Nations Jostle for Share of U.S. Import Pie

WASHINGTON — Foreign apparel and textile suppliers are jockeying for position as they race through the final months of the quota regime that has regulated their global trade for the past three decades.

An analysis of the most recently available Commerce Department import figures showed some clear winners and losers, as well as a few surprises.

“The fog seems to be lifting, and we are getting a glimpse of who the dominant players are beginning to be,” said Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association.

China continues to muscle out its competitors, growing its shipments of fabric and garments through the first five months of the year by 1.3 billion square meters equivalent, to 4.22 billion SME. To illustrate the magnitude of China’s growth, its 1.3 billion SME in new business over that time period was larger than the total shipments of all but two other countries. Mexico and Canada shipped 1.68 billion SME and 1.4 billion SME of goods, respectively, during those months.

While China’s rapid growth rate has been cause for concern in the U.S. and abroad, other nations posting strong gains haven’t received such public scrutiny. South Korea, Mexico, Jordan and Malaysia all had a place on the list of top 10 gainers.

The losers list included such countries as Bangladesh and Turkey, two nations whose industries have been outspoken in calling for the 147 nations of the World Trade Organization to rethink their plan to drop the apparel and textile quotas on Jan. 1.

WWD ranked the top 10 gainers and losers by the total amount of increase or decline, rather than by the percentage of change. This method allows the list to focus on the U.S.’ major trading partners, and it factors out countries that saw meteoric growth or precipitous decline from a very small base. A ranking of the top 10 gainers by percentage would start off with Tajikistan, which posted 1,043.1 percent growth, and Kazakhstan, with a 324.7 percent increase. Together, these two countries shipped 12.4 million SME of goods to the U.S. through the first five months of the year — roughly 0.3 percent of China’s volume.

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The dropping of fabric and garment quotas come Jan. 1 will allow nations with strong supply chains and low wages, such as China and India, to grow their market share dramatically. However, in the final months of this year, importers said, they’re keeping their options open out of concerns that they’ll run into the quota limits earlier than usual.

For the past 30 years, countries have been able to “carry forward” quotas from the next year for categories that have been embargoed. But there are no 2005 quotas for countries to borrow against.

“We have sourcing executives that are going around the world right now making sure they can manage the next five months, because quota is tight and there is no flexibility to speak of,” said Erik Autor, vice president and international trade counsel at the National Retail Federation. “We’re moving into the most important season of the year for apparel retailers, from back-to-school to the holiday season at the end of the year, and sourcing people with major retailers are very concerned they will not have enough quotas this year to meet consumer demand.”

As a result, some countries and regions that in the past have not filled their quota allocations, or that receive quota-free status through trade agreements with the U.S., could get a temporary boost in orders.

Even the flagging U.S. textile industry is having a better year, although textile associations claim several factors are contributing to the uptick in business. Cass Johnson, president of the National Council of Textile Organizations, said domestic producers have seen a “stabilization” in business, which has been on the decline for the past several years.

“It is hard to say whether it is due to the lack of carry-forward, or an increase in military orders, or increased retail sales, but textile shipments appear to be relatively stable,” said Johnson. “It’s probably a combination of those three things.”

Importers and retailers are keeping a close eye on certain regions, such as sub-Saharan Africa, the Andean region and even Mexico, that are beneficiaries of U.S. free-trade programs. Mexico and Jordan, both of which enjoy trade benefits, placed on the top 10 gainers list. However, Canada and Honduras, which also benefit from trade pacts, numbered among the top 10 decliners.

Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles and Apparel, said, “You can look at China, and absolutely China is continuing to grow its business, but there are a lot of other success stories this year.”

She pointed to a 68.7 percent rise in imports from Jordan, which offers duty-free and quota-free benefits to companies operating in “qualified industry zones.”

“Jordan is one destination our member companies are excited about, and a lot are using the QIZ production for cotton shorts and pants and knit tops this year,” Hughes said.

South Korea’s 20 percent increase in imports came as a surprise to some trade observers because it is generally perceived as a high-cost nation.

“That is a country that everyone said was overpriced and not competitive,” said Hughes. “They are a world-class source of yarns and fabrics, and they hold their own in apparel.”

Much of South Korea’s increase came in knit fabrics, a category where quotas were lifted in 2002 under the U.S.’ 10-year phaseout plan. Last year, the U.S. reimposed quotas on Chinese imports in that category, after finding a surge in shipments had caused market disruption.

Other countries have lost ground in categories where the quotas have been lifted, partly as a result of surging Chinese shipments. For instance, Bangladesh, Thailand, Sri Lanka and the Philippines have seen a dramatic decrease in imports of textiles, man-made fiber handbags and luggage, all of which are no longer under quota.

“You are seeing the disaster the industry warned about reflected in the actual trade numbers, where in every category that China has been removed from quotas, it is swamping its competition, whether that’s Thailand, Bangladesh or Mexico,” said Johnson of the NCTO. “Bangladesh is a harbinger of things to come.”

The Bangladeshi government last month sent a letter to the WTO asking that it consider the problem that the quota phaseout could pose to smaller economies. Last week, J.C. Penney Co. responded by saying that if Bangladesh didn’t change its position, the retailer would consider pulling its business out of the country’s factories.