> Brad Mayer wrote:
>
> >the dollar's failure to respond to positive
> >U.S. economic data
>
> Fascinating. The stock market's failure to rally on
> better-than-expected employment data on Nov 7 smells funny too.
===========================
Somebody is not going to be happy about this, either.
[New York Times] November 19, 2003 U.S. Moves to Limit Textile Imports From China By EDMUND L. ANDREWS
WASHINGTON, Nov. 18 - The Bush administration moved on Tuesday to severely restrict the growth of a half-billion dollars' worth of Chinese textile imports and immediately found itself caught between battle cries from the industry for more protectionism and anxiety among global investors who fear it.
Invoking special "safeguard" clauses in its trade agreements with China, the Commerce Department said it would begin discussions to impose new quotas that could sharply reduce China's rapidly growing exports of knit fabrics and a handful of other products.
In themselves, the actions affect only a sliver of China's exports to the United States. But textile companies and unions are putting heavy pressure on President Bush to expand the agenda to cover nearly all of the $10.3 billion in imports of Chinese clothing and fabric.
"We have 12 months between now and when our elected officials go and face the people," said Auggie Tantillo, Washington coordinator for the American Manufacturing Trade Action Coalition. "If we are going to get relief, we're going to have to get it in the next 12 months."
Under pressure from lawmakers in both parties, and alarmed by the loss of manufacturing jobs from steel states like Pennsylvania to textile states like North Carolina - both political battlegrounds - administration officials have become increasingly strident in demanding that China play "by the rules."
But the administration has staunchly opposed Congressional proposals to impose sweeping new tariffs on Chinese imports, in part because they have brought lower prices to consumers and in part because trade restrictions have a chilling effect on investor confidence.
Retailing organizations immediately denounced the administration's decision, saying it would produce a spiral of new protectionism that would lead to higher prices of products ranging from bedroom furniture to television sets.
"The administration is balancing the desire to save several thousand manufacturing jobs against the interest of millions and millions of consumers to buy the products they want at prices they can afford," said J. Craig Shearman, a spokesman for the National Retail Federation.
Investors were rattled as well. News of the textile decision helped send the dollar to a near-record low against the euro and down sharply against the Japanese yen.
The administration did not contend that Chinese producers had broken any rules. Rather, it invoked protective provisions that China agreed to as a condition for admission to the World Trade Organization in 2001. They allow the United States to limit the growth of Chinese textile imports to 7.5 percent a year if they are deemed "disruptive" to American producers. The categories of goods the administration is seeking to curb have been growing at rates that are well into the double digits.
American textile companies say they have been forced to cut 316,000 jobs over the last three years and blame Chinese competition for a large part of that loss.
The decision on tariffs came as President Bush continued to wrestle with an equally explosive trade decision on whether to preserve another set of "safeguard" tariffs that protect American steel producers.
The W.T.O. has ruled that the American tariffs violate international trade laws, and the European Union is threatening to impose $2.2 billion in retaliatory tariffs as early as next month.
American steel producers have let it be known that they are willing to abandon the special tariffs as early as next fall, about six months earlier than they would have been required to do so. But European officials dismissed the idea, saying they would retaliate with tariffs on American exports unless the United States abandoned the special steel tariffs entirely.
In steel as well as in textiles, President Bush has been willing to compromise his often-stated goal of promoting global free trade with the more immediate political goal of stemming the loss of manufacturing jobs.
"This decision demonstrates the Bush administration's commitment to our trade rules and America's workers," the commerce secretary, Donald L. Evans, said in a statement accompanying Tuesday's decision. "I believe this will advance our future dealings with China, for no market operates fairly without open dialogue."
The White House's willingness to impose tariffs, however, contributed to a significant plunge in the value of the dollar against the euro and the yen. In New York, the euro settled at $1.1945, up from $1.1766 on Monday. The dollar traded at 108.04 yen, down from 108.95.
Administration officials will now open talks with Chinese officials on how to sharply limit the growth of imports in three categories that totaled $497 million last year: knitted fabrics, like those used to make T-shirts; dressing gowns and robes; and brassieres.
But textile companies are pushing the administration to include a much broader array of imports in the discussions. They have been drumming up support for their cause from lawmakers in both parties and have bluntly threatened to mobilize voters in textile states to vote Democratic if Republicans fail to deliver for them.
They are not alone. Furniture manufacturers have filed antidumping complaints against Chinese exporters of bedroom furniture. Other complaints are pending against Chinese manufacturers of television sets, handbags and handcarts.
The Bush administration has been pressing China on several fronts for several months now, most particularly about letting its currency rise in value, a move that would make Chinese exports more expensive in the United States.
But the administration has fought all proposals in Congress to impose sweeping new tariffs, and trade experts predict that it will continue to oppose them.
Indeed, even as the Commerce Department threatened to start blocking Chinese textile imports it was also holding the first of several workshops in Newark and New York aimed at encouraging American companies to invest in China.
Senator Ernest F. Hollings, Democrat of South Carolina and a longstanding supporter of protective barriers for textile companies and other industries, said the administration's action did not go far enough.
"Without a comprehensive approach to limit imports of Chinese textiles and apparel into this country, this is just another Karl Rove campaign gimmick," Mr. Hollings said, referring to President Bush's chief political adviser. "It will last until the election and then it will be set aside by the W.T.O."
Empowered by some of its vast force of low-wage workers, and a flood of investment from Western companies that seek to take advantage, Chinese exports to the United States have increased at staggering rates in recent years.
China is now the largest exporter to the United States of clothing and apparel, footwear and toys. The United States' trade deficit with China reached $103 billion in 2002 and is on track to reach the same total this year, making its trade imbalance with China larger than that with either Japan or the European Union.