U.S. may move China textile products

Zakki P. Hakim, The Jakarta Post/Jakarta

The United States may introduce measures to safeguard itself against cheaper textile products from China in a bid to protect its textile industry, as the current quota system will end in January next year, according to an expert.

Halida Miljani, a former Indonesian ambassador to the World Trade Organization (WTO), said on Monday that the move could, indirectly, also help less efficient producers from countries like Indonesia in competing with efficient Chinese producers in the key U.S. market.

The temporary measures may be in the form of higher import tariffs or a combination of tariff and global quota system (this system allows all countries to enter the U.S. market, albeit at a limited volume, while the current quota system gives only certain countries permission to enter the U.S. market).

Imposing higher tariffs against overseas products is allowed under WTO rules if there is a sudden surge in import volume of the products, or if the importation has caused injury to the domestic industry.

"I bet the U.S. will use the safeguard measures, and will come up with lots of dumping allegations (against the Chinese textile products)," Halida told The Jakarta Post and Investor Daily.

Another industry expert concurred.

"Even if the WTO refuses an extension (of the current quota system), the U.S. would likely come up with other forms of barrier to limit products from China," chairman of the Indonesian Association of Garment Producers (APGI) Natsir Mansyur said recently.

The WTO has ruled that the current quota system on textile and apparel products must be terminated, starting January next year. This has raised concern that Indonesian textile producers, who have been struggling to restructure a huge debt burden and aging machinery, may not be able to compete with Chinese producers, who can make much cheaper products.

According to the Indonesian Textile Association (API), Indonesia's market share in the U.S. may be reduced to 2 percent from the current 4 percent, while the share of China may triple to 53 percent from 16 percent.

Local textile and apparel producers have urged the government to provide incentives and delay the rise in minimum labor wages to help them survive in the main export market.

There have been rising calls for the WTO to delay the termination of the current quota system.

The U.S. textile industry, fearing a flood of cheap Chinese imports when the quota system expires, has been leading an international effort to persuade the WTO to approve a three-year extension of the quota system.

Some U.S. lawmakers asked President George Bush in June to support an emergency WTO meeting to reconsider the end-of-year expiry on quotas for clothing and fabrics, The Washington Times has reported.

"Chinese domination of the global textile and apparel trade would shake the economic and political stability of dozens of struggling nations," said a letter signed by 13 Senate Republicans and 16 Senate Democrats, including presidential candidate Sen. John Kerry of Massachusetts.

The Bush administration has steadfastly declined to back away from the quota phaseout.

The end of worldwide quotas is expected to cost 30 million jobs in the United States, Europe and a slew of developing countries, according to industry groups.

Some 81 textile and apparel associations from more than 30 countries have also asked for an extension of the quota system until 2007.