US textile decree to cloud trade relations ( 2003-11-20 00:06) (China Daily)
The US decision to re-impose quotas on three types of textile products from
China, which has disappointed all levels of local industry, will hurt related
businesses and consumers in both countries and dampen economic and trade
relations between the two sides, analysts say.
A woman measures
cloth at a shop in Shanghai November 19, 2003. Chinese textile firms
expressed anger Wednesday over US plans to slap import quotas on a range
of China-made products, saying they would fight the move.
[Reuters]
On Tuesday in Washington, US Commerce Secretary Don Evans announced the US
Committee for the Implementation of Textile Agreements (CITA) had decided to set
quotas on Chinese imports of knit fabric, dressing gowns and bras, which he
claimed "demonstrates the Bush administration's commitment to our trade rules
and America's workers.''
Details of the imposed quotas will be decided after negotiations between both
sides.
The quotas were first eliminated when China joined the World Trade
Organization (WTO) at the end of 2001.
Analysts have condemned the decision to re-introduce them, saying it will
increase prices in the United States, and damage Sino-US trade relations and the
liberalization of world trade.
The Chinese Ministry of Commerce has shown deep regret and firm opposition
over the move.
The ministry's spokesman, Chong Quan, said China will reserve the right to
protect its interests through the WTO.
Chong said both the Chinese Government and textile industry have pointed out
many times that the US textile industry -- in its application for quota
restrictions -- had failed to prove that a reduction in the demand of its
products at home was being caused by Chinese imports.
Tuesday's decision did not conform to CITA's procedure on special safeguards
against Chinese textiles and apparel, and the pledges contained in the working
group's report on China's accession to the WTO, Chong said.
"China hopes the United States will fully recognize the negative impact the
decision will have on textile trade between the two countries, and on bilateral
trade and economic relations as a whole,'' Chong said.
"China had hoped the United States would avoid abusing the special safeguard
measures.''
Zhang Hanlin, president of the China Institute for WTO Studies, reiterated
that the decision will hamper economic and trade links.
"It is not a matter of the goods involved, but the sentiment of the
decision,'' Zhang said.
China has pushed continually to maintain balanced trade with the United
States and vowed to expand its imports from the United States.
A purchasing delegation was sent to the United States last week, signing US$6
billion worth of contracts for products that included planes and cars.
According to Zhang, the United States has ignored China's sincere efforts and
turned an economic issue into a political matter.
Next year's presidential elections in the United States appear to be the main
motivation behind Tuesday's announcement, Zhang said.
In the wake of the decision, the US dollar has struggled at record lows
against the euro and near three-year troughs versus the yen as the market
worries it could signal further shifts in the United States toward additional
protectionist policies.
Analysts say they believe that substantial tariff hikes on foreign goods --
led by rising protectionism -- will probably blunt consumer spending in the
United States, chilling foreign demand for some US assets as the world's biggest
economy slows.
Another case illustrating the US' move toward protectionism is the WTO
Appellate Body's ruling last Monday that its steel safeguards were inconsistent
with WTO rules.
China's industries then urged the Chinese Government to do something to hit
back at the move.
Co-operative spirit hurt by quota decision
Cao Xinyu, vice-chairman of the China Chamber of Commerce for the Import and
Export of Textiles, said the re-imposed quotas will put the breaks on the good
spirit presently being enjoyed between the Chinese and US textile sectors.
"I have met many delegations from some US retailers' associations and states
who have been wanting to find local manufacturers in China, but the US move
makes co-operation difficult,'' Cao said.
Cao said the textile industry is vital to China, like farming is to the
Unites States, which he said employed more than 15 million people directly and
over 100 million indirectly.
China is also one of the few countries in the world buying an increasing
amount of textiles from the United States.
Imports of US fabrics and raw textile materials and products had risen 148
per cent on the year from January to September to US$787 million.
A spokesman from Qingdao-based Nannan Co Ltd, a wholly South Korean-owned
manufacturer and China's largest exporter of bras to the US in 2002, said in
light of this week's decision, its new investment plan will have to be
terminated and newly recruited employees laid off.
Under the quotas, related fabrics and accessories suppliers, including those
from US, will suffer grave losses, he added.
Bras, one of the products moving back under a quota system, are mainly
exported to the United States after being made in China with materials supplied
by the United States.
For example, one of the main suppliers of urethane elastic fiber -- a
widely-used material for making bras -- is Dupont in the US.
Bra prices could rise under the US decision, one of its own trade groups has
warned.
J. Craig Sherman, a spokesman for the US National Retail Federation, said:
"We think this is going to raise costs for retailers and raise prices for
American consumers by limiting the number of Chinese products that can be
brought into the United States.''