The US textile manufacturing industry, led by the National Council of Textile Organizations, is continuing to wage a determined lobbying campaign in Washington, in an effort to persuade Congress and the Obama administration to establish restrictions on imports of sensitive textile and apparel products from mainland China.
NCTO’s current position on China is perfectly showcased in comments submitted to the Office of the US Trade Representative on 22 September regarding China’s compliance with its WTO commitments. NCTO’s comments identify a range of protectionist and mercantilist policies allegedly being pursued by the Chinese government and seek to make a case for a more robust US trade enforcement policy against imports from the mainland.
NCTO contends that China has adopted "a slew of mercantilist actions designed to increase its market share and exports to the U.S. textile sector" despite a pledge it made at the April G-20 summit in London not to take any protectionist actions through the end of 2010. For example, the Chinese government has allegedly provided some US$10 billion in export subsidies to its textile sector by increasing value-added tax rebate rates provided to textile and apparel exports from 11-16%.
NCTO claims that China continues to provide massive subsidies to domestic textile and apparel manufacturers in the form of research and technology grants, bank lending programmes, tax exemptions and preferential tax programmes, in addition to the already mentioned VAT rebates for exports. China’s subsidy structure also remains opaque and is plagued by a lack of transparency, which makes it difficult to determine the subsidies that are actually being provided to domestic producers.
NCTO highlights China’s adoption of a new textile revitalisation plan in April 2009 which, among other things, increased various subsidies, reduced labour costs through forgiveness of payments to social insurance programmes, extended new loans and credit guarantees to textile companies, and provided increased government aid for research and upgrading equipment.
