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Textile firms left with no quota for US exports
Updated: 2005-06-23 10:06

China's textile companies may find themselves facing an ambiguous situation of "no quotas left" in the second half of this year when they want to export to the United States as the US repeatedly sets limits on China's textile products, said spokesman for the Ministry of Commerce Wednesday.

As the United States repeatedly sets limits on China's textile products and the limits are very narrow, the spokesman said, the exportable quantity of some categories of textile products has been almost used up.

China is negotiating with the U.S. on the seven types of textile products which have been set with limits by the US, said the spokesman.

He noted that China has released a temporary regulation to manage China's textile exports, but whether or not such a regulation will be applied to exports to the U.S. will be decided in the negotiations.

"From the current point of view, by the day the regulation takes real effect on July 20, China's textile companies might find themselves left with no further exportable quotas to the U.S.," said the spokesman.

The ministry released the regulation last Sunday, deciding to resume its license system of textile exports to some countries. The measure is expected to take effect on July 20. Currently, the measure is mainly engaged in textile exports to the European Unionon ten categories of products.

In the past 20-odd years, China used the license system as there were export quotas in international trade. On Jan. 1, 2005, the quotas were revoked and Chinese companies began to enjoy the benefit of free trade. Nevertheless, the United States and the EU took restrictive measures on textile products from China based on Article 242, resulting in concerned conditions and procedures for the restriction.

In the early hours of June 11 in Shanghai, after ten-hour-long closed-door talks between Chinese Minister of Commerce Bo Xilai and visiting EU Trade Commissioner Peter Mandelson, China and the EU reached an agreement on textile exports. Then China released the new management regulation on the basis of the agreement.

The spokesman said that not like the situation with U.S., the agreement with EU will dispel the misgivings both at home and overseas on the textile exports of China, thus reducing uncertainty.

He acknowledged that the new regulation differs widely from theone adopted formerly in the country. Firstly, the new regulation was promulgated on the basis of negotiation and thus China has itssay in it, while the former one was set exclusively by importers.

Besides, the textile categories being set with limits are much fewer in the new regulation. For example, in the textile exports to EU, the regulation applies to only ten categories, compared with 41 just before January 1, 2005 when the global quota system ended.

The spokesman suggested domestic textile companies plan carefully in compliance with the new regulation when deciding to export to the EU and improve their products quantity and value-added to ensure higher profits.

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