Blog: Chinese cap a boost for CAFTA?
Leonie Barrie | 16 May 2005
The US government’s decision to cap imports of clothing from China was always going to be a controversial one – and needless to say Friday’s announcement has already sparked a diatribe between US manufacturers, retailers and Beijing, all of whom have their own interests in this ongoing dispute.
However, it could also be argued that the US action to limit the cotton trousers, underwear and cotton knit shirts and blouses exported by China to the United States this year comes one step closer to putting an end to the “will they, won’t they” debate. Formal talks between the US and China are about to begin, but the quotas could remain until the end of the year unless the US and China are able to reach a “satisfactory” agreement to halt the safeguards.
I’ve just returned from a trip to Guatemala where the uncertainty hanging over the region’s industry is painfully clear. Executives talk of the wariness of US buyers who are waiting to see if their purchases from China will be limited and in what categories; while others say that already capacity in Central America is tight, and if the China safeguards happen there won’t be enough capacity to satisfy demand.
Added to this is the ongoing debate over the passage of the DR-CAFTA free trade agreement with the US, which seems to be making agonisingly slow progress. Again investment in the region – and the accompanying orders from US buyers – all depend on this agreement being signed but seem no closer than at this time last year.
One small glimmer of hope could come from the US government’s aggressive stance on the China safeguards – which were given the go-ahead just three days after the deadline for public comment passed. The accord has been given a lukewarm response by certain sectors of the US textile industry, but they may well feel more comfortable in lending it their support now that the administration has acceded their requests for safeguard action.
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