Blog: Safeguard standoff
Leonie Barrie | 19 May 2005
US textile groups are obviously delighted that the Commerce Department is rattling through their safeguard cases: another four categories have just been added – taking the total to seven – in a dispute that has been in the pipeline since last summer.
The government argues that the measures are being taken “to ensure that US companies get a fair deal as they compete in the global marketplace.” But are they really going to make much of a difference to the domestic industry? Surely what doesn’t come in from China will simply end up coming from India or somewhere else in Asia. And in the meantime retailers will rush to try to get their products exported from China before the quota limit is reached.
There’s also a very strong likelihood that countries such as Indonesia, Cambodia, Vietnam, Laos and Thailand will be used for domestic sale or covert reshipment of made-in-China garments. Re-exports under outward processing arrangements (OPA) where garments partially assembled in mainland China undergo some manufacturing processes in Hong Kong, for example, to qualify for export under Hong Kong’s quotas has long been part of the region’s trade.
Whatever the new quota levels for China will be, they will be substantially higher than last year, and one way or another, will expire completely in 3 years’ time.
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