China Hits Back At US Textile Curbs

by Mike Godfrey, for LawAndTax-News.com, New York

17 May 2005

China reacted negatively to the re-imposition by the US on Friday of quotas on trousers, knit shirts and underwear; meanwhile the EU continues to hope that China will voluntarily limit booming textile exports.

Despite complaints from domestic retailers that any action would force up prices for consumers, the administration bowed to demands from textile producers by limiting any increase in shipments in the three categories this year to just 7.5% compared with shipments over a 12-month base period.

Commerce Secretary Carlos Gutierrez said there had been a surge in shipments from China since global quotas were lifted on Jan. 1. The decision was made by the Committee for the Implementation of Textile Agreements. "Today's action by CITA demonstrates this administration's commitment to leveling the playing field for U.S. industry by enforcing our trade agreements," said Gutierrez. According to Commerce Department statistics, imports of Chinese textiles were up 54% in the first quarter on a year earlier.

China's Ministry of Commerce said the decision violated free-trade agreements and could provoke countermeasures. "The Chinese government reserves the right to take further action within the World Trade Organization framework," said spokesman Chong Quan.

Dissatisfaction over what are seen as China's lame efforts to comply with its WTO obligations, especially in the IP field, have hastened action by the administration, which also has an eye on CAFTA ratification discussions beginning this week in the Senate. However, the Bush administration has a history of caving in to producer interests, usually at the behest of the Commerce Department.

Anxieties are also running high in Europe about Chinese textile imports, where the EU Commission has been threatening action for some weeks. In a debate with the European Parliament on Friday Trade Commissioner Peter Mandelson welcomed signals from China that it intends to take further action to address levels of textile imports to the EU.

Commissioner Mandelson said: "I have noted the statements by the Chinese Prime Minister Wen Jibao yesterday in Beijing. I would like to welcome the fact that China understands the concerns of the EU and that China prefers a solution based on dialogue and cooperation. I also welcome that China considers the need to resolve this issue as amongst China ’s primary interests in relation to the EU.

"I noted with particular interest the statement by Wen Jibao that, in addition to the measures already taken to curb textiles export growth, China will take even stronger measures in the near future. I believe that the effects need to be felt quickly if they are to stay our hand in any action that we are to consider taking. It is imperative that China explains in detail the type of additional measures they intend to adopt and what consequences these may have on future trade flows."

Commissioner Mandelson noted that the Commission has a team of officials in Beijing this week to meet Chinese counterparts. These talks continue the informal negotiations launched last week when Commissioner Mandelson meet Chinese Trade Minister Bo Xilai in Paris.

Recommended