Thoughts About China Safeguards

Wednesday, March 18, 2009

As was recently pointed out by our good friends at the National Council of Textile Organizations (NCTO), U.S. imports of apparel from China soared in January after bilateral quotas on these products ended on January 1st.

Because of this, NCTO, along with several other U.S. organizations have requested that the Obama Administration begin to monitor these imports in order to assess possible safeguard quota actions.

U.S. import data showed that in January, imports of apparel products formerly under quota - Chinese trousers, underwear and shirts - increased by 36 percent despite sharply falling retail markets and overall import declines. At the same time, Chinese exporters slashed prices by as much as 20 percent in order to increase market share. In fact, Chinese import prices dropped in ten of the twelve apparel categories. Among the sharpest drops were: cotton underwear (–20%), cotton knit shirts (–16%) and man–made fiber underwear and man–made fiber trousers (both –15%).

In a release, NCTO President Cass Johnson said, “We call upon the Obama Administration to begin its monitoring program … as soon as possible. China maintains at least 63 subsidies that support its textile export sector and the Chinese government starting pumping billions of dollars of new subsidies just prior to U.S. quotas being removed.”

The textile safeguard quotas on China were lifted on January 1st under WTO rules and cannot be re-introduced. Recent countervailing duty and dumping cases on textile products, as well industry investigations, reveal that China continues to heavily subsidize virtually the entire textile supply chain. These subsidies include financing, land, privatization, raw materials, energy, research, capital investments and marketing costs. Last December the United States filed a case at the WTO against China on over a dozen textile and textile related subsidies that are WTO illegal.

Import Increases from China – Key Apparel Safeguard Categories
Description Category Number Percent Increase
(Jan 08 – Jan 09)

All categories (338, 339, 340, 347, 348, 352,
638, 639, 640, 647, 648, 652) up 36%

Men’s cotton knit shirts (Cat.338) up 2%
Women’s cotton knit shirts (Cat.339) up 58%
Men’s cotton woven shirts (Cat.340) up 10%
Men’s cotton trousers (Cat.347) up 39%
Women’s cotton trousers (Cat.348) up 50%
Cotton underwear (Cat.352) up 33%
Man-Made Fiber Underwear (Cat.652) up 39%
Men’s man-made fiber woven shirts (Cat.640) down 36%
Men’s man-made fiber trousers (Cat.647) up 31%
Women’s man-made fiber trousers (Cat.648) up 16%
Men’s man-made fiber shirts (Cat.638) up 2%
Women’s man-made fiber shirts (Cat.639) up 57%

Source: U.S. Department of Commerce

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