Made
in China: Will Apparel Trade ever Be Free?
As you might recall a quota is a restriction on the amount of a particular
commodity which may be imported into a country within a specified period of
time. When China negotiated to become a member of the WTO, certain "safeguard
provisions" were written into the agreement signed by China, the United
States, and all other WTO members. The textile portion of the China WTO accession
agreement allows WTO members that believe imports of Chinese origin textile
and apparel products are causing a disruption in their domestic market to
request consultations with China to ease or avoid such market disruption.
Safeguards are only imposed when imports of textiles and apparel from China
cause market disruption to the domestic market and are intended to ease the
transition from a quota restricted market to an open trading system.
Since the phasing out of quotas at the end of last year, imports of clothing and textile items have increased enormously, a reflection of China's competitiveness. As a result many U.S. textile companies have asked the U.S. government to impose safeguards on several specific categories, thereby limiting imports for a certain length of time. Countries have authority to impose safeguards through the end of 2008.
We know that when imports are limited and their supplies decrease prices tend to go up. This is the law of supply and demand. However, it is also possible that importers of these apparel and textile items may simply import them from another country that does not have safeguards, such as Vietnam, India, or Pakistan. It is therefore unclear what impact the safeguards will have on the price and availability of these product categories. If, however, imports from China are limited successfully and no substitutes are imported from competing countries, American consumers may see price increases in the following product categories:
1) cotton knit shirts
and blouses
2) cotton trousers
3) cotton and man-made fiber underwear
4) other synthetic filament fabric
5) men's and boys' wool trousers
6) men's and boys' woven shirts
7) cotton and man-made fiber dressing gowns and robes;
8) cotton and man-made fiber brassieres;
9) knit fabric
10) cotton and man-made fiber sweaters.
11) men's and boys' wool suits
12) polyester filament fabric,
13) other men's and boys' man-made fiber coats and women's and girls' man-made
fiber coats,
14) cotton and man-made fiber curtains and drapery.