By Missy Branson
WASHINGTON, DC — 2004 will be remembered in many different ways. From the conflict in Iraq, the Summer Olympic Games in Athens, President Bush’s reelection to a second term, to the devastating tsunami that struck South Asia, 2004 will not soon be forgotten.
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While this is how 2004 will be remembered by most Americans, those of us in the textile industry will remember 2004 as a year of extraordinary challenges and opportunities.
The outlook for the industry remained relatively weak in 2004 and anxiety and anticipation underpinned most textile businesses as the world prepared for the elimination of all textile and apparel quotas at the end of the year. While the industry continued to experience plant closures and job losses throughout the year, there were a number of significant events and decisions that provided a glimmer of hope about the future of this industry, its workers, and the communities in which they live.
The year began with the imposition of China textile safeguards on several textile and apparel categories that were removed from quota in 2002. This was important because it demonstrated the government’s willingness to use the China safeguard effectively. Closer to the end of the year, and after a brutal public debate, the government also reaffirmed its intention to accept China safeguard petitions based upon threat of market disruption.
The ability to file petitions based on threat of market disruption is a key component of the industry’s China strategy and resulted in the industry filing 12 threat-based safeguard petitions with the U.S. government.
Unfortunately, a recent decision by the Court of International Trade has temporarily delayed the government’s action on these petitions.
On the international front, the U.S. industry came together with its association partners in Turkey to form the Global Alliance for Fair Textile Trade (GAFTT). GAFTT provided a much-needed platform for textile and apparel businesses around the world to express their concerns about the elimination of quotas and to demand that the WTO take action to address these concerns.
At the end of the year, the GAFTT coalition represented 96 trade associations from 54 countries and had sponsored two successful international summits that received worldwide media attention and raised the profile of this issue within the WTO and many member governments, including the U.S.
At the end of January, the GAFTT coalition held its third International Summit in Washington, DC. The summit provided an opportunity for some of the world’s poorest countries to express their support and need for U.S. government action on threat-based China safeguard petitions.
It was only months ago that these same companies and associations were fighting against one another to gain minuscule trading advantages. Recognizing that a few countries are positioned to monopolize world trade in the textile and apparel sector through the use of unfair trading practices, GAFTT members set aside their differences and focused on combating this threat with the hope of preserving upwards of 30 million jobs worldwide.
If action is not taken to address the threat posed by China, India and others, economic disaster will befall many of the world’s poorest nations and the U.S. government will be forced to deal with not only a tremendous number of domestic job losses in some of our own country’s poorest communities but to also provide aid and economic assistance to hundreds of nations around the world.
At a time of record budget deficits and tremendous fiscal demands due to the ongoing war in Iraq, this is a scenario our government can hardly afford, especially when there are actions it can take to prevent such a disaster from ever occurring.
China’s ability to quickly dominate the market has already been proven as a result of our recent experience in 25 apparel categories removed from quota in 2002. In these categories, China had taken a 73 percent share of the U.S. market as of November 2004, according to U.S. Department of Commerce data. Prior to quota removal, China had only a 9 percent U.S. market share in these same categories.
China’s ability to gain such market share so rapidly is in large part due to its ability to price these goods at as much as 76 percent below U.S. producer prices and 58 percent below the prices of other exporting countries. China is able to offer such prices only because of the unfair and illegal trading practices it continues to employ, including currency manipulation, export tax rebates and loans to Chinese manufacturers that never have to be repaid.
On the face of it these may seem like insurmountable odds. The future of the industry, however, does not rest with the illegal and unfair practices that a few countries may utilize to game the system.
The future of the industry rests with the industry itself and the willingness of all of those affected by these policies to become engaged in the political process. The political process, however, is not about confrontation. It’s about recognizing and understanding the political landscape in which one lives and learning to work from within to affect change for the better.
If U.S. industry can learn to work with the system instead of against it, then this industry and the hundreds of thousands of workers it continues to employ will be around for a long time to come. An extraordinary challenge yes; but also a tremendous opportunity that should not be diminished or ignored.
Missy Branson is senior vice president of the National Council of Textile Organizations (NCTO), Washington, DC. She can be reached at mbranson@ncto.org.
