A new study says the end of quotas won't be as devastating as many in the textile and apparel sectors fear.
"Some might have you believe that these U.S. industries are hanging by their last thread," Fred Abernathy, a professor at the Harvard Center for Textile and Apparel Research, said Thursday in a statement. "It simply isn't true."Abernathy and his colleague, David Weil, said the textile industry will be protected by tariffs, or taxes, which will remain in place long after the 40-year-old quota system expires Jan. 1.
More importantly, they contend that U.S. retailers base their sourcing decisions on multiple factors, not just cost.
"The Wal-Mart model that dominates the U.S. retail scene requires suppliers to replenish their products on a weekly basis," Weil said in the release. "We don't see that relationship changing just because quotas are being eliminated."
The two researchers also argue that U.S. textile companies can stay competitive by focusing on quick turnaround times and product diversity.
Many in the textile industry fear that when quotas end, China will become the dominant player in the world market.
That domination, they say, will force millions of textile workers around the globe out of their jobs.
To illustrate the Chinese threat, one textile association released statistics this week showing China's price advantage.
The National Council of Textile Organizations said China is exporting trousers, shirts, underwear and selected other garments at 76 percent below the prices of U.S. producers.
The statistics show that China's export price on a collection of garments averages $1.84 compared with the U.S. producer price of $7.63.
Textile leaders say China's unfair trade practices include a 40 percent price advantage because of the government's currency manipulation, issuance of billions of dollars in direct subsidies to its textile industry and free loans to manufacturers.
"China engages in the worst kind of predatory pricing," Cass Johnson, president of the NCTO, said in a statement. "When our companies are competing against the Chinese government itself, then something is very wrong."
The NCTO and other textile and apparel groups have asked the federal government to place temporary quotas, called safeguards, on a variety of Chinese exports.
Final decisions on those requests are expected in February.
Earlier this month, retailer and importer groups urged the government to reject the safeguards on underwear, woven shirts, trousers, and knit shirts and blouses.
"Imposition of safeguard quotas ... would severely harm American consumers, retailers and even U.S. textile, cotton and textile machinery exporters," Erik Autor, a vice president for the National Retail Federation in Washington, said in a news release. "The resulting harm would constitute a greater threat of market disruption than the speculative and unsubstantiated claims presented by the textile industry."
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