens of billions of dollars in exports," said Johnson.
According to figures by the NCTO, Chinese apparel categories where quotas were removed in 2005 increased Beijing's market share in the United States from 16 percent to 39 percent, and, in the EU from 27 percent to 48 percent.
It also found that in the United States where quotas were not in place, China's apparel exports grew by $7.2 billion while exports from the rest of the world fell by $3.3 billion. U.S. textile groups argue that a continuation of increased market share by China would eliminate export markets for developing countries.
Industry leaders also say the only solution is to maintain quotas on Chinese apparel exports. For example, in apparel categories where quotas had been re-imposed on Chinese exports they only grew by $2.1 billion.
Earlier this week, U.S. textile groups sent a letter to World Trade Organization chairman of the negotiating group on non-agricultural market access, Don Stephenson, calling on textile negotiations to be separated from the overall Doha talks. U.S. textile groups are hoping that negotiators will decide to separate talks by the April 30 deadline established during the Hong Kong ministerial last December.
"The global textile and apparel sector is simply too critical and too sensitive to be handled in a generic fashion as part of the overall non-agricultural market access (NAMA) negotiations," said U.S. textile groups. "Failure to address the unique needs and concerns of this industrial sector could have disastrous consequences for all involved, most especially for smaller developing and least developed nations."
Industry leaders argue that the U.S. textile manufacturers face eight to 10 times higher duty rates from developing nations, while the United States provides greater market access.
Separate discussions would be able to provide full discussions on tariff harmonization to help remove the tariff imbalance and also to consider the impact of preference erosion in key markets.
"Without a specific textile sectoral, there will likely be severe unintended consequences in the form of substantial market displacement for many of the true developing countries," said U.S. groups.
While the Bush administration said it was too early for the United States to make any commitments on pursuing a separate textile pact, the top U.S. trade envoy said he has been recently consulting with manufacturing groups about a possible sectoral that could provide "more predictability and certainty."
"We are interested in working with other countries on this possibility. We are doing a lot of outreach to other countries to see what interests there is," Rob Portman, told reporters in a conference call from New Delhi Thursday, after meeting with Indian Commerce and Industry Minister Kamal Nath.
The United States is the third largest exporter of textile products with almost all of the $16 billion in U.S. textile exports going to the developing world. Quotas on Chinese apparel products cover nearly 60 percent of apparel imports into the United States and 50 percent of apparel imports into the European, which is nearly a $60 billion export businesses that the developing world will quickly lose once these quotas disappear, the U.S. industry argues.
"The developing world must insist that China's growth continues to be restrained," said Johnson.
