Whether they oppose or support stringent quotas, members of the local apparel and retail industries agree on this much: the latest deal between the United States and China to limit clothing and textile imports is an improvement on the current system.

The new three-year deal, set to go into effect on Jan. 1, will curb the influx of Chinese goods on 34 textile and clothing categories from sweaters to wool suits to swimwear. Imports in most categories would only be allowed to grow between 10 percent and 12.5 percent in 2006 and 2007, and between 15 percent and 16 percent in 2008.

“Up until this agreement has taken place, there have been all sorts of safeguards and legal challenges and questions about how many goods can come in,” said Paul Charron, chief executive of Liz Claiborne Inc., which owns several local apparel brands, including Juicy Couture and Laundry by Shelli Segal. “That appears to be in the process of being answered.”

Under the current system, a series of annual safeguards were imposed on several apparel categories after the U.S. government deemed that a surge of Chinese goods harmed the domestic market. Imports on categories such as socks, undergarments and bras were restricted to increases of 7.5 percent above the previous year’s levels.

The limits were legal under the agreement that allowed China to enter the World Trade Organization and were pushed by Southern textile companies after the U.S. market was flooded by cheap Chinese textiles.

But in the first half of this year, imports of certain apparel and textile products skyrocketed by as much as 10-fold, and the total amount of apparel and textile imports was estimated at $20.6 billion in the 12 months that ended in August.

Apparel makers and retailers faulted the system for being disruptive because of uncertainty as to when safeguards would be imposed, how they would be implemented and which categories would be covered. Businesses were also unable to plan for long-term growth because the U.S. government’s policy toward Chinese imports wasn’t decided.

“A relative level of stability is really important, versus the perceived volatility of the prior year where political reaction can drive short-term decisions,” said Larry Meyer, chief financial officer of Los Angeles-based retailer Forever 21 Inc.

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The full story

is available in the Nov. 14 edition of the Business Journal
.