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US, China try to agree on textile trade

A vendor sells men's shirts at a textile market in Beijing yesterday. PHOTO: AFP

The administration of US President George W. Bush believes it is close to an agreement with China to stem a flood of low-cost Chinese clothing imports that have been a boon to US consumers but have battered US manufacturers.

However, China's Commerce Ministry said yesterday that China and the US still have "substantial differences" in how to resolve disputes over Chinese textile exports.

The statement came after US and Chinese negotiators held a round of talks in San Francisco this week to discuss the Bush administration's safeguard measures that cap imports of shirts, pants and other clothing from China.

"Because the two sides still have substantial differences in some matters of principle, the two sides have agreed to continue discussions on this issue and jointly seek a way to resolve the issue," the ministry said in a statement.

US negotiators wrapped up two days of talks in San Francisco on Wednesday, saying agreement was within reach and could be accomplished with one more bargaining session.

The stakes for both countries are high. Americans could see their clothing bills rise by US$6 billion annually -- about US$20 for each US consumer -- if their access to cheap Chinese products is limited.

However, US textile and clothing manufacturers say they desperately need relief to stem a surge in Chinese imports that began on Jan. 1 after a three-decade system of global quotas expired. The US industry says 19 plants have been forced to close and 26,000 jobs lost this year alone.

For the Chinese, an agreement limiting textile and clothing imports would remove one item from a lengthy list of trade friction with the US, where lawmakers have grown increasingly unhappy with a trade deficit with China that hit an all-time high of US$162 billion last year and is running 32 percent above last year's pace, thanks to a 58 percent jump in clothing and textile imports.

David Spooner, the administration's chief textile negotiator, said the two days of talks at a hotel on Nob Hill had gone extremely well and that an agreement could be wrapped up with just one more round of discussions, expected to take place in China later this month.

"We hope we can resolve this in one more meeting, but we will take however long it takes," Spooner said in a telephone conference call.

However, industry representatives, who were briefed by US officials, sounded less optimistic, saying that both countries remained far apart in a number of areas.

The Bush administration has re-imposed quotas on various categories of clothing this year, but US manufacturers would prefer an agreement covering all areas of production that have been threatened by Chinese imports.

The US has the power to impose limits on Chinese textile shipments through 2008 under the terms by which China was admitted to the World Trade Organization.

These new quotas are known as "safeguards" and are designed to cover clothing and textile categories that are being disrupted by heavy Chinese imports. They cap annual growth in the categories covered to 7.5 percent.

US retailers, who have seen a variety of product lines from China cut off because the quotas for this year have already been reached, are lobbying the administration to allow greater growth in shipments each year than the safeguards provide.
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