China, U.S. avert trade war

January 18, 1994|By New York Times News Service

BEIJING -- China and the United States reached an 11th-hour textile agreement yesterday, averting a major trade clash about the $7.3 billion in Chinese textiles sold in the American market each year.

The Clinton administration on Jan. 6 had threatened to reduce Chinese textile imports by more than $1 billion unless a new agreement could be signed by yesterday to stop gross overshipments and quota cheating

The agreement is significant because it comes at a time of expanded dialogue between Washington and Beijing, with leaders in both capitals trying to resolve some disputes in trade, human rights and other issues through higher-level contacts.

Putting an end to the blatant quota cheating in China's export-oriented textile industry could remove what has been one of the most contentious trade issues in recent years, and today's agreement sounds an upbeat note for the arrival tomorrow of Treasury Secretary Lloyd Bentsen.

Mickey Kantor, the U.S. trade representative, said in a news briefing in Washington that the agreement was not linked to the effort by China to have its preferred trading status renewed. He added, however, "The Chinese government now recognizes that this government is going to be resolute as we approach other issues in our relationship."

A senior U.S. trade official here said last night that Washington would pull back from its threat to cut Chinese textile imports by up to 35 percent. The threat had been issued by Mr. Kantor, who warned that if negotiations did not produce an acceptable agreement, the United States would impose the dramatic reduction.

In return, China has accepted a number of concessions, including slowing the growth of Chinese textile exports to the United States, placing China's $2 billion silk trade in the United States under a quota system and setting up a tougher enforcement system that will include joint inspections of Chinese factories and penalties for quota cheating.

Mr. Kantor said that under the accord, China's silk exports would be allowed to grow by just 1 percent a year. He said these exports had soared "exponentially," leaping from $900 million in 1991 to about $2.6 billion in 1993 and seriously hurting some American apparel makers.

Mr. Kantor said the limits on Chinese exports would not have a "significant or adverse" effect on American consumers. "What it will do is protect United States jobs, and promote United States goods." he said.

If United States enforcement officials find more than two cases of "clear evidence" that Chinese companies are continuing to mislabel or transship textiles in violation of the agreement, Washington will be able to reduce China's quota by three times the value of the offending shipments.

But the senior trade official said there would be an emphasis on consultations and joint action by Chinese and American authorities.

"The goal of the United States is not to get triple charges, the goal is to stop transshipments," the trade official said.

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