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China to scrap export tariffs on 81 types of textiles
By Jiang Wei (China Daily/Agencies)
Updated: 2005-05-30 09:42

China said on Monday it would abolish export tariffs on 81 lines of clothing and textiles, keeping its promise to roll back the taxes if Western countries threw up barriers against its goods.

A Chinese worker sew T-shirts in a garment factory in Dongguan in south China's Guangdong province May 27, 2005. The European Union started a 15-day clock ticking on possible Chinese textile import curbs on Friday but held out hope for a 'mutually satisfactory' agreement with Beijing despite advancing the May 31 deadline for action. The EU Executive Commission, in charge of trade policy in the 25-nation bloc, said intensive talks would take place starting on Monday at all levels with China over its surging textile exports. Picture taken on May 27, 2005.
A Chinese worker sew T-shirts in a garment factory in Dongguan in south China's Guangdong province May 27, 2005. China announced May 29 that it will abolish export tariffs on 81 categories of clothing and textile products from June 1, 2005. [Reuters]

The European Union on Friday formally requested talks with China over surging shipments of T-shirts and flax yarn.

Under the terms of China's accession to the World Trade Organization in 2001, lodging the request requires China to limit its exports of those products to a level no greater than 7.5 percent above the amount that entered the 25-member EU between March 2004 and February 2005.

Washington imposed similar quotas on Chinese-made trousers, underwear, shirts and other goods in mid-May.

To head off such curbs, China introduced an export tax on 148 products on January 1, the day a decades-old system of quotas on developing countries' exports of textiles expired.

China's exports duly boomed, leading to anger in Washington and some EU countries and prompting Beijing on May 20 to offer another round of tariff increases on 74 products with effect from June 1.

In a statement on its Website (www.mof.gov.cn ), China's finance ministry said tariffs that had been in effect on 78 items since January 1 would be scrapped on Wednesday, and planned taxes on three of the lines listed on May 20 would be revoked.

"The State Council's tax committee decided to further adjust textile export tariffs from June 1," the statement said.

"This includes the abolition of a planned export tax on linen yarn. In total, 81 items will see export tariffs canceled from June 1."

China had given due warning of its planned action.

Chinese workers in a Ningbo silk garment factory make textile products in this undated file photo. China announced May 30 that it will scrap export tariffs on 81 categories of textiles. [AFP] 
"If countries take action to limit textile product exports from China, we will exclude those products from the export tariffs," Commerce Ministry spokesman Chong Quan said on May 21.

The executive Commission, which has responsibility for EU trade policy, said intensive talks would take place starting on Monday at all levels with China over its textile exports.

Under WTO rules, if no agreement is reached within 90 days, the EU is permitted to impose the 7.5 percent "safeguard" until the end of the year. They can be renewed until the end of 2008.

China reacted testily on Sunday to the move by Brussels.

"The decision not only transmitted an erroneous signal of trade protectionism for the textile industry sector of the EU, but also undermined the rights and interests of Chinese enterprises in global textile products trade integration," Chong said in a statement posted on the ministry's Web site.

But he said China was willing to settle the problems through consultations with a "pragmatic attitude." The EU, too, held out hope for a mutually satisfactory deal during the 15-day consultation period.

EU figures show imports of Chinese T-shirts rose 187 percent in the first quarter of 2005, while imports of flax yarn, used to make linen cloth, rose 56 percent. 

EU safeguard measures on textiles opposed

Ministry of Commerce spokesman Chong Quan yesterday stated the country's opposition to the European Commission's decision to launch safeguard measures on two categories of Chinese textiles.

"This procedure has hurt Chinese textile manufacturers' rights granted by global trade integration and has sent a wrong signal of trade protectionism to the European textile industry," he said.

Chong stressed that the Chinese Government expected to resolve the existing trade disputes through negotiation with the European side.

The European Union (EU) put its argument to the World Trade Organization (WTO) last Friday and asked China to adopt new measures to control its exports of T-shirts and flax yarn to European countries.

However, the step does not mean an end to negotiations, nor that the EU will take immediate action against Chinese textiles.

Instead, Claude Veron-Reville, the spokeswoman of European Trade Commissioner Peter Mandelson, said consultations would be held between the two sides in the coming weeks in a bid to reach a mutually satisfactory agreement.

Since the beginning of this year, China has adopted a series of measures to control textile exports, including imposing export tariffs on 148 categories of textiles and apparel products and strengthening self regulation among textile manufacturers and exporters.

Also, China's Ministry of Finance announced this month to increase the country's export tariffs on certain categories of textiles from June 1, in hopes of easing the concerns of trade partners.

The export duty on T-shirts was increased from 0.2 yuan (2.4 US cents) to 0.8 yuan (9.6 US cents) per unit. And flax yarn was hit with a new tariff of 3 yuan (36 US cents) per kilogram.

However, the European side argued that the impact of the tariffs would be too little too late.

The European Union claimed that its T-shirt imports from China rose 187 per cent in the first four months of this year from a year earlier and that imports of flax yarn rose by 56 per cent year-on-year.

It said these increases had significantly hurt not only its domestic textile manufacturing industry but the textile manufacturers of other developing countries.

(China Daily 05/30/2005 page1)

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