Wes Hickman (202) 224-5972 or Kevin Bishop (864) 250-1417
-- U.S. Senator Lindsey Graham (R-South Carolina) hosted a meeting earlier this week in Washington with Secretary of Commerce Don Evans and textile leaders from the Carolinas to discuss protecting domestic textile and other manufacturers from trade abuses committed by China.
Present at the meeting were Graham, Evans, International Trade Undersecretary Grant Aldonas, Smyth McKissick, President and Treasurer of Alice Manufacturing Company, and Allan Gant, CEO of Glen Raven Mills.
Several issues were raised with Secretary Evans including the implementation of the China safeguard for textiles. As part of the China Accession agreement to the World Trade Organization (WTO), the U.S. has the ability to utilize a special textile safeguard that would allow the reinstitution of quotas in categories where Chinese imports are surging.
China’s access to the U.S. textile and apparel market more than doubled in 2002, growing by an astounding 117% and is up an additional 114% so far in 2003, according to recent numbers from the American Textiles Manufacturing Institute. The safeguard would re-establish a quota on unrestricted textile or apparel categories -- such as knit fabric, dressing gowns and robes, and cotton gloves -- for a period of one year and could be expanded for two additional one-year periods.
“I have long maintained that China cheats on trade agreements,” said Graham. “The practices of Chinese companies and the policies of the Chinese government are illegal and give them an unfair advantage in the textile market. American textile companies produce superior products and do so in a fair and humane way. Given a fair playing field, they can compete with any foreign producer. That is all we are asking.”
Graham noted Secretary Evans’s strong support for investigating and taking appropriate action against China.
“I was encouraged by the response from Secretary Evans,” said Graham. “He shared our view that China’s behavior is out of bounds. The Secretary’s office is working with manufacturing industries to validate what we believe to be abuses by the Chinese government toward the American manufacturing industry, especially textiles. The Administration is willing to do that for the textile companies.”
The group also discussed the strong evidence that China is intentionally undervaluing its currency to drive down the price of its exports and to hurt U.S. manufacturers. WTO and International Monetary Fund rules prohibit currency manipulation for the purpose of gaining an export advantage.
Earlier today, Graham signed a letter to Treasury Secretary John Snow asking the department to determine if China’s currency is undervalued and if so to take appropriate action. The letter was also signed by Senators Charles Schumer (D-NY), Elizabeth Dole (R-NC), and Evan Bayh (D-IN).
The Chinese yen has been tightly pegged to the US dollar in a range of 8.3 yen per dollar since 1994. Given China's enormous growth since 1994, this fixed level most likely does not reflect its true value.
Economists at Goldman Sachs have estimated that the yen 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. This means that when Chinese manufacturers export a product, they effectively receive a 15 percent to 40 percent subsidy on their exports, providing them with a nearly insurmountable advantage over U.S. producers.
“The Treasury Department needs to look into this issue and take appropriate action to ensure the Chinese aren’t allowed to continue devaluing their currency to the detriment of our domestic industries,” concluded Graham.