When textile quotas end this week, will U.S. jobs go, too?

When textile quotas end this week, will U.S. jobs go, too?
12/30/08
by Lisa Zagaroli | McClatchy Newspapers

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 remaining 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."

At issue are limits on the number of cotton trousers, golf shirts, babies' socks and more than 30 other textile products that China can export to the United States. The quotas expire at the end of this year, and, under a World Trade Organization 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 American 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, the 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 American 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 the possibility of the Chinese dumping 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 that China appeared to be granting a range of 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 that some of the industry's concerns were warranted, given what had happened in 2005. However, he said that 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 that were subject to the safeguard quotas was 17 percent, he 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, he said.

Consumers won't benefit, argues 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.

WILL HISTORY REPEAT?

Quotas on Chinese textile exports to the United States were lifted temporarily at the beginning of 2005. Here's what happened to the number of products that China sent to the United States in the first quarter of 2005 compared with the same period in 2004:

Cotton knit shirts: Increased 1,277 percent.
Cotton trousers: Rose 1,573 percent.
Cotton underwear: Increased 318 percent.
Manmade-fiber knit shirts and trousers: Rose 300 percent.
Source: International Trade Administration