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Lingerie Reveals a Complex Trade Fight

Lawmakers, producers seek limits on Chinese goods. But importers say that won't save jobs.

November 04, 2003|Evelyn Iritani | Times Staff Writer

In America's escalating battle over trade with China, nothing is off-limits, not even women's underwear.

Last week, 165 members of Congress from 36 states sent letters to President Bush urging him to move quickly to protect besieged domestic textile and apparel producers from surging Chinese imports. Among their demands: Restrict the import of Chinese-made bras, dressing gowns and knit fabric.

As evidence of trade's critical role in a hotly contested presidential race, the letters carried the signatures of all five Democratic presidential candidates in Congress, including longtime free-traders Sens. John F. Kerry of Massachusetts and Joe Lieberman of Connecticut. The letters blamed China's "illegal" manipulation of its currency and resulting export boom for an "enormous wave of textile and apparel plant closures and worker layoffs."

To capitalize on the election-year tensions, U.S. manufacturers are organizing a grass-roots lobbying campaign, setting up voter registration programs at their factories and wooing media in textile-dependent states in the South. The American Manufacturing Trade Action Coalition, which filed the China safeguard complaints, was organized by textile and yarn producers that along with apparel makers have shed 271,100 jobs since January 2001.

The message to the White House is clear: Take action now or risk losing at the polls next November.

"I have been a lifelong Republican. I have supported this president," said Steve Dobbins, president and chief executive of Carolina Mills, which has closed 10 North Carolina factories and laid off 1,400 people the last four years. "The way things are going, I can't in good conscience vote for him while I am telling people that have worked for me for 25 years that I can't give them a job."

U.S. retailers and importers opposing the import restrictions complain that China is being used as a scapegoat by U.S. manufacturers that are not competitive because of high wages and rising costs at home. China's defenders deny that a recent gush of Chinese exports has crippled domestic producers, pointing out that the move of labor-intensive manufacturing offshore has been happening for decades.

They also say that the domestic coalition behind the safeguard complaints doesn't include the handful of apparel firms still producing bras in the United States. Bayonne, N.J.-based Maidenform Inc. and Leading Lady, the world's largest producer of maternity and nursing bras, oppose the calls for protection because they source their goods from all over the world -- including China.

"Implementing a safeguard on bras would not increase jobs in the U.S.," said Steve Masket, executive vice president at Maidenform. "If anything, the inability of U.S. producers to balance the costs of production around the world would result in lower long-term sales growth and fewer domestic jobs."

In the bizarre and complex world of international trade politics, it is often difficult to separate the victims from the villains. Though the fate of Chinese-made lingerie might seem trivial, this is shaping up to be a major struggle pitting an increasingly desperate U.S. domestic textile industry against the Bush administration and huge importers such as Wal-Mart Stores Inc., Target Corp. and J.C. Penney Co.

As the presidential race gets underway, the decline in manufacturing jobs and the ballooning U.S. trade deficit with China, which reached a record $103 billion last year, have become the Bush administration's biggest headaches. Last year, China's exports of textiles and apparel to the U.S. grew by 117% and have increased an additional 75% so far this year. In August, China accounted for 21% of the U.S. textile and apparel market, up from 7% in 2001, according to the textile industry.

Commerce Secretary Don Evans just completed a visit to Beijing, where he warned Chinese leaders that they must move faster to open their markets or risk a backlash from unhappy U.S. investors. He followed Treasury Secretary John W. Snow, who a few weeks earlier urged China to loosen controls on its currency, the yuan.

Last week, a Treasury Department report to Congress on the policies of major trading partners in managing their currencies said China had not violated any trade laws by pegging the yuan to the U.S. dollar. The currency peg means that when the dollar weakens, as it has in recent months, the yuan also falls. But U.S. manufacturers contend that the yuan is drastically undervalued and has given Chinese exporters an unfair advantage.

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