The US textile industry has suffered through a number of turbulent years, and it continues to face, what may be euphemistically called, "a challenging economic environment". According to the industry, the combination of a strong dollar and the devaluation of many Asian and other currencies as the result of the 1997 financial crisis has resulted in a tidal wave of Asian textile and apparel imports, driving down prices in the US market and causing the rapid decline of US textile and apparel employment.

In the year 2000, total textile mill shipments fell for the third consecutive year, declining approximately 1%, to US$ 77 billion, the lowest level since 1993. This textile mill shipments' drop was the first three-year decline in at least 40 years. Significant write-offs resulted in an after-tax industry loss of approximately US$ 300 million last year, following profits of US$ 700 million in 1999. Prior to 2000, the US textile industry had not had an annual loss in more than 50 years. Textile employment also continued its long-term decline in 2000. At the end of the year 543,000 workers were employed in the sector, down 3% year-on-year, or 15,000 workers below 1999.

In 2000, the one bright spot on the balance sheet of US textile producers was the industry's export performance, which highlights the importance of the North American Free Trade Agreement (NAFTA) and the Caribbean Basin Trade Partnership Act (CBTPA). Last year, US industry recorded a 12% increase year-on-year in exports of yarn, fabric and made-up textile goods. Despite the strong US dollar, total textile exports exceeded US$ 10 billion for the first time in history. Nonetheless, as the US economic slowdown took hold in the last quarter of 2000, imports of low-cost Asian textiles continued to exert downward pressure on domestic textile prices.

In his 6 June address to the Congressional Textile Caucus, Chuck Hayes, the president of the American Textile Manufacturers Institute (ATMI), put it more bluntly, saying, "The US textile and fibre industry is in a crisis situation". Hayes noted that the aftershocks of the 1997 Asian financial crisis are still causing damage to the US textile industry, as the currencies of major Asian textile exporting countries have not regained their pre-1997 value.

According to ATMI, Asian textile products are entering the US market at prices 35% below the level they had before the crisis. The industry claims that this exchange rate situation gives Asian producers a comparative advantage, which could destroy the US textile industry, if the Bush administration and Congress do not act. Noting the US steel industry's successes in persuading the Bush administration to initiate an investigation under Section 201 of the US Trade Act of 1974, which could result in establishing import quotas designed to give the sector breathing space to restructure, the textile industry wants to receive import relief of its own.

Such relief could take the shape of three distinct approaches.

• The US textile industry wants the Bush administration to initiate antidumping and countervailing duty (AD/CVD) investigations targeting non-market economies in Asia, such as China, and all Asian countries that have devalued their currencies since 1997. With China's impending accession to the World Trade Organisation (WTO), it is likely that China would be the principal focus of such actions. Although Hayes did not name specific countries, such action would presumably also include Turkey, which devalued its currency earlier this year.
  
  

• The industry sees as its second most pressing problem the prevalence of customs fraud, including illegal transhipment and smuggling. Singling out China, Hayes alleged that in the past seventeen years, China has not fulfilled its obligations under any of the six bilateral Sino-American textile and apparel agreements.
  
  A related issue is the smuggling of textiles into Mexico to gain illegal NAFTA origin. The Mexican textile association estimates that as much as 40% of the Mexican apparel market is made up of smuggled goods from Asia. To remedy this situation, the US textile industry advocates increased monitoring by the US Customs Service to combat both smuggling and illegal transhipping of textile and apparel products. This enhanced monitoring could include the establishment of a limited number of ports of entry for textiles and apparel.
  
  

• Finally, US textile manufacturers are concerned that a new round of WTO negotiations could strike a fatal blow to the industry. Consequently, the industry is lobbying Congress for support, in Hayes' words, "to get the administration to include in its objectives for the next WTO trade round, the exclusion of any cuts of US textile and apparel tariffs."