Chinese Textile Exports Are Soaring

As expected, Chinese textile and apparel exports have risen sharply since China’s admission to the
WTO this year — and the trend is likely to continue. Prior to China’s accession to the WTO January
1, its textile bilateral quota agreement with the United States provided for an average annual
growth of about 1 percent

But when China joined the WTO, it was entitled to “catch up” on a seven-year quota phase-out
enjoyed by other WTO members. A sampling of recently decontrolled categories demonstrates just how
quickly and effectively China can move into quota-free markets. While U.S. imports from the world,
including the major Asian suppliers, were down during the first quarter of this year, Chinese
exports showed huge gains. In the case of infantwear, Chinese exports were up threefold, while
exports from other Asian nations declined by as much as 50 percent. A similar pattern held true
with luggage, brassieres, gloves, knit fabrics, robes, dresses and gowns. In some cases, the
Chinese gains were made at the expense of Mexico, where many of the exports contain U.S.-made
fabric and yarn.

Charles Bremer, international trade vice-president for the American Textile Manufacturers
Institute (ATMI), expects the trend to continue and even increase during the second quarter. Bremer
says the trade pattern demonstrates China can produce “any product in any quantity at any price.”
That capability has aroused new concerns in the textile industry about what will happen when all
textile quotas are eliminated January 1, 2005, and tariffs will be the only means of limiting
import growth. The United States has so-called “safeguard” laws that permit it to impose quotas for
three years where market disruption occurs, but in the past, that has been a time-consuming,
expensive and often unsuccessful procedure.

July 2002