The textile quota system is finally kaput — and like it or not, textile importers can now buy as much as they want from anywhere in the world.
Put in place decades ago to give Western textile producers time to find ways to become competitive with low-cost developing countries, the quota system ended at midnight Dec. 31 — and if you had nothing better to do on New Year's Eve, you could have watched the countdown clock on the Web site of the U.S. Assn. of Importers of Textiles and Apparel.
Despite the lengthy 10-year phase-out of quotas, the end stirred bitter words on both sides of the issue as well as a fresh crop of lawsuits. An editorial in Southern Textile News, for example, laid the blame entirely on China and made importing seem un-American:
"The mighty dragon has been breathing fire down our backs for years and is set to emerge from its cave on Jan. 1. The prospect is frightening — unless you're an importer champing at the bit to aid and abet a country that undervalues its currency, engages in intellectual property theft, transships its goods, closes its market, et al."
Here at home, 2004 brought us politicians shamelessly plucking the broken heartstrings of unemployed textile workers. It would have made sense for politicians to help the industry get ready for this day — it was 10 years coming, after all — but the horse was out the barn before the election year began. If they could feel shame, they'd be feeling it now.
There are still issues with China, certainly, and no one can blame the domestic textile industry for trying to get some relief from the government. But we certainly cannot blame China for a directive issued Dec. 13 from the Committee for the Implementation of Textile Agreements calling for U.S. Customs to hold fabrics that entered U.S. ports near the end of the year in excess of quotas.
An unexpected challenge
In years past, fabric that was over quota near the end of a year was counted against the next year's quota. But since the quota is now gone, the committee felt that some importers might deliberately ship goods in excess of quotas limits, expecting that the goods would be released on Jan. 1.
This decision has created trouble and expense for some upholstery fabric importers. Their goods, ordered in good faith in October from mills that held valid quotas, were declared to exceed quota limits when they arrived in December. Obeying the directive from CITA, Customs put the goods into bonded warehouses where they will stay until Feb. 1. At that time, they will be released in 5% per month increments of the amount over the base quota.
Textile lobby groups such as the American Manufacturing Trade Action Council applauded the decision. "It was the very least the government could do," said a spokesman, adding that that the embargo "should be a lesson to people about the risks of doing business with overseas companies."
A spokesperson at the United States Assn. of Importers of Textiles and Apparel countered that the action was action "pointless, without merit and just plain mean."
Since most imported textiles are apparel, a lot of upholstery fabric suppliers felt confident in late December that the embargo would not impact their business, stating that they typically have some goods held at the end of the year, which then are released on Jan. 1. Some of these companies were surprised to learn when they arrived back at work after the holiday last week that the goods had not been released on Jan. 1 but will be held till Feb. 1 and then trickled out incrementally over a period of months.
So, this was a point for the "protectionists."
Then on Dec. 30, the U.S. Court of International Trade ruled that the U.S. Department of Commerce had to stop considering threat-based limits on Chinese textile imports to the United States until "the merits and the issue of compliance with the law are fully considered," according to the judge. That ruling naturally sent the happiness meter off the chart at the USA-ITA and sent groups like AMTAC to resend their press releases citing massive job losses that could occur if the court doesn't reverse its "flawed" decision. Point to the "free-traders." Stay tuned!
Despite all this wrangling, a new year is under way and it's a whole new world for the textile industry.
The good news is that the American textile industry is not going away. The strong players have already adapted in order to survive by investing when they should and carefully carving out a niche — whether it's design or service or technology — that will keep them important to their customers.
Recognizing a Rising Star
Last night, Furniture/Today and the International Textile Market Assn. hosted a cocktail party at the String & Splinter and outlined plans for the Rising Star Award to be presented at Showtime in January 2006. For more information about the nomination process for this award, which is designed to recognize young talent in the home furnishings and textiles industries, contact ITMA at (336) 885-6842.
