US can not afford to remove textile quotas

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Last updated at: (Beijing Time) Saturday, April 03, 2004

US can not afford to remove textile quotas

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January 1, 2005 is a most significant day for China's textile industry. In line with the agreement reached at GATT negotiations a decade ago, textile quotas will be fully eliminated from this day. However, with the day drawing nearer, there are mounting worries in China's textile circle about whether or not the agreement can be fully carried out.

At the beginning of March this year, the Istanbul Declaration was jointly launched by American Textile Manufacturers' Institute (ATMI) and the American Manufacturing Trade Action Coalition (AMTAC), together with ITKIB (Istanbul Tekstil Ve Konfeksiyon Ihracatci Birlikleri, namely Istanbul Textile and Apparel Exporters' Association). It requested that a WTO emergency conference be called on July 1 this year to talk about the proposed extension of textile quotas until the end of 2007.

Textile and trade associations from Mexico, Italy, Belgium, and Austria, etc. signed on this document after that. Trade associations from more than ten African countries also expressed their support for this declaration. All this has indicated that the besiegement against Chinese textile exports may probably be intensified.

The Istanbul Declaration is apparently targeting at Chinese textile industry. It argued that China's WTO membership has brought great changes and impact on the global trade environment and this has made the situation quite different from that in 1990s when the removal of quotas was agreed upon.

They are afraid that once the quota is lifted, Chinese products can get into any textile market in the world unchecked. In this case, they fear, China and a few other countries will monopolize the global textile market, which will in turn result in large scale unemployment and bankruptcies in a number of nations heavily dependent on textile and garments trade.

The Declaration listed out other reasons to support the proposed extension of the quota: currencies undervalued intentionally by some countries with government subsidies and tax rebates programs introduced, making textile products made in these countries 75 percent cheaper than they should have been otherwise.

The associations also claimed that some Chinese textile products increased by nearly 60 percent in the US market and still keep on expanding market share there in less than two years after the US gradually lifted its quotas on these categories in recent years. Relevant associations in the US, Mexico and Turkey even threatened to launch a global campaign to mobilize the whole industry to support their program.

Americans under the cloak of a spokesperson for the global textile trade

The existing textile quota is an important protective measure imposed by developed countries to restrict exports of developing countries. It is estimated that due to the quota system, developing countries as textile exporters suffer as much as 3 billion USD losses annually.

The GATT talks reached an agreement 10 years ago which decided to fully erase the quota system after a 10-year transition and the textile industry would usher in a new era of liberal trade afterwards.

In the recent years, the sped-up globalization process has led to a severely unbalanced trade system and transfer of contradictions to developing countries by developed countries. Besides, competition of textile exports is getting fiercer between developing countries.

But the progress on honoring the promise of removing quotas is quite slow in developed countries headed by the US. Even some developing countries are resorting to anti-dumping cases for setting up barriers against exports from other developing nations. All these have made textile and garment industry one of the categories confronted with the most of technical barriers in the world trade.

Since last year, the US began to take countermeasures to deal with the upcoming lifting of the quotas. They attempted to launch emergency back-up measures to restrict Chinese textile exports on the one hand and on the other instigate the public opinion for quota renewal.

Insiders in China alarmed that some American trade organizations have changed their strategies of focusing on American interests camouflaging themselves as a spokesperson for the global textile industry. They made the use of the competition on exports between developing countries by exaggerating the "threat" of Chinese textiles to rope in support from the world public opinion for a renewed quota system.

A report issued by ATMI at the end of last year read, "China threatening the world's textiles and garments trade". This report asserted that this was the most massive wealth transfer between developing countries and as the result of the transfer, many developing countries, from Mexico to South Africa, from Bengal to Haiti, would become "victims" of Chinese textiles.

Numerous barriers on the way for Chinese textiles to export on a large cale

Textile industry is a big exporter in China. About 20 percent of China's gross exports are textile goods. And China's textile industry has made up one-fifth of the world's textiles and garments trade.

Some insiders of Chinese textile sector hold an optimistic expectation that China's textiles and garments export would soar up by 150 percent when the textile quota is lifted in 2005. But given the present condition for the export market, there are numerous barriers on the way of Chinese textiles to export on a large scale, especially when there is a tendency of "pulling back", for setting up non-tariff barriers to resume quota in a disguised way.

The intensified impression of so called "threat" of Chinese textiles rattled by American media and trade associations has influenced procurement plans of some big exporters to some extent. To secure their stable trade and avert risks brought about by a possible quota renewal, these exporters would be likely to place less order on Chinese textiles by a big margin.

Postponement of quota lifting may cause abortion of Doha talks

The agreement on the global textile and garment trade reached 10 years ago is believed to be an important step of the world trade system toward

the promotion for the development of developing countries. It will benefit many developing countries, as well as China. If the quota-removal is postponed, the credit of WTO will be severely tarnished and the Doha talks, expected to realized this year would probably be failed.

Even American trade officials acknowledged before long that it was too late to change the processing course now. Analysis by professionals holds that American textile industry took the action out from several purposes. That is, they are seeking for a pretext for the re-launching of restrictions even if the quota-removal cannot be altered. Should the US succeed in imposing new restrictions, it will be likely to serve as an example for the trade protectionism forces in the EU and other areas to follow suit.

By People's Daily Online

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