Importers Weighing Their Options

Now that the day has come when WTO countries have dropped all quotas, importers aren't planning a headlong rush into China or any other country.

US textile makers have been closing mills such as this Thomaston Mills plant in Georgia for many years

U.S. textile makers have been closing mills, such as this Thomaston Mills plant in Georgia, for many years.

Photo By WWD Staff

NEW YORK — The industry spent the last decade waiting for the day when the members of the World Trade Organization, now totaling 148 countries, would drop the quota restrictions that governed the global trade in garments and fabric for more than 30 years. That day has come, but importers aren’t planning a headlong rush into China or any other country right away.

Changes will come more slowly, playing out over the next two to four years, executives said. But after all the dust has settled, apparel manufacturing — a $330 billion bootstrap industry employing more than 30 million workers that dozens of countries have used as a stepping stone into the global economy — will look dramatically different. Companies that today buy goods from 40 or more countries expect to consolidate their buying to half that many nations.

“This thing has become a significantly smoother transition than any of us would have predicted a year and a half ago,” said Rick Darling, president of Li & Fung USA Ltd., an arm of the $5.47 billion Hong Kong-based sourcing powerhouse. “I don’t want to say it’s a nonevent, but it’s been very well managed by the major importers.”

Importers assert that they’re not rushing to move substantially more of their production into China, which is already the leading supplier of textiles and apparel to the U.S. It shipped $14.07 billion worth of those goods to the U.S. in the year ended Oct. 31, giving it a 17.3 percent share of the $81.03 billion market.

They have good reason to step cautiously: There are many uncertainties surrounding just how free China’s trade will be for the next few years. China joined the WTO in 2001, more than halfway through the 10-year quota phaseout. Fearful of the nation’s potential to dominate the apparel trade, many smaller countries called for continued restrictions on China. The world’s most populous country agreed to a safeguard measure, which allows importing countries to place temporary, one-year quotas on specific categories of Chinese goods if imports of those products are shown to cause market disruption in the importing nation.

Earlier in the year, according to industry sources, Chinese officials indicated they were unwilling to cooperate in the administration of safeguards if the U.S. imposed them. That, importers feared, could lead to nightmare situations in which they would place orders at Chinese factories only to learn they would not be allowed in when they reached American ports.

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