9th March 2005
Volumes up 546% – Prices down by as much as 45%
U.S. faces further Huge Job Losses
Chinese Customs data is now available for exports of major apparel products from China into the U.S January 2005 over January 2004, as China was released from quota control as a result of joining the World Trade Organization.
Cotton knit shirts and trousers, showed the highest growth with 18 Mn shirts shipped up from 1Mn (1,332% growth) and 27Mn trousers shipped, up from 1.9Mn January 2004 (1,836% growth) which represents shipping one year’s sales in one month. Industry figures show declines of 45% in prices in cotton trousers and 28% in cotton shirts. (see Table)
These figures represent the official data from any source on China’s 2005 trade. They will not be reflected in U.S. official import statistics until February import figures for goods entering U.S. ports is due on Friday, March 11.
Most increases in shipments are fuelled by China’s ability to manipulate and control its pricing structure in textile and apparel products and affect eight product groups that represent the major employment and production sectors of the U.S. yarn and fabric industry (650,000 employees).
The figures tell their own story. In 2004, Chinese exports of apparel in quota-free categories increased by 513 million square meters, or 55 percent, and brought China’s share of the U.S. import market in these categories to a record 70 percent. Imports from the rest of the world fell by 91 million square meters in 2004. According to Department of Commerce figures, next largest supplier after China was Thailand at 35%.
China’s share of 25 apparel categories increased from 10% in 2001 to 34% in 2002, 57% in 2003 and now to 70 percent in 2004. In December 2005, China had a 72 percent share of the import market.
The National Council for Textile Organisations (NCTO) was formed early 2004 by the amalgamation of American Textile Manufacturers Institute (ATMI) and the American Yarn Spinners Association (AYSA). Led by Cass Johnson ex- head of ATMI he identified in February 2005 that In 2004, the US textile and apparel trade deficit with China was a record $17.5 billion, up $3.5 billion dollars over 2003, a 25% increase.
The NCTO claims the Chinese government employs numerous illegal and unfair trade practices to ensure that Chinese exporters can under-price their worldwide competition in textiles and apparel. Anti-competitive actions by China’s government claimed by the US industry, include currency manipulation (estimated to provide up to 40% subsidy for Chinese exporters), illegal direct government subsidies of its money losing state-owned textile and apparel sectors, illegal export tax rebates (13%) and the deliberate extension of billions of dollars in non-performing (free money) loans by China’s central banks in order to award a competitive advantage against foreign competition.
Cass Johnson, president of NCTO, claims an NCTO analysis concluded that Chinese prices in world markets for apparel products averaged 58 percent below the prices offered by other countries, including low priced suppliers as Bangladesh, India and Pakistan. Furthermore the NCTO claim, the U.S. Government must move now to get the safeguard process restarted and give the industry the relief it was promised as part of the China accession agreement.
Cass Johnson is quoted saying, “The U.S. government is now the only entity that can act quickly enough to prevent a wave of plant closings and job losses in the U.S. textile and apparel sector. A long drawn out safeguard petition process will only ensure that thousands of U.S. textile workers will lose their jobs to China’s unfair and predatory trading practices.”
As Chinese exports have surged, exports from US free trade and trade preference countries fell sharply. In apparel products removed from quota control, US imports from Mexico fell nearly 50% to 40 million square meters over the last three years and Mexican market share declined from 8 percent to 2 percent. Caribbean and Central American countries also saw sharp declines, with CBI exports dropping 40% to 68 million square meters and CBI market share declining from 10 percent to 2 percent.
Paradoxically the US has strange bedfellows in this onslaught by the Chinese textile industry on world markets. Jamshid Basiri, secretary of Iran’s Textile Industries Association said in November, where Chinese imports via the Emirates have doubled says, “China’s rapidly growing garment industry has reportedly turned into the No.1 threat to Iranian textile and garment industries”.
The Impact on the US industry has been felt most in North Carolina with 126 plants closed since 2000, South Carolina ( 70) – Georgia ( 34) – Virginia and Alabama (30) and the NCTO claim over 200,000 jobs have been lost in 5 years.
Faced with the collapse of manufacturing Commerce Department’s Undersecretary of Trade Grant Aldonas went round the country last year talking to manufacturers. He told them that the trade laws needed to be overhauled in order to deal with the surge of cheap imports from low-cost countries, primarily China. “The anti-dumping statutes and tariffs don’t work,” he said.
“One of the things”, he said, “that is going to be helpful moving forward, is thinking thoughtfully about the trade laws because we’ve got a lot of folks in Congress who are great defenders of the trade laws who will say, “Whatever you do, don’t touch those things. I guess my reaction is it’s broken, we better touch it. You know, we better find some way to grapple with this problem because we don’t have the tools right now the way these laws are written to go after a problem like China…”
As textiles so iron castings. “The U.S. foundry industry is at a critical juncture,” says a legal filing made by the American Foundry Society to the International Trade Commissions’ recently initiated “Section 332" investigation. “The industry has been undergoing a massive restructuring and the pace of closures of production facilities has increased.”
The 2 major US cast parts makers — Citation Corp. with 17 foundries and 5,100 employees, and Intermec with 17 foundries and 6,000 employees — have recently filed for bankruptcy protection. Combined, the two firms generate about $1.5 billion a year in revenues.
Six of the top 10 foundries in the United State have filed for bankruptcy protection over the past three years, according to the American Foundry Society.
About 50 foundries are closing in the United States each year. Over the past 20 years more than 1,000 foundries have disappeared, a contraction of 30 percent to just 2,380 foundries. There are an estimated 12,000 foundries in China.
China exports to US of Major Apparel Products
Source: Chinese Customs as reported by the Global Trade Atlas.