For Immediate Release
Contact: Nate Herman
Phone: 703-797-9062

TGA Dispels the Myths on China Textile Safeguard & Travel Goods
Safeguard Quotas Would Hurt U.S. Firms, U.S. Jobs & U.S. Consumers

Princeton, NJ - July 15, 2003 - Anne DeCicco, president of the Travel Goods Association (TGA), announced today that TGA will launch a media campaign to provide accurate, factually supportable information to the media and government officials about the U.S. travel goods industry and China. "Beginning today, the U.S. travel goods industry will disseminate the truth in response to the U.S. textile industry's political efforts to convince the U.S. government to impose safeguard quotas on U.S. textile travel goods imports from China under the China textile safeguard clause," announced DeCicco. "Despite claims to the contrary, the imposition of safeguard quotas will not protect the U.S. travel goods industry. In fact, the imposition of quotas will hurt the U.S. travel goods industry, the same industry the safeguard clause was designed to protect, and the tens of thousands of U.S. workers who depend on the industry." DeCicco continued, "It is time to replace theory, assumptions and implications with reality."

TGA took the first step in its media campaign by sending a letter to President George W. Bush on behalf of the U.S. travel goods industry on July 11, 2003 opposing safeguard quotas.

Before January 1, 2002 (the day quotas were removed), the United States was the only country in the entire world to maintain quotas on textile travel goods. "Besides the United States, not one developed or developing country, including the European Union, Canada or Japan, had erected quotas against textile travel goods imports," said DeCicco. "Did the United States know something the rest of the countries didn't know? Were the United States' quotas effective?"

"The imposition of safeguard quotas on textile travel goods will not protect U.S. production or U.S. jobs," noted DeCicco. DeCicco continued, "It has been proven since 1984 (the year quotas were first imposed on textile travel goods) that quotas do nothing to protect domestic production; nor would quotas result in the re-establishment of domestic production of textile travel goods. In fact, even with strict quotas still in place on China and other countries in 2001, imports still accounted for 82 percent of all travel goods (both leather (non-textile) and textile) consumed in the United States, a steep rise from 65 percent of all U.S. consumption in 1992." Although data for 2002 is not yet available, these numbers are expected to rise. (Quotas on textile travel goods were removed January 1, 2002.) "More importantly, DeCicco stated, "most of the remaining production is related to high-end leather luggage, handbags and travel goods made of other non-textile materials. Imposition of quotas on textile travel goods will do nothing to help the small production of leather travel goods in the United States. Instead, from 1984-2001, U.S. travel goods firms paid hundreds of millions of dollars to foreign governments and countries for quota, money which now stays in the U.S. economy."

As to employment, "We estimate that there are 80,000 jobs in the U.S. directly related to the wholesaling and retailing of travel goods; whereas, there is no more than 10,000 jobs in the U.S. engaged in the production of travel goods," stated Tom Sandler, president of Samsonite, Inc., the largest domestic employer in the U.S. travel goods industry, and chair of TGA. "Of those 10,000, only a small amount are involved in the production of textile travel goods." The net effect of the imposition of quotas would disrupt supply and increase consumer prices of textile travel goods. It would also cause a significant disruption to the substantial domestic employment engaged in the design, sale, marketing, warehousing and distribution, administration and retailing of the imported products.

DeCicco asks, "What is the U.S. textile industry trying to protect if safeguard quotas wouldn't protect non-existent U.S. textile travel goods production and would only harm U.S. textile travel goods employment?" The U.S. textile industry argues that safeguard quotas would protect its falling sales of U.S.-made fabrics not only to U.S. manufacturers of textile travel goods, but to manufacturers in countries, such as Mexico, that use U.S.-made fabrics to receive duty benefits under U.S. trade preference programs and free trade agreements. The truth, however, is that U.S. imports of textile travel goods have increased significantly over the past 1-1/2 years, not only from China, but also from Mexico. U.S. imports (based on # of pieces) from Mexico more than doubled in 2002. More importantly, the percentage of textile travel goods from Mexico entering under the North American Free Trade Agreement (NAFTA), which requires the use of U.S. fabric, also doubled, accounting for 74 percent of all textile travel goods imports from Mexico. However, the textile industry has failed to provide statistics to support their claims. According to DeCicco, "The U.S. textile industry has repeatedly failed to provide numbers to substantiate any of its claims related to textile travel goods."

Why would the imposition of safeguard quotas on Chinese textile travel goods actually hurt U.S. firms, U.S. workers and U.S. consumers? The U.S. travel goods industry suffered a major drop in sales, ranging from 40% - 60%, immediately after September 11, 2001 due to the significant decline in travel and the depressed economy. "As an industry and major employer of United States citizens, noted Sandler, "U.S. travel goods manufacturers, distributors and retailers needed to stay profitable while finding new ways to lure travel-wary and reticent U.S. consumers back into stores. U.S. travel goods firms introduced new products, slashed inventories and implemented other cost cutting measures in their efforts to achieve this balance."

In addition, knowing of the pending elimination of Category 670 (textile travel goods) quotas on U.S. imports well in advance, many U.S. travel goods firms successfully planned and implemented an orderly production transition away from other, higher-cost Asian countries such as Thailand and the Philippines to Chinese factories. Despite these efforts, many U.S. travel goods firms and retailers did not survive, with a prominent U.S. travel goods firm going out of business, the top U.S. travel goods retail chain closing its doors, and the second largest U.S. travel goods retail chain declaring bankruptcy. Many small, family-owned retail stores also were forced out of business. According to Sandler, "For those U.S. firms that survived, the elimination of U.S. quotas on textile travel goods arrived just as the U.S. industry was at its nadir, fostering a fragile recovery by providing increasingly cost-conscious U.S. consumers with more value for their money." Sandler continued, "The imposition of safeguard quotas and the increased costs it would impose on the U.S. travel goods industry would force many U.S. firms to layoff U.S. workers, force many U.S. travel goods retailers to close stores and force U.S. consumers to pay significantly higher prices."

Why, then, do textile travel goods remain a target of the U.S. textile industry? "The textile industry is significantly larger, and more politically connected than ours," stated DeCicco, "But although they can muster political influence, it doesn't mean their case has merit. In fact, what they advocate is blatant protectionism, which the Bush Administration, and the Clinton Administration before it, strongly opposes. The U.S. travel goods industry is hopeful that CITA [the Committee for the Implementation of Textile Agreements] will rise above political pressure and evaluate the petitions [for the imposition of safeguard quotas] on their merit, or lack of merit, as required by CITA's own published procedures."

"Although we understand, and are even somewhat sympathetic to the real issues facing the textile industry," commented DeCicco, "we are distressed, that as they cast a wide net in an attempt to solve their own problems, they have seriously threatened the stability and fragile recovery of an industry that is unable to help them. Imposition of safeguard quotas on textile travel goods from China would, however, hurt the tens of thousands of U.S. citizens employed in the travel goods industry; it would hurt U.S. consumers who would see increased prices, but not increased value; and, on a macro level, it would hurt the already fragile relations the United States has with the Chinese government, which has strongly objected to attempts to implement safeguard quotas. It is ludicrous to get the Chinese irritated over an issue where the United States has no case. We have to pick our battles carefully, and this certainly should not be one of them. All of this damage would occur, and no one, especially not the U.S. textile industry, would see any significant benefit," said DeCicco.

"While it is something of a David vs. Goliath situation," DeCicco continues, "we nevertheless are exerting what efforts we can to ensure that the Bush Administration and those in Congress who support trade and globalization are made aware of this attempted power play by a party that is not even directly involved in our industry." Notes TGA Chair Sandler, "Certainly when former U.S. Trade Representative Charlene Barshevsky negotiated the provisions [of the China textile safeguard clause], it was never envisioned that they might be used to hurt the very industries they were designed to protect."

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The Travel Goods Association is the voice of the U.S. travel goods industry. A national trade association, TGA represents the manufacturers, distributors, and retailers of luggage, leather goods, business and travel accessories, business and computer cases, handbags, and other products for people who travel.

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