I'm told people in the northern tier of the United States make fun of Canadians because of their provincialism and economic dependence on their southern neighbors. But it looks like Canadians don't have to take a backseat to anyone in trade disputes, judging from their government's recent actions involving China.
Canada slapped a 50 percent tariff on imports of barbecue grills it said were being subsidized by the Chinese government. The Canadian International Trade Tribunal acted before formally determining if the imports injured Canadian grill producers. If so, the import duties become permanent.
The case, brought by a firm in Brampton, Ontario, is becoming all too familiar to manufacturers in the United States and Canada who have watched their market shares dwindle under the assault of lower-priced imports from China. The Canadian firm claims China's subsidies helped its manufacturers' share of the grill market climb from 1 percent in 2000 to 21 percent in 2003.
A new National Council of Textile Associations study shows Chinese manufacturers have captured 72 percent of the U.S. market in 29 apparel categories removed from quota control after China joined the WTO in 2001.
Trade analysts have warned Chinese manufacturers have been shaving prices even more as they jockey for position in anticipation of the removal of all textile quotas under the Multi-Fiber Arrangement next Jan. 1.
Based on the accelerated efforts during the second quarter of 2004, NCTO officials project China's share of the U.S. textile market could hit 80 percent by the end of 2004. Earlier studies had estimated China would reach 75 percent before the quotas expired in January.
U.S. manufacturers aren't the only ones feeling the sting of the Chinese market-grabbing tactics. The NCTO says that the U.S. market share held by about 50 other countries has fallen from 90 percent to 28 percent since January 2002. Mexico, Thailand, the Philippines and the Caribbean nations saw the largest declines.
Although input costs generally rose during that time, the NCTO says China's apparel prices declined 53 percent after quotas were removed, falling from an average of $6.23 per square meter in 2001 to $3.12 per square meter in June.
On Sept. 1, the NCTO and other U.S. organizations said they planned to file threat-based special textile safeguard petitions to “prevent China from causing irreparable damage to the U.S. textile industry and the U.S. textile and clothing market.”
The safeguard petitions, which can be brought under China's accession agreement to the World Trade Organization, would be filed to limit the further growth of Chinese textile and apparel products in categories such as men's and boys' cotton trousers and women's and girls' cotton trousers.
The filings will take several months to wind their way through the Committee for the Implementation of Textile Agreements, an interagency committee, while the administration decides whether it wants to further annoy the Chinese government. Maybe we should turn the handling of such cases over to the Canadians.