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Tariff hike helps keep textile trade in order
China Daily  Updated: 2005-05-24 05:38

Protectionists in some developed countries might be excited by China's recent announcement that it plans to massively raise tariffs on textile exports.

China will raise export tariffs on 74 textile products, with a 400-per-cent increase for most, beginning next month.

But rather than being a concession to rising protectionism from the United States and some European countries, the move marks China's resolution to speed up the painful restructuring of its textile industry, one of its key export sectors, to prepare for future competition.

Thanks to abundant cheap and relatively skilled labourers, China has become the largest textile producer and exporter in the world. Last year, it exported textile products worth about US$95 billion, accounting for 16 per cent of its total exports.

Fears of China's advantages in this labour-intensive industry led to a 10-year-old quota regime on textile goods that only ended on January 1 this year.

Such a system, at odds with the fundamental principle of free trade advocated by the World Trade Organization, was originally designed as a stopgap measure for related countries to take their time to adapt to economic realities.

Yet, a whole decade after the implementation of such an unfair check on China's textile exports, developed countries like the United States are still dragging their heels on much needed industrial restructuring, while pressing developing countries hard to open their markets wider.

The recent decision by the United States to reintroduce restrictions on seven kinds of textile and clothing imports from China and a similar demand by the European Union to protect domestic producers all bode ill for global trade.

By yielding to domestic protectionism, these developed countries set a bad example which poisons the international climate needed to save the Doha round of trade talks. The success of Doha will largely determine the progress of the international community's joint efforts to build a free and fair global trade system in the new century.

Also, these countries' protectionist acts risk derailing sound global trade growth which has been increasingly powered by China's rapid economic growth in recent years.

It would be their loss if the Chinese growth engine were affected by their irresponsible protectionist measures.

A Morgan Stanley report indicated that in the past decade, cheap imports from China saved American consumers more than US$600 billion.

And from last year, China is expected to buy more than US$1 trillion worth of goods from the rest of the world every two years, creating numerous jobs for other trade partners.

Next month's tariff hike will put extra pressure on China's textile industry which currently employs millions of workers. Consequently, extensive growth patterns featuring razor-thin profits will no longer be allowed to prevail.

While China does its part to improve global trade, other related countries should stop encouraging protectionism.

(China Daily 05/24/2005 page4)

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