Global Policy Forum

By Greg Hitt

Moving to blunt China's clout in textiles, the U.S. launched a series of trade investigations that set the stage for imposing import curbs on Chinese-made apparel. The Bush administration's announcement comes amid a surge in textile imports from China and complaints by American manufacturers and their supporters in Congress that the U.S. textile industry is fast losing ground. In a written statement, Commerce Secretary Carlos Gutierrez said the move was a "first step" toward determining whether the U.S. market is indeed being disrupted, and whether the disruptions can be attributed to Chinese imports.

Under the terms of China's entry to the World Trade Organization, the U.S. and other major trading nations reserved the right until 2008 to impose annual limits on apparel imports if they are deemed disruptive. Mr. Gutierrez made clear the administration is prepared to exercie that authority. "This administration is committed to enforcing our trade agreements and to providing assistance to our domestic textile and apparel industry, consistent with our international rights and obligations," he said.

The action highlighted the broader set of economic concerns the U.S. is pursuing with China, as well as the political considerations for Mr. Bush at home. The White House wants Beijing to curb the piracy of intellectual property and subject China's currency to market forces. The U.S. contends the value of China's currency is artificially low, giving Chinese manufacturers an unfair edge in the world market.

By targeting the swell of textile imports, Mr. Bush also may help ease opposition to the proposed Central American Free Trade Agreement, his top trade priority on Capitol Hill (see related article on page A15). A large bloc of lawmakers from the Deep South, where the textile economy is still pervasive, oppose that treaty, in part because of concerns that textile producers would be hurt by the increased foreign competition. Mr. Bush enjoyed wide support through the region in his 2004 re-election campaign.

Textile imports from China were expected to surge early this year following the Dec. 31 expiration of quotas controlling the world-wide trade in textile and apparel products. China had warned that a rise was inevitable, and even imposed export tariffs in a bid to address international concerns. But the increase during the first three months of the year has proved too sharp for the U.S. to ignore.

The proceedings announced yesterday cover three categories of apparel: cotton-knit shirts and blouses; cotton trousers; and cotton and man-made fiber underwear. In each of the first two groups -- shirts and blouses, and trousers -- Chinese imports rose more than 11-fold from the first quarter of 2004, according to preliminary U.S. government data; underwear imported from China rose fourfold. Under the rules for safeguard proceedings, it could take 90 days -- and perhaps longer -- for the administration to decide whether to impose import limits. At the moment, only one import safeguard is in force: a measure approved last October that limits sock shipments from China. Textile-industry officials have been complaining for weeks that the administration needed to act more broadly, contending that thousands of American manufacturing jobs are at stake. They welcomed yesterday's action.

Laura Jones, executive director of the U.S. Association of Importers of Textiles and Apparel, a business trade group, said the three-month data was skewed by a spike in February imports. "There is no pattern, no consistent and substantial increase to justify the drastic action of self-initiation," said Ms. Jones, whose group represents dozens of big U.S. retailers, including J.C. Penney Co. and Liz Claiborne Inc. Indeed, while the U.S. previously has taken up safeguard petitions backed by textile makers, yesterday's action was the first time the government had acted alone to initiate a safeguard proceeding.