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Chinese textiles exports prompt protectionism

The flood of Chinese exports following the end of the global textile trade quota system has set off protectionist alarms in the West and threatened the jobs of millions of workers in poorer countries.

The US and the EU last week triggered processes to limit textiles imports from China, sparking an angry response from the rising Asian giant that it would not be pushed around on the issue.

Elsewhere in Asia, countries that had long enjoyed the benefits of the trade quotas, such as Bangladesh, Cambodia, Sri Lanka and Vietnam, have warned their textile industries and the people they employ are fast losing out to China.

However the end of the quota system has not been all bad news, with more competitive and better prepared industries in the Philippines, Indonesia and India reporting they are weathering the China storm.

The event that threw the US$400-billion-a-year global textile industry into turmoil was the end of the 1974 Multifiber Arrangement on Jan. 1 this year, which lifted quotas and restrictions on exports.

China, already the world's largest exporter of clothing at the beginning of this year with a 28 percent share of the market, has enjoyed a phenomenal boom following the end of the quotas.

The US government took its first step toward curbing Chinese textile imports on Monday last week by announcing a review to determine whether the recent surge in Chinese imports had disrupted the US market.

US officials said Chinese imports of cotton knit shirts and blouses, cotton trousers and man-made-fiber underwear had surged by about 1,250 percent, 1,500 percent and 300 percent respectively, following the end of the quotas.

The US government review move could lead to Washington limiting growth in Chinese imports to 7.5 percent through 2008, under a clause China agreed to upon entering the WTO.

The EU adopted a similar measure on Wednesday when it unveiled "alert levels" at which it would consider limiting Chinese clothing imports, but resisted pressure from Europe's textile industry for more drastic action.

In response, Chinese commerce ministry spokesman Chong Quan (崇泉) on Thursday warned the actions of the EU and the US violated free trade principles and could jeopardize global textile trade.

The responses of all three parties have sparked concerns that tit-for-tat action could lead to a trade war.

"The danger is that the textile issue becomes the straw that breaks the camel's back," said Ernest Bower, a partner with Washington-based consultancy BrooksBowerAsia.

Bower said the EU and the US "should not impose new measures on China" if they were genuine in their free trade principles.

"If the US and Europe favor free trade, they must be consistent and not fight rear-guard actions like those being proposed by protectionist groups," he said.
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