Expiration of remaining China trade restrictions may devastate U.S. textile industry.
WASHINGTON — As the head of one of the largest yarn manufacturers in the world, Anderson Warlick doesn’t mind going up against other businesses. Competing with Chinese products, however, feels like taking on an entire foreign government.
The chief executive of Parkdale Mills in Gastonia, N.C., is worried that already tough competition from China will get far worse after Wednesday, when the last U.S. limits on imports of certain textile products expire.
“It’s a very serious issue and it could be devastating for the industry,” Warlick said. “I think the entire textile chain will be affected.”
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At issue are limits on the number of cotton trousers, golf shirts, babies’ socks and more than 30 other textile products China can export to the United States. The quotas expire at the end of this year and, under a World Trade Organization (WTO) agreement, the U.S. government can’t reimpose restrictions on Chinese textiles.
The industry is worried that what happened in 2005, when similar safeguards were lifted temporarily, will happen again in 2009.
China flooded the U.S. market in 2005, with a more than 1,500 percent increase in cotton trousers alone.
While that drove down the prices of those products for consumers, U.S. textile companies lost about 55,000 jobs that year, more than 8 percent of the industry’s work force, trade officials say.
“If we lost 50,000 jobs the first time the quotas were lifted, we are concerned it can be just as bad this time,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.
“Keep in mind that the hemorrhage of jobs was mitigated by the fact we put the quotas in place that are about to expire. How many more jobs would have been lost, who knows?”
The U.S. textile industry already has seen jobs evaporate in the face of global trade. A flood of Chinese products that don’t use U.S. fibers would be an additional blow to what’s left of the industry, the manufacturers say.
Nationally, there was a 33 percent decrease in textile and apparel jobs from 2002 to 2008, with 475,000 jobs left in the industry.
In textiles alone, Alabama dropped 45 percent to 13,000 jobs and Georgia fell 22 percent to 58,500 jobs from 2002 to 2006, according to the National Council of Textile Organizations.
South Carolina had 27,000 textile and apparel jobs this year, compared with 48,600 in 2004, federal labor data showed. North Carolina had 58,600 textile and apparel jobs this year, compared with 100,000 in 2004.
U.S. manufacturers say they’ve learned to compete against China’s lower wages. What they can’t compete with are government subsidies that enable China to sell some finished products for less than the fiber alone costs in the United States.
In an effort to mitigate possible Chinese dumping of textiles, several members of Congress have called for the International Trade Commission to monitor Chinese textiles more closely now that the quotas are expiring.
This month, U.S. Trade Representative Susan Schwab backed up industry concerns by announcing China appeared to be granting subsidies such as cash rewards and preferential loans to its exporters to give an advantage to several industries, including textiles.
She initiated a case with the WTO to get China to stop its allegedly unfair-trade practices, but it probably will be up to the incoming Obama administration to decide whether to file a formal case. China would face sanctions, such as penalty tariffs, if it didn’t agree to stop violating trade rules.
R. Matthew Priest, the deputy assistant secretary for textiles and apparel with the International Trade Administration, said some of the industry’s concerns were warranted, given what had happened in 2005.
However, he said China hadn’t maxed out the number of products it was allowed to export here even under the quotas.
The Chinese products aren’t duty-free, either. This year, the average duty on imports of textiles and apparel subject to the safeguard quotas was 17 percent, Priest said.
Americans benefit from the U.S. trade relationship with China, he added.
“People don’t realize how increasingly China is an export market for our products,” he said. “Some people might scoff at that, but the rising Chinese consumer wants U.S. products.”
Lifting the safeguards might lead to consumers paying less for trousers, shirts and other garments, Priest said.
Consumers won’t benefit, counters Amy Daugherty, who owns Miami Thread in Drexel, N.C., where about 20 employees make industrial sewing thread that ends up in bedding, military gloves, safety harnesses and firefighting gear.
“If people don’t have jobs, they’re not going to buy things no matter how cheap they are,” she said.