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Status Quota?

Without trade quotas, U.S. textile-makers struggle.

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This story appears in the September 2005 issue of Entrepreneur. Subscribe »

George Shuster, CEO of Cranston Print Works Co., likes to say his company "opened China before Nixon did." The Cranston, Rhode Island, textile company, Shuster says, was importing raw materials from China even before Nixon's 1972 diplomatic breakthrough ended decades of Cold War silence between the countries. "They call us an old, good customer, and an old friend," Shuster says of his Chinese suppliers.

Despite the friendship, China's role in the industry has Shuster concerned these days, and many other U.S. textile companies terrified. When a global system of trade quotas expired at the end of 2004, Chinese imports surged in the United States. In some categories, imports of T-shirts, pants and other textiles jumped more than 1,000 percent through the spring months. Dozens of factories closed their doors, blaming the tidal wave of low-cost competition. Finally, in May, under pressure from factory owners and labor unions, the U.S. imposed new quotas limiting year-over-year increases in Chinese textile imports to 7.5 percent.

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