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Nations battling on textile quota removal
By Jia Bian (China Business Weekly)
Updated: 2004-09-08 14:29

With the approaching time to remove all textile quotas worldwide, US manufacturers are lobbying the Bush administration to take pre-emptive action to stop an expected flood of Chinese clothing imports.

Chinese textile firms and associations, on the other hand, have been working hard to stop new major trade barriers being erected by the United States, the world's largest importer of textile products.

All quotas restricting textile and clothing trade between the World Trade Organization (WTO) members will be eliminated by December 31, 2004, according to the Agreement on Textiles and Clothing reached under the General Agreement of Tariffs and Trade (GATT) in 1994. GATT is the forerunner of the WTO, of which China became a member in 2001.

US textile manufacturers say the end of textile quotas will threaten hundreds of thousands of US jobs.

Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said textile groups would file "safeguard" petitions, asking the Commerce Department to restrict imports from China for a range of clothes as well as home furnishings such as cotton towels and sheets.

The drive for new import restrictions comes as President George W Bush faces criticism from Democratic rival John Kerry that he has not done enough to keep US jobs from moving overseas.

The US Commerce Department has never restricted Chinese clothing imports based on just the "threat" of a surge. And Kerry spokesman Phil Singer accused the Bush administration of "refusing to take action for the completely predictable flood of textile imports that will come from China next year."

China, the world's largest textile exporter, exported textile products worth US$80.4 billion in 2003.

Yang Zhi, an official with China Chamber of Commerce of Import and Export for Textiles, said her chamber will keep a close eye on the US move.

"I think our chamber leaders should try to work out some prevention measures against the US manufacturers' action," said Yang.

Many US clothing imports are restricted by quotas which will expire at the end of this year. The quota has greatly increased the price of Chinese clothes and other textile products sold to the United States. For example, in order to get quota, Chinese manufacturers will have to pay an extra US$80 for 12 pairs of cotton trousers whose price was only US$120.

The costs of quotas have made the price of many Chinese textile products close to those of some quota-free Southeast Asian countries, although China's manufacturing costs are much lower, said Zhao Hanyu, chairman of Zhejiang-based Tianlong Holding Co Ltd. Tianlong Holding is China's leading textile manufacturer and exporter.

"After the quota is lifted, the cost advantage of Chinese products will be realized and its exports to the US market should increase significantly," Zhao said.

However, Zhao also worried that the United States and European Commission will impose new barriers to restrict imports from China.

China's WTO accession agreement allows the United States and other members to slap emergency restrictions on Chinese textiles in response to a surge.

According to Tantillo, the textile groups want the Bush administration to pre-emptively impose a limit on China's growth in key US clothing categories in 2005 of no more than 7.5 per cent above this year's level.

Facing the situation, Chinese textile manufacturers and exporters should form alliance to follow their export growth. If the growth goes too rapidly, they should try to slow down the export growth, suggested Zhang Hanlin, director of WTO Research Centre under the Beijing-based University of International Business and Economics.

Wang Li, a researcher of Sino-US trade at the Chinese Academy of International Trade and Economic Co-operation, said although Kerry has reiterated that if he was elected, he would impose strict trade measures against China, the actual situation might be different.

"He (Kerry) will also face US domestic pressure to favour Sino-US free trade," said Wang.

The conclusion was echoed by Erik Autor, vice-president of the US National Retail Federation, who said the textile industry was exaggerating the China threat "to try to recreate the old quota system."

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