LABOUR UNION OFFICIAL CALLS ON CANADA TO IMPLEMENT SAFEGUARDS AGAINST CHINESE CLOTHING AND TEXTILE IMPORTS

OTTAWA – Alex Dagg, Canadian Director and Executive Vice President of UNITE HERE – the labor union that represents workers in the apparel, textile, laundry, distribution, hotel and food service industries – today told a House of Commons subcommittee Canada should implement a safeguard available through the World Trade Organization to restrict textile and clothing imports from China.

In testimony before the Standing Committee on Industry, Natural Resources, Science and Technology, Dagg said the recent expiration of worldwide quotas on apparel and textiles means the Canadian textile industry will be hit with decreased exports to the U.S. as well as increased imports from China in the Canadian markets. China is expected to capture about 70 percent of the U.S. apparel and textiles market.

“For the first time in three decades all countries will compete in an unregulated environment with China,” Dagg said. “Every country in the world with an apparel and textile industry is threatened by this development.”

Dagg said the safeguard was a part of China’s entry into the WTO. The safeguard may be implemented if imports from China threaten to impede the “orderly development of trade.” The safeguard would allow the Canadian government to limit the growth of Chinese imports to Canada to a rate as low as 7.5 percent. Several countries – Turkey, Argentina and Peru – have already implemented the safeguards.

“The radical nature of this threat can be seen by what happened to imports from China when import quotas were removed on several categories in January 2002,” Dagg testified. “In the three years since quotas were lifted Chinese imports in baby garments increased by 427% and China’s import share went from 14.7 percent to 54.1 percent. In women’s and girls’ knit shirts & blouses China’s imports increased by 406.3 percent and China’s share of imports went from 20.7 percent to 61.5 percent.

“During this period tens of thousands of Canadian apparel and textile workers lost their jobs. Now that all quotas have expired we can expect similar increases in Chinese imports in all products. Tens of thousands of more jobs are threatened.”

Dagg told the subcommittee the appreciation of the Canadian dollar against U.S. currency poses a second threat.

“Canada’s economy is more dependent on exports to the U.S. than any other country in the world,” she said. “Therefore our monetary authorities should be extremely concerned about the appreciation of the Canadian dollar against the U.S. dollar.

“The Canadian dollar has increased from 64 cents U.S. to well over 80 cents, or by about one-third, over the past two years. About one-third of that increase took place between June and December 2004.

“While the rise in the Canadian dollar is largely the flipside of the fall in the U.S. dollar the fact is that the Canadian dollar has appreciated more against the U.S. dollar than the currency of any other major U.S. trading partner. While The Bank of Canada has not been primarily responsible for the rise of the dollar, the two interest rate hikes in late 2004 (in September and October) contributed to the rise in recent months.

“The higher Canadian dollar makes it very difficult for Canadian companies to export to the U.S. market and to compete in the Canadian market. The problem is not just sharpened competition with the US, but also a heightened competitive threat from China and other developing Asian currencies whose currencies are pegged to the U.S. dollar.”

Dagg urged the subcommittee to recommend that the Canadian government implement the China apparel and textile safeguards and call on The Bank of Canada to express their concern about the U.S. dollar depreciation and to keep interest rates low and reverse a “recent monetary tightening”.

UNITE HERE has more than 40,000 members in Canada. The apparel industry is Canada’s 6th largest manufacturing sector with approximately 100,000 employees working in 3,900 establishments. The textile industry employs an additional 43,000 workers. Apparel is manufactured in all provinces and territories. Quebec accounts for 55% of the value of Canada’s apparel production. Montreal is the third largest apparel manufacturing center in North America, after Los Angeles and New York.