Safeguards on Textile and Apparel Imports from China

Publication Date: June 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Manufacturing and industry; Trade

Type:

Coverage: China

Abstract:

Textile and apparel import data issued in June 2006 indicated that from January-April 2006, the volume of U.S. imports from China grew by 4.84% compared to the same time period in 2005. The volume of U.S. imports from the world grew by 1.06% during the period.

U.S. textile and apparel production has been steadily declining, and imports from all countries have been increasing. However, U.S. imports from China have been growing at a much faster rate. The expiration of textile and apparel quotas on January 1, 2005, led to U.S. industry concerns that Chinese imports will capture the domestic market share in many product categories. Many developing nations that received access to U.S. and other developed country markets through the quota regime are also concerned that the end of quotas will lead to a global consolidation of textile and apparel production in which only a few nations, including China, India, and Pakistan, will benefit. In contrast, retailers and other importers of textiles and apparel have long opposed quotas because they believe that they cause market inefficiencies that result in higher prices to U.S. consumers than would otherwise be the case.

A textile-specific safeguard measure in China's World Trade Organization (WTO) accession agreement allows the United States and other Member countries to impose import quotas on textile and apparel imports from China if they determine that Chinese-origin imports of the targeted products are causing "market disruption." Between December 2003 and late October 2005, the Committee for the Implementation of Textile Agreements (CITA) formally requested consultations with China -- and simultaneously implemented quotas -- on cotton knit shirts and blouses (Multi-Fiber Arrangement (MFA) categories 338/338); cotton trousers (categories 347/348); cotton and man-made fiber underwear (categories 352/652); cotton yarn (category 301); men's and boys cotton and man-made fiber shirts, not knit (categories 340/640); man-made fiber knit shirts and blouses (categories 638/639); and man-made fiber trousers (category 647/648). U.S. producers vowed to continue filing safeguard petitions with the hope of pushing forward a more comprehensive agreement establishing quantitative limits on Chinese imports.

On November 8, 2005, then-U.S. Trade Representative (USTR) Rob Portman and Chinese Commerce Minister Bo Xilai announced that the United States and China have signed a three-year pact limiting China's exports of 34 textile and apparel products until 2008. The agreement was very similar to a June 10, 2005 agreement the European Union reached with China. U.S. producers expressed satisfaction over the measure, while U.S. importers and retailers, were displeased over the limits that the agreement imposed.

Some domestic producers are currently expressing concern that Chinese producers are currently shipping textile and apparel goods to a second country, such as Indonesia, en-route to the United States (transshipment) for the purpose of circumventing the limits set forth in the U.S.-China agreement. This report will be updated as events warrant.