KARACHI, May 14: In a dramatic move, the United States late on Friday re-imposed quotas on three categories of clothing imports from China thereby sending shock waves across nations producing textiles and clothing. Though the move is going to directly benefit countries like Pakistan and India but textile industry is taking US action as “abrupt departure from norm set by WTO’s quota free era” which began less than five months ago from January 1, 2005.
The Bush administration under pressure from domestic producers re-imposed quota ceiling on cotton trousers (Category 347 and 348), cotton knit shirts (category 338 and 339) and underwear (category 352) being imported from China. The move came after domestic US textile industry put up a pressure on Bush administration seeking immediate remedy against a surge of Chinese imports since global quotas elimination from Jan 1, 2005. The industry warned that if no appropriate step was taken thousands of US jobs would be loss.
“We had a notion for such an action from the US administration was imminent but never though it would re-introduce quantitative restrictions”, a leading exporter of textiles and clothing to US told Dawn. Undoubtedly countries like Pakistan and India would directly benefit from this move but it is a bad omen for global free trade, he added.
Announcing the decision, Commerce Secretary Carlos Gutierrez said that a government investigation had found that a surge in shipments from China, since global quotas were eliminated early this year, was severely harming the local industry. Despite the fact that US retailers strongly opposed the decision saying it would deprive the consumers from getting textile products at competitive prices and would ultimately push costs higher.
However, the domestic producers managed to convince the administration on a threat of dramatic job losses if immediate and effective measures are not taken to check unbridled flow of these textile products from China.
Exporters believe that the US move would greatly benefit local knit-wear and hosiery industry in category 338 and 339, which is presently under crisis. Similarly, exporters are of the opinion that for category 347 and 348 the country could avail opportunity as it locally produces denim used for trousers.
However, some textile analysts feel that the phasing out of quotas did not bring any benefit to exporting countries, instead it deprived them from some advantages. When there were quotas there was indirect price check and exporters used to take advantage of the availability of quotas. The government used to earn revenue through auction of quotas.
As of now, they said, the importing countries are either imposing anti-dumping duties or re-imposing quantitative ceilings or quotas. The European Union (EU) is presently collecting revenue to a tune of $100 million from anti-dumping duty and customs duty on import of bed-linen from Pakistan. The EU had imposed 13.1 per cent anti-dumping duty on bed-linen last year and on an average collects around $52 million on $400 million imports from Pakistan. Similarly, around $40 million is collected through customs duty at 12 per cent after Pakistan graduated from GSP scheme of the EU. Consequently, some analysts argue that it would have been better for countries like Pakistan to stay under quota regime as it benefits the exporters as well as the government.
The US move to re-impose quotas totally negates the WTO’s free market theory, and this means that some sort of check and balance would always be needed to safeguard the interest of importing country, analysts added.
