U.S. Textile and Apparel Industries and Rural America: Textile and Apparel Trade After the Multifiber Arrangement
Although MFA quotas have been completely phased out,
other policy instruments, such as tariffs and
preferential agreements, will affect the market. Global
tariffs on textiles and apparel remain significantly
higher than for most other manufactured products. Nontariff
trade barriers are also a factor, including anti-dumping
duties, import “rules of origin,” safeguards,
elaborate custom procedures, stringent labeling requirements,
and outright bans on apparel imports. Countries with
preferential market access typically pay lower tariffs,
and this will also influence production and trade.
Textile producing countries have expressed particular
concern about the expansion of Chinese textile and apparel
exports in the more open world market following termination
of MFA quotas. For this reason, China-specific safeguard
provisions were established in the 2001 World Trade Organization
(WTO)-China Accession Agreement. These provisions were
designed to reduce market disruption and protect WTO
members from surges in Chinese imports that would impede
the “orderly development of trade.” Two types
of China-specific safeguards were identified in the accession
protocol, namely special-textile and the transitional,
product-specific safeguards. The requirements for
imposing China-specific safeguards are much less stringent
than the “general
safeguards” specified
in the WTO Agreement on Safeguards (Liu
and Laixiang).
Unlike WTO general safeguards, China-specific safeguards
can be levied by a WTO member given the threat of market
disruption. No governmental investigation is required
prior to imposition nor is it necessary to establish
a causal link between increased import quantities and “serious
damage.”
The special-textile safeguards allow for the expansion
of Chinese exports, but limit growth to as little as
7.5 percent annually. These safeguards provide 1 year
of protection, renewable on an annual basis through 2008.
The transitional, product-specific safeguards can be
maintained for 3 years with the possibility of a 2-year
extension. WTO member producers will have recourse to
these safeguards through 2013.
The United States and the European Union (EU) forged
bilateral accords with China in 2005 that supplemented
the WTO-China Accession Agreement of 2001. The U.S.-China
agreement calls for China to limit the shipments of 34
products to increases of 8-10 percent in 2006, 13 percent
in 2007, and 17 percent in 2008. The 34 products accounted
for almost half of China’s textile exports to the
United States in 2005.
The U.S.-China textile deal provides greater predictability
for both Chinese exporters and U.S. importers than the
system of annual safeguards sanctioned under the special
textile provision in the WTO-China Accession Agreement.
Moreover, it provides U.S. retailers with greater import
growth opportunities from China than the previously established
7.5 percent cap. Both the U.S.-China and the EU-China
2005 bilateral accords are likely to raise developed-country
imports from other low-cost sources of supply.
Textiles safeguards have also been invoked by Argentina,
Brazil, Colombia, South Africa, and Turkey.
For More Information
- Huan Liu and Laixiang Sun, “Beyond Phase-out of
Quotas in Textile and Clothing Trading: WTO-Plus Rules
and the Case of U.S. Safeguards against Chinese Exports
in 2003,” Asian-Pacific Development Journal,
Vol. 11, pp. 49-71, June 2004.
- U.S. Department of Commerce, International Trade
Administration, Office of Textiles and Apparel, China
Textile Safeguard actions.
- ERS WTO Briefing Room and its chapter Beyond
the Agreement on Agriculture.
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