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China Import Growth Eases As Many Quotas Fill Slowly

With quotas filling up more slowly than expected, Chinese apparel and textile imports grew 1.9 percent in May to 1.5 billion SME, worth $1.9 billion.

WASHINGTON — With quotas filling more slowly than anticipated, apparel and textile imports from China grew 1.9 percent in May compared with a year earlier to 1.5 billion square meter equivalents, valued at $1.9 billion.

On the broader scene, a spike in oil prices helped increase the U.S. trade deficit in all goods and services by 0.8 percent over April to $63.8 billion. The deficit with China grew by 4.1 percent to $17.7 billion, according to the Commerce Department's monthly trade report.

Chinese apparel imports fell 16.7 percent against a year earlier to 413.5 million SME, valued at $1.1 billion. The decline comes against the backdrop of steep increases last year after the end of the global quota system. By May, however, the Bush administration began restricting trade anew with China, first imposing temporary safeguard quotas and, in November, cutting a deal to limit imports in 34 categories of goods.

Goods under the agreement made up 8.5 percent of China's apparel and textile shipments to the U.S. in May. As of Tuesday, only the quota on silk and vegetable fiber trousers is more than 40 percent filled, while other categories.

"There's a lot of quota not being used right now that they allocated, and a lot was allocated on prior orders," said Wendy Wieland Martin, vice president of international trade at Kellwood Co. "It sounds like they're going to pull back some of the unused quota and redistribute it."

Uncertain how the quotas might play out, many brands also decided to manufacture elsewhere.

"Everybody has run away out of fear," said Tom Haugen, president of sourcing firm Li & Fung USA, noting that the industry thought China's quotas would fill more quickly.

On another front, Vietnam, pursuing a bid to join the World Trade Organization, saw apparel and textile imports jump 53.6 percent in May to 96.6 million SME, worth $258.4 million. At a Senate Finance Committee hearing Wednesday, industry lobbyists, senators and a senior U.S. trade official squared off over the need for a stronger textile safeguard if Vietnam successfully joins the WTO.

Sen. Chuck Grassley (R., Iowa), chairman of the Senate Finance Committee, said he has concerns that Vietnam might follow in China's path and allow exports to surge. Grassley did not indicate his position on a textile safeguard amendment that might be offered to pending legislation. Congress is poised to consider granting Vietnam permanent normal trade relations status, a precursor to WTO entry.

Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, told the panel the textile industry expects apparel and textile exports from Vietnam to grow exponentially, resulting in the loss of more U.S. jobs, if quotas are removed and a stronger safeguard mechanism is not put in place.

U.S. trade officials said they negotiated a strong textile enforcement mechanism in the bilateral deal and they oppose a China-like textile safeguard.

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