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News 01 U.S. to Put Quotas on
Textiles From China
The decision, which applies to
brassieres, dressing gowns and knit fabrics, comes
amid growing trade tensions
November 19, 2003 - WASHINGTON The Bush
administration announced plans Tuesday to impose
quotas on Chinese textile imports, protecting
another U.S. industry from foreign competition and
increasing pressure on Beijing to address a growing
trade imbalance.
----- The decision,
which applies to Chinese-made brassieres, dressing
gowns and knit fabrics, is expected to roil
relations with a country that has become a
lightning rod for anxiety about U.S. trade deficits
and job losses.
Administration officials said the move would
protect American textile and apparel makers from an
import surge that has disrupted U.S. markets and
endangered industry employment. The administration
offered a similar rationale last year for imposing
tariffs on imported steel.start
-----"This decision
demonstrates the Bush administration's commitment
to our trade rules and America's workers," said
Commerce Secretary Don Evans. "This will advance
our future dealings with China, for no market
operates fairly without open dialogue."
----- China's Commerce
Ministry said today that the government "firmly
opposed" the U.S. decision and that it might appeal
to the World Trade Organization.
----- In the United
States, critics said it appeared that domestic
politics played a big role in the trade action,
which could shore up support for Republicans in
textile-producing states. U.S. importers predicted
that the quotas would increase prices paid by
consumers and undermine America's leadership in
global trade negotiations without halting the
long-term decline of domestic fabric makers.
----- The quota
decision came at a sensitive point in U.S. trade
relations. This week, at talks in Miami,
administration officials will try to overcome other
countries' reservations about a proposed Free Trade
Area of the Americas, which would expand the North
American Free Trade Agreement which covers the
United States, Mexico and Canada to virtually the
entire Western Hemisphere.
----- At the same
time, President Bush is facing pressure to rescind
last year's steel tariffs, which were ruled illegal
last week by the WTO. Analysts said that a
compromise appeared to be in the works to
accelerate the planned phase-out of the tariffs.
But it was unclear whether a faster timetable would
appease the European Union and other nations that
have threatened to retaliate with restrictions of
their own.
----- On those issues
and others, the administration has been roundly
criticized for pushing its trading partners to open
their markets, even as it has erected barriers to
protect beleaguered U.S. industries. And its latest
move to impose textile quotas came under immediate
fire from some groups.
----- "Not a single
job is going to come back to the United States as a
result of this decision," said Laura Jones,
executive director of the U.S. Assn. of Importers
of Textiles and Apparel, a New York-based
organization. "Slapping the quota on China will
merely shift the trade to other countries, mostly
in Asia."
-----
America's trade deficit with China reached a record
$12.7 billion in September, and economists predict
it could top $125 billion for the year. Many U.S.
firms and workers in industries such as garment,
furniture and electronics have cited China's
growing economic prowess as a big factor in the
loss of 2.5 million manufacturing jobs during
Bush's presidency. The issue is expected to figure
prominently in the 2004 presidential campaign, and
the administration has promised to crack down on
abusive trading practices by the Chinese.
----- The textile
quotas will be imposed under a "safeguard"
provision that accompanied China's acceptance into
the WTO. That provision authorized the United
States to impose temporary restrictions, limiting
annual imports to 7.5% above the previous year's
levels, if imports from China disrupted U.S.
markets. The United States is required to enter
into discussions with China to try to reach a
negotiated solution within 90 days, and the quotas
would take effect if those talks fail.
----- Since previous
quotas were lifted last year, imports of
brassieres, dressing gowns and knit fabric have
soared. Shipments of Chinese synthetic-fiber bras
were up 76% during the first nine months of this
year, cotton bras rose 32%, synthetic-fiber
dressing gowns were up 58%, cotton gowns jumped 96%
and knit fabric rose 32%, according to the American
Manufacturing Trade Action Coalition, a
Washington-based advocacy group that filed
petitions seeking the safeguards.
----- Meanwhile,
employment in the U.S. textile industry has
continued to slide as labor-intensive production
shifts to China and other countries where wage
rates are much lower. The number of American
textile and apparel workers fell from 1.045 million
in January 2001 to 729,000 last month, a decline of
316,000. California, a major center of garment
design and production, has lost about 21,000
manufacturing jobs in that industry in that
time.
----- The three
categories covered by the quotas account for only
$497 million of China's $10.7 billion in textile
and apparel exports to the United States. But
supporters of the quotas said the effect could be
much wider if U.S. importers limit future
purchases, fearing that similar safeguards would be
applied to other Chinese goods.
----- "This decision
sends a message that you cannot expect to move all
your orders to China … because you may have
comprehensive quotas or category-by-category quotas
on those goods," said Cass Johnson, president of
the American Textile Manufacturers Institute, a
Washington organization that promotes the interests
of U.S. textile mills. "It does set up a real sense
of uncertainty."
----- Supporters said
they hoped that prospect would persuade the Chinese
to negotiate a broad, voluntary agreement to limit
exports of other textile and apparel products, many
of which are scheduled to become quota-free this
year and next. They acknowledged, however, that
import restrictions were likely to increase the
cost of goods purchased by U.S. consumers.
----- Gary C.
Hufbauer, a senior fellow at the Institute for
International Economics, a nonpartisan economic
research center in Washington, estimated that the
combination of tariffs and quotas applied to all
categories of U.S. textile and apparel imports cost
an average American family of three from $400 to
$500 per year.
----- Hufbauer said
the administration's decision represented a triumph
of politics over economics. "What the
administration is saying to the textile industry
is, 'We feel your pain. Don't beat up on us in the
2004 election. Bring your petitions in, and we'll
take care of your problems,' " he said.
----- The quotas are
expected to help Republican lawmakers in areas
where textile manufacturing is concentrated,
particularly North and South Carolina and, to a
lesser extent, Georgia, Alabama and Virginia. Bush,
in turn, will need their support to pass future
trade pacts sought by the administration.
----- "The reality is
it's an election year," said Auggie Tantillo,
Washington coordinator of the trade action
coalition that brought the petition for the quotas.
"We have 12 months between now and when our elected
officials have to go and face the voting populace.
If we're going to get relief, it's going to be
within that 12-month time frame."
///
02 Dollar
Sinks on Fear of Trade War; Stocks Drop
November 19, 2003 - Rising worries about U.S.
trade disputes with Europe and China sent the
dollar's value tumbling Tuesday, and Wall Street
went with it.
----- The euro hit its
highest level against the greenback in the European
currency's nearly five-year history while the yen
rose to a three-year peak.
----- In the stock
market, the Dow Jones industrial average dropped
86.67 points, or 0.9%, to 9,624.16, its seventh
loss in eight sessions. The broader market also
ended lower, hurt in part by a jump in crude oil
prices to levels last seen just after the Iraq war
began in mid-March.
----- The action in
currencies and stocks suggested that some investors
increasingly feared that trade battles between the
U.S. and other countries could escalate,
threatening global commerce and economic
growth.
----- For the dollar,
there's a special risk: Because the United States
is dependent on foreigners to finance a large chunk
of its budget deficit, trade disputes leave the
U.S. vulnerable to foreign selling of
dollar-denominated securities that could send the
buck spiraling lower.
----- Those concerns
may have been magnified Tuesday by a Treasury
report showing that foreigners' purchases of U.S.
securities in September exceeded sales by a slim
$4.2 billion, down from $49.9 billion in
August.
----- "I see a growing
probability of a run on the dollar," said Paul
Kasriel, economist at Northern Trust in
Chicago.
----- A lower dollar
is good news for many U.S. companies because it
makes American exports cheaper abroad. But it also
can make foreign products more expensive for U.S.
consumers.
----- Heavy selling of
the dollar Tuesday followed news that the Bush
administration planned to limit imports of some
textile products from China.
----- That decision
came as the administration faced demands by the
European Union to end tariffs imposed last year on
steel.
----- Currency traders
and foreign investors may be betting that the
administration will risk playing hardball on trade
to appease industries in which thousands of jobs
have been lost because of imports, some analysts
said.
----- "This is an
election year coming up, and employment is going to
be an issue," Kasriel said.
----- With the dollar
already weakened this year, it didn't take much to
push it down Tuesday.
----- "People have
been looking for a very precipitous move in the
dollar," said Craig Larimer, currency strategist at
Bank One Capital Markets in Chicago.
----- The euro zoomed
to end the day at $1.195 in New York, up from
$1.177 on Monday and the highest value since its
creation at the start of 1999.
----- The dollar also
tumbled against the yen, ending at 108.04 yen in
New York, its weakest level since November 2000 and
down from 108.95 on Monday.
----- The Bush
administration has insisted this year that it
favors a "strong" dollar, but it hasn't intervened
as the buck has declined. Many analysts believe the
administration has been abetting a weaker dollar to
help U.S. manufacturers.
----- But a sudden
collapse of the dollar could cause problems for
global financial markets. Foreigners who have been
big buyers of U.S. Treasury bonds might dump the
securities rather than risk a further devaluation
of their holdings. That could drive up U.S.
interest rates.
----- Yet there was no
sign of rampant Treasury selling Tuesday. Instead,
bond prices rose slightly as some money left stocks
for bonds. The yield on the 10-year T-note, which
moves in the opposite direction of its price,
dipped to 4.14% from 4.20% on Monday.
----- In the stock
market, most indexes were down between 1% and 2% on
Tuesday, but volume wasn't heavy and losers
outnumbered winners by a relatively modest ratio of
3 to 2 on the New York Stock Exchange.
----- The
technology-dominated Nasdaq composite was off 27.86
points, or 1.5%, to 1,881.75. The Standard &
Poor's 500 index fell 9.48 points, or 0.9%, to
1,034.15.
----- Many Wall Street
pros believe the chances of an all-out trade war
are slim, despite the currency market's
jitters.
----- Like his recent
predecessors, President Bush may for political
reasons stage a "tactical retreat" from free-trade
policies in some industries, said Jeffrey
Applegate, head of investment strategy firm Jeffrey
Applegate & Co. in New York. But the broad
framework of free-trade agreements negotiated over
the last two decades isn't in danger, Applegate
said.
----- The recent slump
in the stock market, he said, probably has more to
do with rebounding oil prices than the dollar.
----- Timothy Morris,
chief investment officer at Bessemer Trust in New
York, said the dollar might be providing another
excuse for stock investors who have been itching to
take some money off the table.
----- "I think people
have had a good run and they're inclined to lock in
some profits," he said.
----- Although major
indexes have fallen seven of the last eight
sessions, the decline so far has been a slow-motion
affair. The Dow is down 234.30 points, or 2.4%,
from its recent peak of 9,858.46 reached Nov. 3.
The blue-chip index is up 15.4% year to date.
----- The Nasdaq index
is down 4.8% from its recent peak reached Nov. 6
but still is up 40.9% since Jan. 1.
///
Respectfully
Submitted
Josie
Cory
Publisher/Editor
TVI Magazine
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