And here we go again...

Folks,

I've cut and pasted this one in since NYTimes requires registration... but
our delusional "trade representatives" stupidly arrange to give the Chinese what
is best for them ... "upscale clothes" and keep what is worst for us "cheap
clothes".. sigh... but, of course, we can work with this at the small biz
level...

John



December 13, 2004

China Relents, and Promises Textile Tariffs

By KEITH BRADSHER

ONG KONG, Monday, Dec. 13 - The Commerce Ministry in China announced
Sunday night that it would impose tariffs on some textile exports, a step that
could avert a trade war with the United
States and the European Union over a new influx of low-cost Chinese
garments that had appeared likely to flood Western markets starting Jan. 1.

The ministry's Web site, where the announcement was posted, did not specify
the level of these export taxes or what textiles would be taxed. If the tariffs
are not high enough to limit the competitiveness of
Chinese exports, then the Bush administration could still proceed with recent
threats to impose new limits on shipments by China.

The Chinese decision nonetheless represents the first sign of compromise on
the contentious issue by China, and appears to represent a victory for the Bush
administration. The administration has been under
strong pressure from apparel manufacturers and their workers in Southern
states, who had warned of large-scale layoffs if nothing was done.

A complex system of quotas has limited international trade in textiles and
apparel for decades but will expire on Jan. 1 under an agreement worked out in
1993 as part of the creation then of the World Trade
Organization. Chinese manufacturers have been expanding their factories in
preparation to increase exports once the quotas are lifted.

The Commerce Ministry said in its statement that the goal of the tariffs
would be to encourage Chinese producers to manufacture higher-end textiles and
apparel instead of selling a full range. A minimum tax
will be set for each garment regardless of what each garment costs. If the
tax is $1 a shirt, for example, it might discourage the production of T-shirts
in China, for which the wholesale price is much less than
$1 a shirt, but not silk blouses with much higher price tags.

"This is part of a string of measures China will take to ensure a smooth
transition for textile integration following the end of the quota system," Chong
Quan, a ministry spokesman, told the official New China
News Agency.

A Commerce Ministry aide declined to elaborate.

The Chinese decision to impose export tariffs under Western pressure will
mean that American and European shoppers are less likely to see lower price tags
on an influx of everything from underwear to
Chinese-made Armani ties. But for seamstresses in North Carolina and in
dozens of developing countries that compete with China, the decision announced
Sunday could mean a reprieve from fiercer
competition and possible unemployment.

China is not the first country to impose voluntary restrictions on its
exports in the face of threatened retaliation by the United States. Japan
imposed
quotas on its exports of cars to the United States through the
1980's to allay worries from Detroit that it would take over much of the
American automobile market.

Detroit repeatedly complained that the Japanese had set their quotas too
high. It is similarly possible that the Chinese export taxes will not be set
high
enough to satisfy American textile and apparel producers
or the Bush administration.

The Commerce Ministry said only that the tariff rate would be set "by
considering the conditions of textile manufacturers." There was no immediate
reaction
on Sunday from Washington to the Chinese
decision.

Carl B. Weinberg, the chief economist of High Frequency Economics, a
consulting firm in Valhalla, N.Y., said tariffs would probably not leave Chinese
manufacturers selling any less than they do now but
could prevent them from reaping gains next year. "However, it is a setback to
the W.T.O. objective of reducing constraints on world trade," he said.

Before China was allowed to join the W.T.O. in 2001, Clinton administration
officials insisted on a special provision of the so-called Chinese accession
agreement that would allow the United States to impose
new limits on Chinese textile and clothing imports from 2005 through 2008.
The provision allows the United States to impose limits if Chinese exports
disrupt American garment markets or even threaten to do
so.

The Bush administration has already ordered new limits on Chinese shipments
of four categories of clothing, and has threatened limits on a wide range of
additional categories. European officials had also
signaled their strong opposition to a new influx of inexpensive Chinese
textiles.

W.T.O. rules now prohibit the kind of semi-voluntary export quotas that Japan
imposed on its car shipments in the 1980's. But Jim Leonard, the United
States deputy assistant secretary of commerce for
textiles and apparel, said at a recent news conference in Hong Kong that the
United States would welcome any Chinese effort to make the end of global
textile and apparel quotas a more harmonious process.

He said then that Chinese officials had refused to discuss export limits.

Willie Fung, the chairman of Hong Kong-based Top Form, the world's largest
maker of brassieres, with operations in China, Thailand and the Philippines,
said in a recent interview that Beijing had been
nervous about facing lawsuits alleging the export of garments below cost, a
practice known as dumping.

As a result, Beijing has been trying to discourage companies from quickly
moving factories that make T-shirts, socks and other inexpensive garments to
China from other developing countries while
encouraging production of more specialized clothing, for which antidumping
lawsuits would be harder to prove.

The Bush administration signaled again over the weekend its intention to
limit Chinese shipments if China did not do so, by announcing that shipments
this
month in excess of quotas for 2004 would not be
allowed into the United States in January, and would only be allowed to
trickle in thereafter.

Japanese automakers responded to export quotas by making Lexuses and Acuras
instead of compact cars, increasing the threat to Detroit. As Chinese garment
factories produce costlier goods, they may pose a
new challenge to American companies.


Copyright 2004

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