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Lifting Textile Import Quotas: Apparel Makers Gauge Fallout

Lifting Textile Import Quotas: Apparel Makers Gauge Fallout

By CHRIS CZIBORR

2005 could be a pivotal year for textiles, and, by extension, apparel makers.

As it is now, three decades of textile import quotas under the Multi Fiber Agreement are set to end on Jan. 1. That would give textiles from China, India and other developing states freer access to the U.S. and the European Union.

The issue is pitting U.S. textile makers against apparel makers and retailers.

The Bush administration is lobbying the World Trade Organization to extend the quotas, with backing from U.S. textile makers.

On the other side, the Washington, D.C.-based National Retail Federation and the Arlington, Va.-based American Apparel and Footwear Association are pressing for an end to the quotas as planned. So is U.S. Trade Representative Robert Zoellick.

An extension would mean higher U.S. prices on clothes, they argue. How it plays out could have varying effects on local apparel companies.

Big companies, such as Huntington Beach-based Quiksilver Inc., could benefit.

Surfwear maker Quiksilver imports clothes as well as fabrics for production here. Company officials declined to comment for this story. In filings with the Securities and Exchange Commission, Quiksilver said it deals with quotas by getting fabric from multiple sources.

“We do not anticipate that these restrictions will materially or adversely affect our operations since we would be able to meet our needs domestically or from countries not affected by the restrictions on an annual basis,” the company said.

The lifting of quotas presumably would give Quiksilver more leeway in buying fabrics from Asia.

The end of quotas would “affect our industry to a degree,” said Alex Bhathal, spokesman for Tustin swimwear maker Raj Manufacturing Inc.

Raj makes swimsuits in Tustin. Fabric for the company’s products isn’t subject to quotas, just duties, Bhathal said.

Even so, “if quotas go away, there’ll be increased competition for lower-end products,” he said

Raj: No Government Help

Raj hasn’t lobbied the U.S. government to keep the quotas, according to Bhathal.

“We’re not in the mindset of asking the government for help,” he said. “It’s already an extremely competitive business.”

The company might look to shift production to China down the road, Bhathal said. But an end to quotas wouldn’t be enough to spur such a move, he said.

“People have been trying to make more swimsuits in Asia, especially China, over many years,” Bhathal said. “And that accelerated in the past year.”

Quality concerns keep Raj from producing in China now, he said.

“We need a high-quality, fashionable product and quick production turnaround. Those things can’t be done out of China, but that may change in the future.”

Raj Bhathal, Alex’s father and the company’s chief executive, has made exploratory trips to China.

“Our designer label division would stay domestically produced no matter what,” Alex Bhathal said. “If we do something overseas, it would be done on the private label side where cost is more of a factor.”

Raj counts about 400 local workers.

Susan Crank, chief executive of Anaheim swimwear maker Lunada Bay Corp., said she worries what lifting quotas would do to specialty U.S. textile mills.

“The thing that concerns me the most is that there are some very entrepreneurial mills in the U.S. where small runs of fabrics are made,” she said. “There are times when the balance of larger and smaller manufacturing runs can allow a U.S. mill to exist. If those larger runs are only given to China and the U.S. mills are left with only the smaller runs, I don’t know that they could survive.”

Lunada Bay taps mills in the U.S. and Canada for all its textiles, Crank said. The company then taps contractors in OC and Los Angeles to makes its swimsuits.

Like Raj, quality is an issue for Lunada Bay, Crank said.

“In swimwear, it’s important fabrics stretch and there’s a consistency in color from lot to lot,” she said. “All those things have been provided very well by U.S. makers in particular.”

Esmael Adibi, director and professor of economics at Chapman University in Orange, said quotas aren’t helpful for the U.S. economy and its consumers.

“If anybody wants to sell us cheaper goods, there’s nothing wrong with us accepting,” Adibi said. “Even if the Chinese are selling at below cost, it’s still good for consumers. Governments,whether they increase tariffs or impose quotas,aren’t helping the economy as a whole. They are helping one industry at the expense of consumers as a whole.”

While consumers would pay less without quotas, they also could have less choice, according to Crank.

“We’re all good at adapting, and we’re all understanding that we’ve got to be thinking on a global basis,” she said. “But the more creative and the more innovative kinds of fabrics that would be available to a company such as ours where we sew 100% in the U.S. could limit us as to the kinds of creativity that can be used in regards to fabric.”

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