US trade action against China at crossroads
( 2003-07-11 09:52) (Business Weekly )
To implement or not to implement Section 201 of the 1974 Trade Act - that could be the question for the US Government if the American Textile Manufacturers Institute lobbies for such a move to restrict imports of Chinese textiles.
The institute will file its application to the US Department of Commerce within three months and apply for restrictions on imports of Chinese textiles and clothing, according to China Central Television news.
It would be the first such application since US safeguard measures against Chinese textiles took effect on May 21.
However, it is now said that the association may turn to Section 201 of the Trade Act instead of the safeguard measures.
Unlike safeguard measures adopted in anti-dumping cases among World Trade Organization (WTO) members, Section 201 belongs to US domestic law and "should be applied to domestic trade disputes only," said Sun Huaibin, director of the Research Centre of the Chinese Textile Economy affiliated with the China National Textile Industry Council.
Section 201 is a unilateral rule. In other words, the US Government will implement the rule so long as it considers that imported products have seriously hurt or threaten to hurt the interests of US manufacturers, explained Sun.
"It is common practice for the US Government to put its domestic law before international law," he said. "But whether Section 201 will be implemented depends on the attitude of the US Government rather than that of the US textile manufacturers."
China exported US$62.68 billion of textiles and clothing to the United States last year.
"The US Government should admit that many of its domestic textile dealers have made large sums of money from Chinese products," Sun added.
However, political factors may have an effect, particularly the upcoming US presidential election campaign.
George W. Bush's administration would probably tacitly consent to the restrictions given that it represents large US manufacturers, said Li Yushi, vice-president of the Chinese Academy of International Trade and Economic Co-operation, a think-tank of China's Ministry of Commerce.
In addition, to get more votes from ordinary people, the Bush administration is expected to show it is determined to protect US workers, who complain about their plants being shut down as identical but cheaper Chinese products flood in, said Li.
Under China's commitments to the WTO, if the American Textile Manufacturers Institute turns to the unilateral provision instead of the safeguard measures permitted, this could be for two possible reasons, Sun speculated.
One is the lack of convincing data that the abrupt increase in imports of Chinese textiles and clothing has hurt the US textile industry.
US data on textile plants that have shut down and workers who have been laid off cover all categories of products, but the WTO safeguard measures must be product-specific. In this case, the safeguard measures would not be applicable.
The other possible reason is that the textile institute's application to the US Department of Commerce to implement safeguard measures against Chinese textile products, which is presented last September, has already expired.
The recent US-instigated trade disputes between the United States and China suggest that the United States is changing its attitude towards trade with China, Zhang Hanlin - president of China National Institute on World Trade Organization, part of the Beijing-based University of International Business and Economics - was quoted by China Central Television news as saying.
Such disputes have included anti-dumping charges against Chinese exports of television sets, trade disputes concerning Chinese agricultural products, as well as the latest charges against Chinese textiles and clothing.
According to official US data, China's trade surplus with the United States last year exceeded US$100 billion. China thus topped the list of countries that have a trade surplus with Washington for the first time.
Under such circumstances, the US Government will inevitably respond to protect its goods, said Zhang.
The trade academy's Li said: "The constantly sluggish US economy, which has yet to rebound since 2001, has forced the Bush administration to do something (to divert public attention) and trade with China is considered an easy target."
It is too early to predict whether such trade disputes will grow fiercer in coming years, he added.
Chinese trade and industry officials suggested in late May that the US safeguard measures against Chinese textiles should be lifted for the benefit of both nations, but little substantial progress has been achieved in subsequent bilateral consultations.
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