United States, China reach broad agreement on textiles
The United States and the People's Republic of China reached a wide-ranging agreement on textile trade, after five months and seven rounds of negotiations.
The deal, completed in London early Tuesday, was announced jointly by U.S. Trade Representative Rob Portman and China's Minister of Commerce Bo Xilai. The agreement goes into effect Jan. 1, and ends Dec. 31, 2008.
The agreement imposes tighter limits on Chinese exports of 'core' apparel products than any quotas that could have been imposed under existing safeguards. 'In general, quotas established by the agreement for 2006 on 'core' products are lower than the safeguard threshold, about the same for the safeguard threshold for 2007, and higher than the safeguard threshold for 2008,' the office of the U.S. Trade Representative said in a statement.
Over the three-year life of the pact, China can export 3.2 percent more of the covered products to the United States than if safeguards were invoked on all of the covered products for all three years.
The United States, for its part, promises to exercise 'restraint' in future use of safeguards to restrict products not covered by the agreement.
As part of China's accession to the World Trade Organization, WTO member nations that felt threatened by market surges of imports from China were allowed to invoke safeguards, or de facto quotas, on categories of apparel and textiles through 2008. After that year, all such safeguard mechanisms drop away, and China can export what it pleases.
Responding to petitions from U.S. textile manufacturers, the U.S. government's Committee for the Implementation of Textile Agreements (CITA) had placed safeguards on 19 categories products by the time of the agreement. The new pact actually places quotas on 34 products.
'The textile issue between China and the United States has been the biggest of such kind of disputes. It is indeed a very complicated matter,' Bo Xilai said. 'It is because of the flexibilities shown by the U.S. side in the sixth and seventh rounds of negotiations that we finally succeeded in concluding the agreement.'
'We took our time,' Portman said. 'This is a very good agreement for the American textile worker. It is also a good agreement on the Chinese side, because it adds certainty, predictability and stability.'
'I know that Ambassador Portman was pressured by the U.S. (textile) industries, but it doesn't mean that whoever cries louder is more reasonable. There is an old saying in China that 'crying baby gets the milk first' ' We know that Ambassador Portman has shown some flexibility at the end of the day, but I don't think that's enough — actually, that's still a far cry from our original expectations,' Bo Xilai told reporters.
'However, we have this paragraph 242 (in China's WTO accession agreement) on which we signed out names. China is a creditworthy country and follows and abides all kinds of WTO rules, which is why we finally decided to negotiate and have this agreement,' Bo Xilai said.
'We feel this agreement will be a necessary prelude to a greater understanding of the practicalities in both nations that must be respected so long as safeguards have their place,' Kuang Weilin, China's deputy consul general in New York, told Shipper's NewsWire during a trade dinner at the Stock Exchange a few hours before the pact was announced.
'U.S. textile and apparel manufacturing workers and their communities are big winners today,' said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition (AMTAC), a group representing U.S. textile 'domestics.' Tantillo thanked Portman, Commerce Secretary Carlos Gutierrez, Chief Textile Negotiator David Spooner, and CITA for 'their hard work to make this a reality.'
'There is both relief and disappointment in the importing community,' said Laura E. Jones, executive director of the U.S. Association of Importers of Textiles and Apparel (USA-ITA). 'The good news is that there is some certainty now, because there will be an allocation and visa system, so companies will know that if they order goods, they will get them. On the other hand, the bad news is that while we can do business, it's a limited amount of business.'
Jones conceded the situation could have been worse. 'Thanks to a five-month delay in the initial safeguard measures,' as a result of a preliminary injunction that USA-ITA received from the U.S. Court of International Trade, 'we were able to develop some level of trade from China in 2005. Because of that, importers and retail companies will have viable quota levels under this agreement,' Jones said.
A statement from AMTAC also cited USA-ITA's litigation. The new pact 'guarantees the reapplication of quotas each year through 2008 for all categories covered by the deal. The importance of locking in future safeguards was clearly demonstrated by numerous delays, such as those encountered as a result of the USA-ITA lawsuit, which stalled the implementation of safeguards in 2005 and allowed a 115 percent growth by volume compared to 2004,' AMTAC said.
Tantillo told reporters Tuesday the U.S. textile industry would use its respite, granted by the new pact over the next three years, to shore up international support for further restraints on China not presently part of its WTO accession, 'if China tries to put us out of business after 2008.' He conceded that 'our survival will depend on strong political support.'
'In the end, in the real world, no jobs are coming back to the United States as a result of this deal,' Jones said. 'They may go to India, Bangladesh, Pakistan, Sri Lanka, you name it — but not here.'