What is likely to happen when restrictions on imports of Chinese textile and apparel products into the US expire on 31 December 2008? Action to seek new restraints is a near certainty - as the National Council of Textile Organizations hints in its year-end review.

At the end of 2008, US safeguard quotas on some Chinese textile and apparel imports are due to come to an end.

And it is a near certainty that the US textile industry will be seeking new restraints to prevent what it describes as "a devastating flood" of subsidised textile and apparel products from China in 2009.

While the form of these restraints is, at present, unclear, the National Council of Textile Organizations (NCTO) offers some clues in its annual "Year-End Economic and Trade Review for the Textile Industry."

NCTO says it believes threat from China to the US textile and apparel industries continues to grow, "and as we look down the road into 2008, the threats and the challenges are greater still."

Strategic planning
With the expiration of the safeguards at the end of 2008, the trade group says it has already begun work on a strategy to ensure that restraints remain on China "until the Chinese government lives up to its WTO commitments and stops subsidising its textile and apparel sectors."

"Thanks to the efforts of our industry leaders as well as textile-state members on Capitol Hill, we are beginning to see a new focus on textile enforcement initiatives already in 2008.

It argues that these efforts "must be continued if free trade agreements with Peru and Colombia are to have any meaning for the industry."

And warns that if the industry is not confident textile enforcement will remain a priority within the Department of Homeland Security, "then our support for the pending free trade agreement with Colombia could be jeopardised."

NCTO also claims that the threat from China "impacts textile and apparel workers around the globe."

While China's textile and apparel exports were rising by $4.5bn last year, exports from the rest of the world fell by $2bn it said.

"And the elimination of quotas at the end of 2008 means the prospect for unrestrained textile and apparel imports from China could threaten $40bn in trade in products that are currently under quota.

"Every major exporter of textile and apparel products is threatened, from Lesotho to El Salvador, form Pakistan to Mexico."

Significant events in 2007
2007 also saw the emergence of several new tools, in addition to existing trade remedies, which are likely to be used to address the China issue.

These include a decision by the US government's Commerce Department to overturn a 20-year precedent and allow companies to file subsidy cases against China.

NCTO calculates that there are at least 63 subsidies made available by the Chinese government to China's textile industry - which can now potentially be attacked following the change in policy.

In addition, the imposition of dumping monitoring on Vietnam set another precedent that could possibly be extended to China.

Members of Congress are also demanding that an effective China bill is passed this year that could set punitive tariffs on Chinese imports if the country doesn't revalue its currency.

NCTO chairman Harding Stowe comments: "2007 was a transitional year for the US textile industry.

"As imports from China continued to surge and DR-CAFTA entered into force for all the major textile and apparel producing countries, the industry worked to secure trade opportunities in this hemisphere as one part of a strategy for remaining competitive against China.

"We also began looking ahead to 2008 and preparing for the expiration of the U.S.-China textile agreement."

As far as the trade relationship between the US and China is concerned, in 2007 the US trade deficit with China was $256.2bn, up 10% compared to 2006.

With respect to textiles and apparel, the US trade deficit with China grew by nearly 20% from $26.6bn in 2006 to almost $31.8bn billion in 2007 - despite the fact that China is under quota in a large number of products.

And in those products where China is not under quota, China has already taken an average 60% of the US market, NCTO claims.

Textile statistics
In 2007, US textile exports fell by 5% during the first nine months of the year, dropping from $12.7bn to $12.1bn.

However, exports to trade preference areas showed sharper drops, with textile exports to Mexico down 13% and the CBI region by 9%.

Imports that are made under the "yarn-forward" rule of origin (ie, from NAFTA, CAFTA and others) continued to fall sharply and are now down 11.3% for the first nine months of the year.

Imports from the CAFTA region, which had appeared to stabilise during the first half of the year, took a downward slide in the third quarter and are now off 4.6%.

The losses in the western hemisphere came from China, which gained nearly 1.5bn sme (square metre equivalents) in 2007.

Imports from Cambodia, India, Pakistan and Indonesia, all of which had been growing, stopped or fell back during the last quarter. In 2007, Vietnam gained 269m sme and Bangladesh gained 47m sme.

The growth in imports from Vietnam and Bangladesh can partly be attributed to the fact that each of these countries relies heavily on subsidised inputs of yarns and fabrics from China for the bulk of their apparel export.