China Pledges To Tax Its Own Textile Exports

by Mary Swire, Tax-News.com, Hong Kong

15 December 2004

China has pledged to tax some of its textile exports after concerns were expressed by the United States and the European Union that they will be flooded by imports when quotas are lifted on January 1.

The Chinese Ministry of Commerce indicated earlier this week that it will impose taxes on lower value textiles whilst discouraging excessive expansion of the domestic cloth manufacturing industry.

Under a World Trade Organisation agreement reached a decade ago, quotas on the importation of textile products imposed by several powers will expire beginning 2005.

However, the EU and US are concerned that an unregulated global textile trade will lead to a glut of materials on the market originating from China - the world's largest producer of textile products, which has sold $42 billion worth of products in the first half of 2004 alone.

The EU welcomed the “goodwill gesture” by China, and a spokesman indicated that it has no plans to impose restrictions on Chinese imports next year.

However, the US appears less than convinced by China’s pledge to limit exports and the Bush administration is expected to make a decision on limiting Chinese imports by February.

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