EU hails, U.S. silent on China's textile tax

Beijing says it will curtail its exports as quotas end

December 14, 2004|By NEW YORK TIMES NEWS SERVICE

WASHINGTON - China's promise to impose new taxes on some textile exports will do little to sway the Bush administration as it debates whether to limit the expected flood of Chinese goods next year, trade groups on both sides of the argument said yesterday.

However, the European Union welcomed the Chinese announcement and reaffirmed that it would lift its textile quotas without limits.

"We're clear on this. We made our commitments back in 1994 and we will be delivering on those commitments," said Anthony Gooch, a spokesman for the European Union in Washington. "As of January 2005, we will be lifting those quotas."

But a spokeswoman at the Commerce Department, Mary Brown Brewer, resisted making a judgment about the new Chinese proposal because details about the plan were missing, including the size of the tax.

Instead, Brewer repeated the administration's pledge to oversee an orderly transition in the United States after the global quotas are lifted and "to promote the competitiveness of U.S. industry and level the playing field for American workers."

The United States is expected to make its final decision about limiting Chinese imports beginning in February.

Members of the World Trade Organization agreed a decade ago to lift all trade quotas on textiles and apparel as of Jan. 1 to permit the free flow of goods around the world. But as the date nears, manufacturers in the United States and other textile-producing countries have been scrambling to protect their industries. Analysts have predicted that China could capture as much as 70 percent of the American market over the next two years.

At a meeting with Chinese officials last week, European officials said they were concerned about the effect on developing countries such as Bangladesh and Cambodia that fear that their textile industries could collapse when forced to compete head on with China.

The Chinese government's announcement Sunday seemed aimed at calming developing countries that worry that they will lose millions of jobs when all global tariffs on textiles and apparel are lifted.

But adding to the sense of crisis, Washington imposed embargoes yesterday of at least one month on an array of imported clothing and fabrics from a number of countries because the countries' shipments exceeded their quotas.

American retail apparel and textile groups called the administration's decision mean-spirited, one that could hurt businesses that had bought the goods to sell during the holidays.

American retail groups that would profit from greater access to Chinese apparel and textile goods said yesterday that the Chinese proposal would do little to ease the mounting pressure from American manufacturers to protect the industry and tens of thousands of jobs.

The United States has been pushing China to enact voluntary restraints once the global quota system ends and the $495 billion international textile and apparel industry is up for grabs.

In addition, the administration agreed yesterday to consider another petition from the American textile and apparel industry to restrict the import of knit fabric from China, adding to a large variety of goods that could be limited.

China said prospective safeguards were illegal under WTO rules, and the country had rejected the idea of voluntarily capping the amount of goods it exports to the United States.

Instead, it offered its own proposal Sunday. It included new taxes on the quantity of goods exported, as well as other measures to encourage Chinese investment in textile and apparel enterprises abroad and greater production for the domestic market.

But Auggie Tantillo, the Washington representative of the American Manufacturing Trade Action Coalition, which is organizing the campaign to limit Chinese imports, said none of the measures addressed the basic problem.

"Even if this is a legitimate plan, it's not sufficient," Tantillo said. "Chinese have a built-in advantage with unfair pricing schemes, undervalued currency and export subsidies. We still need safeguards, absolutely."

Tantillo said he thought that China's promise to impose a new tax for every piece of certain goods was a way to raise money for the government rather than a way to control exports.

In announcing the plan, a Chinese spokesman said the new taxes would be collected on volume rather than quality to encourage the manufacture of high-end textiles.

Yesterday's announcement of an embargo on clothing and fabrics caught many retailers by surprise.

Normally, countries that ship more than their quota on the last month of the year are given a reprieve and permitted to borrow from their quota for the coming year. But with global quotas ending Jan. 1, the government announced that the containers of excess goods would be embargoed until February.

A New York businessman who imports bed linens said two containers were impounded from him, at the cost of $1,600 a month plus shipping charges. He has to decide the best way to get the same sheets, duvet covers and matching items to his customers and not break his bank account.

"We're the ones caught in the middle," said the businessman. "We got a legal visa from India. Now we're the ones who have to pay."

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