Contact:    Cass Johnson, 202-822-8025                                                  March 2, 2006

    Missy Branson, 202-822-8026    

In 2005, China Moves Toward Monopolizing Non-Quota Apparel Categories in both U.S. and EU

China’s Market Share in U.S. and EU Will Hit 70 Percent by June 2007

Trade Stats Show Looming Disaster for Developing World if WTO Does Not Act

- Nearly $60 Billion in Apparel Exports at Stake -

(Geneva) At a WTO meeting on a textile sectoral, the National Council of Textile Manufacturers (NCTO) released a comprehensive review of global trade figures that show China is racing towards monopoly status in apparel categories that were not covered by quotas in the United States or the European Union in 2005.

The analysis shows that if China continues at its current pace, China will achieve a 70 percent import

market share in the U.S. and the EU in these categories within the next 15 months.

NCTO warned that developing countries around the world were approaching a cliff unless the WTO acted.  NCTO president Cass Johnson said, “The China textile safeguard mechanism that has preserved millions of jobs around the world will expire at the end of 2008.   As of today, there is no means for either the United States or the European Union to stop China once the safeguard mechanism expires.  Unless action is taken now, during the Doha Round, developing countries will see their textile and apparel export sectors quickly dismantled once the safeguards disappear.”

Johnson noted, “Quotas on Chinese apparel cover 60 percent of apparel imports into the United States and 50 percent of apparel imports into the European Union.  That’s nearly 60 billion dollars in export business that the developing world will quickly lose once these quotas disappear.  

As part of the Doha negotiations on industrial products (also referred to as NAMA) the developing world must insist that China’s growth continues to be restrained.  Absent such action, this important export market for the developing world will be gone in less than three years after the safeguard mechanism disappears, and millions of jobs in the developing world will disappear along with it.”

During 2005, in apparel categories that were removed from quotas, China increased its market share in the United States from 16 percent to 39 percent and, in the EU, from 27 percent to 48 percent.   The 2005 surge in imports from China mirrored almost exactly a similar surge in 2002 when China was released from a smaller number of apparel quotas.  China’s import market share in the 2002 product categories is now 67 percent in the United States and 74 percent in the European Union.  The next highest share is Thailand with 2.5 percent.   If China continues at its current pace in the 2005 categories not covered by safeguards, it will reach a 70 percent share of the import market by June 2007.

“By tracking past trade flows and sourcing patterns, we can now project that importers and retailers will complete their shift to China within 24 to 36 months of quotas going away.  

The grim reality of today’s marketplace means that importers and retailers will put 70 percent of their business where the price is best.  Because of the Chinese government’s mountain of unfair trade practices, particularly currency manipulation, that means they will go to China.   There is no other business choice they can make.  The tracking data shows that with Chinese prices so low, trade preferences have not stopped China from monopolizing markets; only safeguards have been effective in slowing China down.”

The NCTO analysis compared China’s export growth in apparel categories that have been removed from quota with China’s growth in categories where quotas have been re-imposed.  It found that in the United States where quotas were not in place, China’s apparel exports grew by $7.2 billion dollars while exports from the rest of the world fell by $3.3 billion. 

However, in apparel categories where quotas were re-imposed, China’s apparel exports only grew by $2.1 billion while the rest of the world lost only $38 million. 

Figures for the EU were similar.

The NCTO analysis also examined average Chinese prices compared to “Rest of the World” prices.  The analysis showed that Chinese prices dropped by an average of 34% following the removal of quotas and remained approximately ten percent below world prices thereafter. 

NCTO is a member of the Global Alliance for Fair Textile Trade (GAFTT) that includes 90 plus trade groups from more than 50 countries.  GAFTT has urged its member governments to insist that the Doha Round of multilateral trade talks include a separate textile negotiation under a textile sectoral where issues such as China’s monopolization of the textile and apparel market can be addressed. 

The WTO has set a deadline of April 30^th for deciding whether or not a textile sectoral should be included in the WTO negotiations.

Go to www.ncto.org for complete report or click here.

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