'Impact of China Imports is Exaggerated, Report for US Congress says'

There is no clear correlation between the decline of US textile industry and the surge in US apparel imports from China, a report for the US Congress just asserted. With US quotas on imports from China set to be removed at the end of next year, first arguments appear for a decisive text ile debate in the 2008 election year.

Although quota removal of January 2005 resulted in a significant increase in US apparel imports, it did not trigger the textile big bang previously predicted by experts, a report for the US Congress just asserted.

The report published by the Congressional Research Service (CRS) was written to help US lawmakers in making up their minds about US apparel imports from China and their impact on US textile and apparel industries.

Predictions and reality

With the definitive removal of US quotas on imports from China due on 1 January 2009, the textile chapter may attract some interest from US politicians in the coming election year.

Interestingly, the CRS report clearly tries to minimize arguments of textile lobbyists in Washington about the alleged threats caused by Chinese products.

"The year-on-year increase in clothing and textile imports between 2004 and 2005 was not significantly greater than the years before and after," says author Michael Martin, a specialist of Asian political economics.

In sharp contrast with earlier predictions, textile and apparel production in countries outside China and India were not harmed by the removal of quotas.

Other producers have maintained the value of their exports while China however took most of the growth in US apparel imports.

More important for US Congress, there is no clear correlation between the rise in US imports from China and the decline in textile and clothing employment in the country, the report says.

General safeguard

Job losses in domestic textile and apparel industries appeared in the 90s with a peak between 1995 and 2003.

Production of textile industry in value terms declined from 1997 but less significantly falling in the last years, although imports from China sharply rose.

Data actually provide "rather ambiguous results on the possible impact of quota elimination on the US textile and clothing industry."

The big question behind this report is related to future protectionist measures to be taken by the United States after quotas will be eliminated.

If the textile safeguard will not be available after 2008, US textile lobby may try triggering the so-called "general safeguard" available until 10 December 2013.

Another solution would consist in requesting anti-dumping duties for products made below cost or countervailing tariffs for products which are subsidized in China.

China currency bills in preparation may also offer opportunities for US textile lobby.

The end of textile quotas will clearly not put an end to the debate around textile trade protection in the United States.