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The Trade Issue: Commerce Today
- and Tomorrow     By Karen Koza

“What happens in 2009? That’s the $64,000 question,” considers Matt Priest, Deputy Assistant Secretary for Textiles and Apparel for the International Trade Administration of the United States Department of Commerce and Chairman of the Committee for the Implementation of Textile Agreements (CITA). Priest is, of course, referring to the U.S.-Chinese Textile Memorandum of Understanding (MOU) on quotas on textile and apparel imports from China set to expire on December 31, 2008. Many in the United States textile industry are concerned that the U.S will incur a glut of Chinese imports, as experienced in 2005 following the elimination of quotas under a World Trade Organization agreement.

According to WTOPnews.com, an online news source, apparel imports did spike dramatically. “Imports of cotton trousers from China increased from 918,000 dozen in the first half of 2004 to 17,454,000 dozen in the first half of 2005. Sales from China crowded out imports from other countries, particularly poor nations in Africa, the Caribbean and Latin America, and contributed to the loss of thousands of U.S. jobs. Chinese prices dropped by an average of 40 percent and apparel exports jumped by nearly 600 percent,” their web site reads.

According to Priest, expectations about the levels of Chinese imports in 2009 simply depend on whom you ask. “Some expect a massive surge amongst categories, others don’t see the potential for surges in certain products,” he says with regard to categories currently under the MOU. Two reasons he points to in support of relatively low increases include the higher cost of doing business in China today based on shipping, energy and labor and the appreciation of the Chinese economy, which has experienced double-digit growth in the last two years.

Natalie Hanson, Vice President of International Development Systems (IDS), a Washington D.C. based textile and apparel quota specialty organization, also believes that any increases will not be as drastic as they were in 2005, due to the fact that current quotas were negotiated off already high numbers. She sees this as a good thing for the hosiery industry. “The situation with quotas this year is very different from the situation in 2005 as the quotas are much larger and not as restricted. It’s unknown if the quotas on socks for China will be fully utilized.”

While attention perseverates on China as it is the top source for US imports of socks, there are countries from other areas of the globe that round out the top five, Hanson details. Pakistan, Honduras, Korea and Mexico, respectively, top the list.

IDS TRADE MONITORING SERVICE DOCUMENT
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©2008 International Development Systems, Inc. http://www.ids-quota.com

“2009 will be an interesting year for the hosiery industry; I think that those who have designed their supply chains and sourcing strategies with a global action plan will see that as a smart move,” Priest adds. “Today’s environment is much more challenging and there are good reasons to think globally but based on historical co-production models and the opportunity to do business in a permanent free-trade environment, the Western Hemisphere will continue to be an attractive place for the industry to do business.”

Hanson also encourages those in the supply chain to look beyond the issue of quotas and take a look at the much larger picture. ”Quotas are just one element of the competitive equation,” she observes. “There are transportation costs, reliability and the matter of who produces the best quality at the best prices.”

“Companies that take a long-term look at their manufacturing process, maximize their energy sources and seek sustainability will maximize and leverage the parameters of their businesses,” adds Sally Kay, President of The Hosiery Association. “It’s all about manufacturers finding more options in the global marketplace.”

    By Karen Koza