Nov 18 2003

Textile Industry Receives Protection from Chinese Imports

Safeguard Relief Provisions Activated by Bush Administration

WASHINGTON – U.S. Senator Lindsey Graham (R-South Carolina) today said he was pleased the Bush Administration had decided to implement the China safeguard relief provisions to protect the textile industry. The safeguards re-establish a quota on unrestricted textile and apparel categories – such as knit fabric, dressing gowns and robes, and bras – for a period of one year and could be expanded for two additional one-year periods. “I’m very pleased the Bush Administration has decided to implement the safeguard protections,” said Graham. “There’s no question the Chinese have been cheating and profiting from unfair trade practices. The safeguards are one way to show the Chinese that their conduct is out of bounds and we aren’t going to put up with it. I applaud Commerce Secretary Don Evans and President Bush for taking meaningful steps to combat China’s cheating.” Graham blamed the Chinese for intentionally manipulating the value of their currency creating a competitive disadvantage for American producers. He noted the Chinese yuan has been tightly pegged to the US dollar in a range of 8.3 yuan per dollar since 1994. Given China's enormous growth over the past decade, this fixed level most likely does not reflect its true value. If the yuan were allowed to float freely, like other major currencies, many economists believe it would appreciate substantially against the U.S. dollar. Economists at Goldman Sachs have estimated that the yuan may be undervalued by 15 percent and other experts say that number could be as high as 40 percent, meaning that the Chinese intentionally lower their currency's value to make their goods and services cheap internationally. The practical effect of this currency manipulation means Chinese manufacturers receive a 15 percent to 40 percent discount on their exports, providing them with a nearly insurmountable advantage over American producers. “There has been a perfect storm brewing in China which is trying to destroy what remains of the textile industry,” said Graham. “China’s access to the U.S. textile and apparel market more than doubled in 2002, growing by an astounding 117 percent and is up an additional 114 percent so far in 2003. “We have lost thousands of textile jobs in South Carolina, not because the Chinese work harder or smarter, but simply because they are cheating,” said Graham. “The American textile worker can compete with anyone given a fair opportunity. Unfortunately, that opportunity does not exist in today’s’ economy.” Graham noted he will also continue to push legislation he introduced with Senators Charles Schumer (D-New York) and Jim Bunning (R-Kentucky) which imposes a 27.5 percent tariff on all Chinese imports if they do not put an end to currency manipulation. The legislation, S. 1586, allows the President to remove sanctions once he certifies that China has moved to a market-based currency. The tariffs would kick in after a 180 day grace period to ensure that Treasury officials have adequate time to work with the Chinese to institute reforms. The U.S. Senate is on record in support of changing the Chinese currency practices. Last month, the body passed Senate Resolution 219 calling on China to abide by its international agreements and adopt a market-based system of currency valuation. The resolution passed Senate late last month without a single dissenting vote. “The textile industry provides jobs and benefits to hundreds of thousands of Americans,” said Graham. “The Bush Administration was right to protect these jobs from a communist dictatorship that manipulates and cheats rather than follow the rule of law. But there’s still more that needs to be done.” ####