The History of Trade, Part 2 - New York Times

The History of Trade, Part 2 - New York TimesEditorial
The History of Trade, Part 2
Published: November 12, 2005
During the 1980's, the United States government, egged on by a Detroit auto industry terrified of Japan's low-cost, fuel-efficient cars, imposed quotas on imports of many Hondas and Toyotas. So Honda and Toyota - and Mitsubishi and Mazda and Nissan - started making luxury cars that could challenge Detroit in a far more profitable market. The results can be seen on the highways and byways of America: Acuras, Lexuses and boatloads of other high-end Japanese cars, which have steadily put the squeeze on a market niche previously dominated by the Americans and the Europeans.

Washington has apparently not heard that old chestnut about not learning from history and being doomed to repeat it. On Tuesday, the United States government, egged on by a textile and apparel industry terrified of imports of cheap Chinese T-shirts, bras and baby socks, announced that it had persuaded China to agree to export quotas for the next three years. Chinese officials say they will try to use the quotas to push their manufacturers toward producing more high-end garments. That will challenge American and European manufacturers in a far more profitable market, one in which American companies have staked their futures, and could hasten the demise of an already dying American textile and apparel industry.

But don't tell that to shortsighted American textile companies. They're too busy crowing and looking for other ways to limit Chinese imports. "We know we have three years to come up with other strategies to deal with predatory imports," James Schollaert, a Washington representative of the Hosiery Association, told The Times this week.

What Mr. Schollaert and other American textile lobbyists should be looking for are other strategies to make the textile industry here more competitive in a globalized economy - because China is not going to take three years to make up its mind. Indeed, all across the developing world, poor countries are increasingly starting to make a play for more high-end textile and apparel manufacturing.

Lafayette 148, a New York fashion house, sent a top knitwear expert to China two years ago to teach factory workers Italian knitting techniques. Celine, a unit of LVMH Moët Hennessy Louis Vuitton, is manufacturing $500 denim-and-leather handbags in China, according to The Wall Street Journal. It also reports that last year, Gucci began sewing some sneakers in Serbia, while Tod's, the fancy Italian shoemaker, is considering moving part of its Hogan sneaker line to China.

It is extremely frustrating that political leaders refuse to recognize that all of the protections created in the last 40 years to shield American textile jobs from foreign competition have failed. Employment in textile mills has fallen to about 400,000, from approximately 1 million in 1974. It would be better to find ways to get those workers into growth areas rather than keeping them in dying ones.

China Textile Agreement - New York Times

China Textile Agreement - New York TimesChina Textile Agreement

Published: November 19, 2005
To the Editor:

"The History of Trade, Part 2" (editorial, Nov. 12) criticizes the United States-China textile agreement as protectionist.

The United States textile market is open without restriction to exporters from around the world, with the exception of China, Vietnam, Belarus and Ukraine. We imposed safeguards on textiles from China because we believe that free trade must also be fair.

The imposition of safeguards was within our rights under the World Trade Organization.

Chinese textile exporters will see their shipments grow over the next three years, and the quotas will expire at the end of 2008.

The bilateral United States-China textiles agreement affects less than 3 percent of United States imports from China. There are many different ways to characterize a trading relationship that is 97 percent free of quotas, but "failed" is not one of them.

Franklin L. Lavin
Under Secretary for Intl. Trade
Department of Commerce
Washington, Nov. 17, 2005

Deal on Textiles May Only Delay China's Dominance

Deal on Textiles May Only Delay China's DominanceDeal on Textiles May Only Delay China's Dominance

By Paul Blustein
Washington Post Staff Writer
Wednesday, November 9, 2005; A24

The U.S. textile industry got its heart's desire yesterday -- an agreement limiting the amounts of shirts, slacks, underwear, fabric and other textile products that Chinese companies can ship to the United States over the next three years.

No sooner had the deal been announced at a London news conference by U.S. Trade Representative Rob Portman and Chinese Commerce Minister Bo Xilai than the industry began praising it. "U.S. textile and apparel manufacturing workers and their communities are big winners today," Augustine D. Tantillo, executive director of the American Manufacturing Trade Action Coalition, said in a written statement.

But it is far from clear that the agreement will do much to halt the steady erosion of jobs in the battered U.S. sector, much of which is concentrated in the Southeast. According to some trade and industry experts, the deal could even hasten the industry's decline, by giving China's export machine greater incentives to move into the higher end of the market, on which U.S. companies have staked their futures.

"This is going to backfire," said Grant D. Aldonas, who until earlier this year was undersecretary of commerce for international trade and the Bush administration's lead negotiator with the Chinese on the issue. "It's the orthodoxy in certain industries that protectionism is the answer and it is just shortsighted in the extreme."

For U.S. consumers who have become accustomed to the rapidly proliferating "Made in China" labels on the clothes they buy, the agreement will at least slow that phenomenon for a while. Imports of Chinese textiles and apparel will be allowed to rise at annual rates ranging from 8 percent to 17 percent, depending on the product and year, beginning on Jan. 1, 2006, and lasting until the end of 2008.

Winning such an accord with Beijing has been the top goal of the U.S. textile industry since the demise of a decades-old system of global quotas restricting the amount of clothing that individual countries could export. Once that system disappeared on Dec. 31, 2004-- freeing countries in Asia, Africa and Latin America to ship as many sweaters, bras and bedsheets as the market would bear -- China's network of factories, with its bottomless reserve of low-cost workers, threatened to dominate global markets.

But while yesterday's agreement will prevent the Chinese from dominating their competitors with the swiftness many had feared, the deal's three-year duration means that a day of reckoning still looms. And after the pact ends, Washington will no longer have the leverage it has exercised over Beijing in recent months: the right to impose annual caps, known as "safeguards," on Chinese textile and apparel imports. Beijing agreed to such restraints until 2008 as part of the price of its entry into the World Trade Organization.

"Under this new agreement, the U.S. industry will know with certainty that China will not be able to flood the U.S. market during the next three years," said James W. Chesnutt, president of National Spinning Co. of Washington, N.C., and chairman of the National Council of Textile Organizations.

But, he acknowledged, "the threat from China is not eliminated by this agreement, only delayed."

Furthermore, instead of shifting production to the United States, whose manufacturers generally do not compete directly with the Chinese, the agreement could mean that other Asian countries get more orders from U.S. retailers at China's expense, some analysts predict.

"There's a balloon effect. You squeeze in one place, and the pressure just gets transferred someplace else," said Peter Kilduff, a professor at the University of North Carolina at Greensboro who specializes in the textile industry.

Imports of clothing from China surged 71 percent over the past year, to $8.2 billion. Imports from India have risen 34 percent, to $2.7 billion; Bangladesh's shipments have increased 24 percent, to $2.23 billion; Indonesia's have risen nearly 17 percent, to $2.7 billion; and Sri Lanka's have increased nearly 18 percent, to $1.7 billion. Those countries' sales to the United States are likely to increase even faster now that China's are limited, Kilduff and others said.

None of those caveats has stopped industry officials from crowing. Chinese competition, they said, is far more unfair than that of other countries. They voiced delight that after five months of tough negotiating, the administration induced the Chinese to accept caps on most apparel products of 10 percent growth in 2006, 12.5 percent in 2007 and 15 to 16 percent in 2008. All told, China's shipments will increase only about 4 percent more over the life of the agreement than they would have if the administration imposed safeguards each of those three years, according to the industry's calculations.

Bo acknowledged that the figures were "a far cry from our original expectations." He said China could take comfort in that a three-year negotiated agreement affords greater predictability to its exporters than does the system of annual safeguards. Clothing importers, who opposed any sort of limits on Chinese imports, also said they were unhappy with the tightness of the caps.

But Aldonas, who is now in private legal practice, asserted that U.S. manufacturers would eventually regret pushing the administration for comprehensive caps on imports. With the Chinese compelled to limit their exports, "they'll move up the value chain, ceding the lower value stuff to the Pakistans and others," he said. "Those are the longer-term effects I'm worried about."

The U.S. industry lost jobs at a terrible clip even when the global quota system was in effect, noted Edward Gresser, a trade expert at the Progressive Policy Institute. Employment in U.S. textile mills has fallen from about 1 million when the quota system was established in 1974 to about 400,000 when it ended last year. The number of jobs in garment factories has plunged even more steeply.

Since worldwide quotas failed to stem job losses, Gresser said, "I'm skeptical that a quota on China alone will be more successful."

© 2005 The Washington Post Company

CNN.com - China awaits textile pact fine print - Nov 9, 2005

CNN.com - China awaits textile pact fine print - Nov 9, 2005China awaits textile pact fine print

BEIJING, China (Reuters) -- Chinese reaction to a textile trade deal signed with the United States ranged from relief to bitterness and uncertainty as Chinese exporters waited for details of the new quotas.

The deal that Chinese Commerce Minister Bo Xilai and U.S. Trade Representative Rob Portman sealed on Tuesday limits Chinese exports of 34 clothing and textile categories, such as shirts, trousers and underwear, for the next three years.

"The deal struck over Chinese-U.S. textile trade will create a stable, predictable environment for the trade, and greatly strengthen the confidence and determination of Chinese businesses and U.S. importers to accept and make orders," said the China Chamber of Commerce for Import and Export of Textiles in a written statement.

But even Bo and other Chinese officials voiced frustration at U.S. efforts to block rising Chinese textile exports after a global quota system expired at the start of this year.

Immediately after signing the deal, Bo said the quotas were "a far cry from our original expectations."

The deal generally sets growth rates for clothing imports from China at 10 percent in 2006, 12.5 percent in 2007 and 15 percent in 2008. For textile products, the rates are 12.5 percent in 2006 and 2007 and 16 percent in 2008.

After that, U.S. rights to restrict such imports will shrink.

The quotas are higher than the 7.5 annual growth allowed by current U.S. safeguard restrictions, and China's Ministry of Commerce and state-sponsored industry associations said the deal was the best Chinese manufacturers could expect.

A former Chinese trade negotiator, Zhou Shijian, told the Chinese-language China Business Daily: "China was in an innately unfavorable negotiating position" because of U.S. trade rules.

Clarity
Many Chinese-based manufacturers said they welcomed an end to uncertainty but were waiting for the Ministry of Commerce to explain the quotas.

"The deal is good for us, because it removes uncertainty for buyers," said Zuo Quntao, a manager at the Weida Garments, a shirt maker in the eastern Chinese province of Zhejiang that exports nearly all its shirts.

But Zuo said that Weida and other exporters had not seen the details. "For real buyer confidence, we need to know the details of how quotas will be allocated," he said.

While some manufacturers welcomed the deal, other manufacturers said that if the quotas threatened growth, they may move some production to Southeast Asian countries, or use those countries for final processing so orders escape quota restrictions.

"We've mostly remained outside the limits. We've been using other countries in Southeast Asia to transfer shipments," said a sales manager at Aotin Enterprise, a clothes exporter in the far southern province Guangdong, who gave his surname as Luo.

The deal came after five months of grinding negotiations between China and the United States. Washington imposed quotas after U.S. manufacturers and trade unions complained that cheap Chinese clothes threatened their survival.

Chinese textiles and clothes exports grew to $13 billion in the first months of this year, a rise of 65.5 percent on the same period last year.

In the deal, the United States said it would exercise "restraint" in using "safeguard" limits on Chinese textiles. But Fan Dabiao, the general manager of Soho International, a clothes exporter in eastern China, said he was worried about more restrictions.

"The U.S. promised only to exercise restraint, so who knows what the variables may be in the future," he told the Chinese-language International Business Daily.

Copyright 2005 Reuters. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.
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http://edition.cnn.com/2005/BUSINESS/11/09/textile.reaction.reut/index.html

CNN.com - Bush urges China move on yuan - Nov 9, 2005

CNN.com - Bush urges China move on yuan - Nov 9, 2005U.S., China reach trade spat deal

LONDON, England (Reuters) -- The United States and China have reached agreement on reining in China's booming clothing and textile shipments to the United States until 2008.

U.S. Trade Representative Rob Portman and Chinese Commerce Minister Bo Xilai announced the deal at a joint news conference in London on Tuesday and hailed it as a success for both sides.

"I believe the textile agreement shows our ability to resolve tough trade disputes in a manner that benefits both countries," Portman said.

Bo described the outcome as a "win-win result", though he later said the agreement was "a far cry" from Beijing's original expectations.

The accord was reached after seven rounds of negotiations, at some of which Bo said the two sides had been "almost at the edge of a cliff".

The deal covers more than 30 individual products and contains quotas that a U.S. statement said would begin at low levels.

An unnamed U.S. official said the accord would allow hundreds of thousands of Chinese garments piled up in U.S. ports to be sold.

The deal is intended to smooth over a rough spot in the U.S.-China trade relationship before President George Bush visits Beijing in the middle of this month.

China's exports of clothing and textile products to the United States jumped more than 50 percent in the first eight months of 2005 to nearly $17.7 billion following the end of a global quota system on January 1.

That prompted U.S. textile producers to seek protection under a "safeguard" provision of China's 2001 entry into the World Trade Organisation. The measure allows WTO members to restrict the growth in imports from China to 7.5 percent annually when there is a market-disrupting surge.

The Bush administration has imposed safeguard curbs on billions of dollars' worth of Chinese clothing imports this year. But because the curbs have to be renewed annually, textile groups have pushed for a comprehensive agreement that would limit imports until 2008 when the safeguard provision expires.

Copyright 2005 Reuters. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.
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http://edition.cnn.com/2005/BUSINESS/11/08/us.china.textile.reut/index.html

薄熙来称中国在对美贸易中并无意追求大额顺差 index

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???????????:???????? ?薄熙来评中美纺织品谈判：闹人的孩子多吃奶 评 www.XINHUANET.com　　 2005-11-09 11:39:14　　来源：中新网

中新网11月9日电　l1月8日中美纺织品备忘录在伦敦签署之后，中国商务部部长薄熙来现场回答了中外记者的提问。据商务部网站消息，薄熙来说，这次谈判是复杂的，也是困难的，正因为如此才谈到七轮，有几次已经走到了悬崖的边缘。

薄熙来表示，如果说到业界的压力，美国的纺织服装业涉及到几十万人就业，而中国则涉及近2000万人的就业，应该说，中方企业的诉求更大、更强烈。

薄熙来说，我知道美国业界给美国贸易代表波特曼先生施加了不小的压力，但有句俗话：“闹人的孩子多吃奶”，我们应做出正确的判断，不能说谁嚷嚷的厉害谁就有道理。

薄熙来说，众所周知，美国和中国的经济差距很大，美国的人均GDP和人均收入都30多倍于中国，如果中国的纺织企业不能实现合理的出口，很多工人将失去工作，这远比美国的人数要多。

薄熙来表示，波特曼先生最后表现出一定的灵活性，但还不够，按理应该让中国的纺织品完全享受2005年1月1日以后全球纺织品一体化的待遇。当然，有一个242条款，中方遵守一切WTO的现成规则。但发达国家应该了解，全球贸易自由化是大势所趋，数量限制是不合时宜的。

薄熙来：中国有权利享受纺织品全球一体化的成果

中新网11月9日电 l1月8日中美纺织品备忘录在伦敦签署之后，中国商务部部长薄熙来现场回答了中外记者的提问。据商务部网站消息，薄熙来表示，2005年1月1月实现纺织品全球一体化后，中国有权利享受这一成果。

薄熙来强调，纺织品涉及到中国近2000万人的直接就业，其中有很多是低收入的职工，他们还要养家，因此纺织业在中国是高度敏感的行业。他表示，对于像中国这样人口众多的发展中国家，培育起纺织服装这样有竞争力的行业很不容易，希望世界各国给予更多的理解。

在回答有关如何比较中美、中欧纺织品谅解备忘录的问题时，薄熙来表示，两个协议是平衡的。中欧的协议在今年6月11日就己达成，欧盟表示了诚意，对于营造中欧纺织品正常稳定的出口环境起到了重要作用。这次中美之间又在平等务实的气氛下达成协议，和中欧协议互为补充，成为通过平等磋商来解决贸易争端的两个成功范例。

Beijing, Washington strike deal on China textiles

Beijing, Washington strike deal on China textiles
Beijing, Washington strike deal on China textiles
(AFP)
Updated: 2005-11-07 17:21

The United States and China have agreed to a deal on the import of mainland clothing and fabric, resolving a bitter trade dispute between the two nations, a major Chinese textile association said.

A shop assistant puts socks on mannequin feet in a store in Beijing in this undated file photo. [AFP]
"Both the US and China have compromised in reaching this textile pact," China National Textile and Apparel Council spokesman Sun Huaibin said.

"China made concessions on the duration of the quotas, allowing the US to impose controls on access by Chinese textiles and apparel to the American market through 2008, instead of 2007," Sun said.

The US imports of China-made textiles will be limited to 10-17 percent annual growth rates through to 2008, a concession by China, which wanted it to expire in 2007, Sun said.

It provides for a progressive increase in imports of most major textile and apparel products from China -- by 8 to 10 percent in 2006, 13 percent in 2007 and 17 percent in 2008.

It also represents a concession by Washington, which had proposed keeping annual growth close to 7.5 percent, he added.

Sun said working under the new agreement would be better than being subjected to protectionist, unilateral safeguards and would increase certainty for the Chinese industry.

Beijing, Washington strike deal on China textiles
(AFP)
Updated: 2005-11-07 17:21

The council's statement echoes similar reports from the US media over the weekend.


Workers sew clothes at a garment factory in Hefei, Anhui Province in this undated photo. It is reported China and the US have reached an agreement on China's clothes exports to the US. [newsphoto]
The US reports said Beijing and Washington had agreed in principle to a three-year textile pact allowing for escalating annual import growth rates in 34 individual categories of China-made fabrics and apparel.

The Washington Post said the agreement was likely to be signed next week by US Trade Representative Rob Portman and Chinese Commerce Minister Bo Xilai.

Portman is due to hold talks in Beijing on November 14 to discuss copycat abuses of foreign brands by Chinese manufacturers and lack of access for US companies trying to enter the booming Chinese market.

The pact follows several rounds of Sino-US negotiations to slow the surge of Chinese imports following the scrapping of a global textile quota system on January 1.

China and the European Union finalised a similar deal in September this year.

An official at China's Commerce Ministry declined to comment on the new agreement, saying a statement would be released soon.