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| Now that global quotas have expired, cheap Chinese textiles are flooding the market. Christine Romans reports on what this means for the U.S. |
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NEW YORK (CNN/Money) -
U.S. imports of Chinese-made clothing jumped sharply in January, the first month after the United States unshackled China and other countries from its long-standing quota restrictions.
For consumers, it could mean cheaper duds in the months ahead.
January saw huge gains in imports of Chinese made apparel including key items such a shirts, pants, lingerie, sleepwear and dresses.
According to the Census Bureau, imports of men's trousers rose 75 percent versus a year ago, while imports of women's sleepwear and shirts equally rose 30 percent from 2004.
The figures also showed a sizeable month-over-month increase for those categories. [For more on the January trade report, click here] For example, U.S. imports of women's lingerie more than doubled to just over $100 million in January from $44 million the month before. And imports of men's shirts nearly doubled, reaching $91 million in January from $51 million in December.
The U.S. eliminated apparel quotas on January 1, 2005. These barriers limited imports of sweaters, coats, shirts and pants from countries such as China, India, Pakistan and Bangladesh.
Once the restriction was removed, industry watchers said they expected the "law of the jungle" to take over. Countries, in theory, will now have free access to the U.S. market, and they will compete globally on price for a greater chunk of the pie.
Many observers bet on China's ability to outmuscle the competition to become the supplier of choice for a large number of U.S. retailers in a post-quotas world.
Indeed, that may already be happening. "Based on just one month of data, we can't make a judgment that the quotas elimination is responsible for these increases [in apparel imports from China]," said Nick Orsini, assistant divisional chief for trade and analysis with the Census Bureau. Nevertheless, Orsini said the numbers did stand out against historical trends.
"Some of the this may be attributed to the removal of the quotas and some to the strength of retail sales," said Britt Beemer, retail industry observer and senior analyst with America's Research Group.
Consumers could be big winners as a greater influx of cheaper-priced clothes from China will help drives down prices since the long-standing quotas had allowed retailers to inflate their sales prices.
Without trade barriers, U.S. retailers say they'll be able to more competitively source rather than artificially raise prices.
At the same time, observers point out that the quotas issue is fraught with political minefields. Domestic manufacturers have accused Chinese companies in the past of "dumping" -- or selling below fair market price -- in the United States.
Said Beemer, "It's likely that American apparel manufacturers and trade unions will raise cries of dumping and unfair trade policies and they'll pressure Congress to reinstate quotas saying that their removal is hurting American jobs." [see video]
Sure enough, the backlash Friday was swift and loud.
"This surge of imports from China is just the tip of the iceberg. If history is any indication, Chinese imports will continue to soar until they gain a virtual monopoly of the U.S. market,"American Manufacturing Trade Action Coalition (AMTAC) Executive Director Auggie Tantillo, said in a statement.
"If the U.S. government fails to act immediately to implement the WTO safeguard, it will be an act of reckless disregard of the available evidence costing hundreds of thousands of U.S. jobs as a consequence," he said.
The monthly trade report also drew a cautionary response from government officials who suggested that the United States would consider imposing restrictions if there is evidence the domestic market is being disrupted.
Jim Leonard, deputy assistant secretary of commerce, told Reuters that the January trade data shows "a significant increase in apparel imports from China. We are concerned about the impact of this increase on our trade and our industry."
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