U.S. Clothing and Textile Trade with China and the World: Trends Since the End of Quotas

The elimination of the last set of quotas of the Agreement on Textiles and Clothing (ATC) on January 1, 2005, ostensibly brought about the end of decades of quantitative restrictions on the international exchange of clothing and textiles. Trade analysts around the world expected that the final lifting of import limits would foster increased growth in clothing and textile trade, as well as a restructuring of clothing and textile production. In particular, some market watchers predicted a dramatic shift of clothing and textile production to China at the expense of many other nations. One major factor complicating analysis of post-ATC clothing and textile trade was the decision by the United States (and the European Union) to utilize available trade remedies to forestall the impact of end of quantitative restrictions on clothing and textile trade. After the United States imposed safeguard measures in 2004 and 2005, China and the United States negotiated a "memorandum of understanding" that continued quotas on selected items until 2008. For Congress, post-ATC clothing and textile trade has raised several issues it may choose to consider. First, Congress may consider modifying current trade remedy laws, particularly those dealing with safeguard measures and countervailing duties. Second, Congress may wish to examine in more detail the impact of the end of the ATC quotas on the U.S. clothing and textile industry. Third, Congress may also consider examining the effectiveness of various trade preference programs, especially as they relate to clothing and textiles.