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Wed, May 25, 2005 - Page 12 News List

China warns of tariff retraction

TEXTILES TIT FOR TAT Beijing warned that it will not put tariffs on some textile exports as promised if the US and EU pass their own import tariffs on such goods


China yesterday threatened to renege on a promise to impose tariffs on 74 categories of textile products if the same items were subject to limits from US and European governments.

"If the United States and the European Union formally carry out restrictions on any of these categories, we will not impose tariffs on the items in question," a commerce ministry official told reporters.

China on Friday made a conciliatory gesture to the US and EU to ease simmering trade tensions, announcing it would raise export tariffs on 74 categories of textile products from June 1.

The ministry of finance said that the 74 categories were among 148 products on which tariffs had already been placed at the end of the decades-long global textile export quota system on Jan. 1.

It also announced export tariffs on flax yarn. Virtually all the products affected are exported to the US and EU which have both resorted to safeguard measures to curb what they see as a flood of cheap Chinese goods.

Tough quotas mean the US could effectively close its borders to more imports of some types of Chinese textiles in the second half of the year, the state-run China Daily newspaper said yesterday.

Exports to the US of cotton-knit tops, one of the items affected by quotas, surged to 11 million units in the first five months of the year, compared with 2.8 million units during all of last year, the newspaper said.

An increase of this magnitude may not leave much room for more imports for the remainder of this year, said Fawn Evenson, vice president of the American Apparel and Footwear Association.

"The resulting quotas could be so small that the US could close the border to these items in July of this year," she told the newspaper.

Ironically, US companies could suffer, as the US provides about 60 percent of the cotton that is used in manufacturing some of the textile products now restricted, according to the paper.

In a sign that despite the Chinese move on the 74 categories frictions are far from over, the EU went a step further on Monday towards imposing limits on some types of Chinese textiles.

The EU's textile committee approved a proposal by EU Trade Commissioner Peter Mandelson to launch formal talks with China on exports of T-shirts and flax yarn.

Textile producers in the developed and developing world have been struggling with a flood of cheap exports from China since the end of the 31-year-old global textile quota.

China said yesterday it would expand its efforts to negotiate with the EU to protect the interests of the domestic textile industry.

"The commerce ministry will try all possible ways to protect the rights of Chinese exporters," Lu Jianhua, director of foreign trade at the commerce ministry, said on the ministry's Web site.

He made the comments shortly before a scheduled meeting between Gao Hucheng (高虎城), China's top trade negotiator, and Mandelson in Brussels.

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