Do you feel whether adequate steps have been taken by the US Government to stall predatory tactics of China to save US manufacturers at home? What more can be expected as of now?
The US government took quick and decisive action to keep China from overwhelming the US textile and apparel market when it approved safeguard petitions filed by NCTO to re-impose safeguards on China in early 2005. The result was that our industry and those in other major exporting countries in the world- including India, Pakistan, Bangladesh, Turkey, Mexico, etc.- did not see their industries swept under the Chinese tidal wave. This was a tremendous help not only to our industry but to the developing world as well.
Over time, NCTO has been tracking China's progress in apparel categories where safeguards were not been applied. The results are startling and give us a taste of things to come. Within three years of quotas being removed, China's market share went from an average 21 percent US market share to a 65 percent US market share, with the runner-up (Vietnam) attaining only a 4 percent market share. Nearly every other major supplier, including powerhouses such as India, Bangladesh, Pakistan, Turkey and Mexico, lost significant amounts of market share. In volume terms, Chinese exports in these categories increased by 1.5 billion square meters while the rest of the world lost nearly 350 million square meters. I understand that the situation in Europe is almost exactly the same.
This is clearly monopolistic behavior and should give everyone pause, particularly since the remaining US safeguards on the most sensitive apparel categories will be removed on January 1, 2009. Under current WTO rules, these safeguards cannot be re-imposed. While a number of countries are working hard at the WTO to get a new safeguard-Turkey, the Western Hemisphere (CAFTA/NAFTA countries), North Africa and the Middle Eastern countries-they are being blocked by China and, oddly enough, India and Pakistan. India and Pakistan stand to lose as much as the rest of us if China is granted unrestrained access to the US and EU textile and apparel markets, but their governments are instead standing shoulder to shoulder with China in preventing safeguards from being re-applied. This is a puzzling position that they may soon come to regret. When quotas were removed on China during five months in 2005, Chinese exports increased as much as 1,500 percent in the very same product categories that India and Pakistan export in.
As you can see, the core problem of the Chinese government's continuing intervention in its textile sector (as well as the rest of manufacturing) remains to be dealt with. Our industry is encouraged that the US Congress is now taking a more active role in China policy and NCTO is part of a broad coalition of manufacturing, agricultural and union groups that are pressing for punitive tariffs against Chinese imports if China keeps uses its currency as an economic weapon. We do not know if this will happen in time but the mood in Congress has certainly sharpened where China is concerned. We expect to see a major China bill coming out of the US Congress by the end of the year.
Can you please list out the valuable overall contributions of NCTO in serving the cause of the US and the global textile industries?
In terms of overall contributions, I think the China safeguards have to stand out. If NCTO had not acted, there would be no safeguards against China and most exporters around the world would be in serious trouble today. There is little doubt that major export markets in the Asia, the Western Hemisphere and Africa markets would be in shambles if NCTO had not taken the lead.
I think most textile producers around the world understand the threat. NCTO is a founding member of The Global Alliance for Fair Trade in Textiles (GAAFT), which includes textile and apparel trade associations from more than 60 countries. The major purpose of this group is to prevent governments like China from gaining control of this vital sector.
Through its safeguard petitions, NCTO was able to prevent China from taking over the biggest product categories (such as trousers, knit shirts, woven shirts and underwear). Today, the Chinese share is only 12 percent in these categories, compared to 65 percent today in quota free categories. I think this may have created an illusion among some countries that things are OK because their major export markets have not yet had to compete head to head with China. As I noted earlier, the governments of India and Pakistan, in particular, continue to aggressively support China's position on textiles at the WTO. We are all going to have work together if our industries are not suffer enormously when the existing safeguards are removed.
Any message you may like to share with more than a million members and visitors of fibre2fashion portal being accessed worldwide?
NCTO is an organization that believes in the benefits of trade and knows that our textile manufacturers can compete with anyone in the world when the rules are uniformly applied and countries are required to live up to their international commitments. The problems arise, as I have laid out above, when companies are forced to compete against predatory governments that are willing to sacrifice everyone else for their own benefit. NCTO is aggressively reviewing our options within the framework of US trade law, and looks forward to continuing to work with other associations and governments to prevent a few bad actors from establishing a cartel in textile and apparel production.
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.