[Congressional Record Volume 150, Number 106 (Thursday, September 9, 2004)]
[Extensions of Remarks]
[Page E1572]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           TEXTILES AND APPAREL CHINA SAFEGUARD ACT H.R. 5026

                                 ______
                                 

                          HON. SANDER M. LEVIN

                              of michigan

                    in the house of representatives

                      Thursday, September 9, 2004

  Mr. LEVIN. Mr. Speaker, yesterday, several colleagues and I 
introduced legislation that would create a comprehensive plan to 
address the impending crisis in the U.S. textiles and apparel industry. 
An explanation of this bill for the Record follows.


                                Summary

       H.R. 5026, the Textiles and Apparel China Safeguard Act, 
     creates a comprehensive program to respond to the WTO-
     mandated expiration of textiles and apparel quotas at the end 
     of 2004. Foreseeing within the expanded trade resulting from 
     China's WTO accession the potential negative impact on the 
     U.S. and world markets from quota expiration, the Clinton 
     Administration negotiated the right for the United States to 
     use a special safeguard against imports of textiles and 
     apparel products from China. Despite 345,000 U.S. jobs lost 
     in the textiles and apparel industry since 2001, and 
     estimates of hundreds of thousands more after quotas expire, 
     the Bush Administration has failed to actively implement the 
     special safeguard or to create a comprehensive approach to 
     the issue.
       The Textiles and Apparel China Safeguard Act is critical 
     for the U.S. textiles and apparel industry and the 700,000 
     U.S. jobs it supports. The Act ensures active enforcement of 
     the special safeguard against imports from China and creates 
     a comprehensive approach to the impending crisis. The Act has 
     three key elements. Specifically, it would:
       (1) direct the President to make two changes to the overly 
     restrictive rules issued by the Bush Administration to 
     implement the China safeguard so that the safeguard will be 
     meaningful for the U.S. textiles and apparel industry;
       (2) direct the President to use the special China safeguard 
     to negotiate a comprehensive agreement by immediately 
     entering into formal consultations with China over textiles 
     and apparel imports that threaten to disrupt the American 
     market; and
       (3) enforce aggressively U.S. rights under the special 
     China safeguard by imposing restraints on imports if China 
     does not agree on a mutually acceptable solution.


                       Background and Explanation

       On January 1, 2005, quotas on textiles and apparel products 
     are scheduled to expire for WTO Members. Textiles and apparel 
     industry analysts predict that China will dominate global 
     textiles and apparel production when that happens. In the 
     United States, some analysts expect China to capture over 
     two-thirds of the U.S. market and, according to the World 
     Bank, capture as much as 50 percent of total global 
     production--a dramatic increase from its current 17 percent 
     share.
       China's dominance in the U.S. market will have serious 
     direct adverse consequences domestically. It will also be 
     devastating for many poorer developing countries that will 
     lose their U.S. market share to China, including U.S. 
     preference partners in Central America and sub-Saharan 
     Africa. The impact on these countries will be another blow to 
     the U.S. industry because many of the U.S. preference 
     partners are heavily integrated with the U.S. industry, 
     including use of significant amounts of U.S. textiles in the 
     apparel they export.
       The textiles and apparel industry is among the largest U.S. 
     manufacturing industry (in terms of employment, with a total 
     of around 700,0000 workers), yet to date the Bush 
     Administration has failed to take any significant steps to 
     address this major trade event.
       As part of China's WTO accession package, the Clinton 
     Administration created a special safeguard applicable to 
     imports of textiles and apparel products from China. This 
     special China safeguard gives the United States the right (1) 
     to enter into consultations with China to create a more 
     stable market, (2) to negotiate restraints on textiles and 
     apparel imports with China, and (3) to impose restraints on 
     an annual basis if China does not agree and the imports are 
     causing or threatening market disruption.


                Changing Overly Restrictive Regulations

       The Bush Administration issued regulations in May 2003 
     implementing the special safeguard. Those rules, however, are 
     overly restrictive, severely constraining the safeguard and 
     making it effectively unavailable for large segments of the 
     U.S. industry and its workers. First, the regulations do not 
     clearly provide the right to bring a ``threat'' case. In 
     other words, the U.S. industry and its workers will have to 
     wait until after imports from China have already caused 
     injury--often irreparable injury--before they can bring a 
     successful case. Second, the regulations are written in a way 
     that significantly constrains the U.S. right to respond to 
     market disruption from China. In many cases, Chinese imports 
     cause market disruption not by competing directly with U.S. 
     production, but because they supplant production that would 
     have used inputs made by U.S. industry. In both cases, the 
     injury to the U.S. industry and its workers is the same--lost 
     orders and lost jobs--yet the current regulations do not 
     provide clearly a right to use the safeguard to prevent the 
     second kind of market disruption.
       The Textiles and Apparel China Safeguard Act directs the 
     President to rescind the restrictive interpretation of the 
     textiles and apparel safeguard implementing regulations and 
     replace them with regulations that:
       (A) make clear that the U.S. industry and workers will not 
     have to wait until after Chinese textiles and apparel imports 
     have caused injury, but may use a threat case to preempt 
     injury; and
       (B) make clear that a safeguard may be imposed for market 
     disruption that harms the U.S. industry and workers when 
     Chinese imports displace production that uses inputs made by 
     the U.S. industry.
       In this way, the Textiles and Apparel China Safeguard Act 
     will allow the United States to take full advantage of its 
     rights under the special China textiles safeguard and make 
     this safeguard a more useful tool for the U.S. industry and 
     its 700,000 workers.


    Creating a Comprehensive Approach for Import-Sensitive Products

       Given the significant adverse impact expected on the U.S. 
     textiles and apparel industry and its workers from immediate 
     and wholesale elimination of textiles and apparel quotas--
     some estimates predict hundreds of thousands of U.S. jobs 
     will be lost if nothing is done--a more comprehensive 
     approach is needed. The Textiles and Apparel China Safeguard 
     Act provides this comprehensive approach.
       The Act directs the President, in effect, to negotiate a 
     comprehensive bilateral textiles and apparel agreement with 
     China, as allowed under the terms of China's WTO accession 
     agreement. The special China safeguard allows China and any 
     WTO Member to negotiate bilaterally ways to address market 
     disruption caused by Chinese textiles and apparel. 
     Significantly, the accession agreement does not place any 
     limitations on the content of such settlements. The open-
     ended nature of the settlement provision in the safeguard 
     provides the basis of negotiating a comprehensive textiles 
     and apparel agreement with China. The Textiles and Apparel 
     China Safeguard Act directs the President to negotiate such a 
     comprehensive agreement on all products still subject to 
     quotas.
       If China is not willing to come to terms on a comprehensive 
     agreement, the Act directs the President to invoke the import 
     restraints provided for under the safeguard across the board 
     for all products eligible for the safeguard, as the United 
     States has the right to do under the terms of China's WTO 
     accession agreement.




                          ____________________