China to limit sales of textiles to U.S.

BUSINESS DIGEST

Business Digest

November 09, 2005|By KNIGHT RIDDER/TRIBUNE

WASHINGTON -- U.S. textile and apparel manufacturers welcomed an agreement yesterday that for three years limits China's exports to the United States of everything from trousers to towels and bras.

The deal signed in London removes a major irritant to U.S.-Chinese trade relations shortly before President Bush's visit to China Monday. It gives breathing room to American textile manufacturers in the Carolinas, Georgia and elsewhere that have been hurt by surging imports from China.

Global rules governing the textiles trade expired last year, giving China unrestricted access to developed markets such as the United States and Europe.

Clothing imports from China - which run into the billions of dollars - surged in January and February, and the United States and European Union rushed to impose quotas to protect domestic manufacturers.

The accord, which is to take effect Jan. 1, effectively promotes managed trade over free trade by setting market-share limits on Chinese products in 34 sensitive categories. China will limit the average growth of exports in those categories to about 10 percent next year, 12.5 percent in 2007 and 15 percent to 16 percent in 2008.

In 2009, the 34 product categories no longer would be subject to any U.S. safeguards and Chinese exports could move freely into the United States.

Beijing abandoned its demand for a two-year deal and Washington gave up its demand to limit growth to 7.5 percent in sensitive categories such as cotton trousers, knitwear, underwear and bras.

"When a patient is bleeding, the first thing you've got to do is deal with that wound. In essence, we had to stabilize the situation by limiting China's ability to come in and overtake the U.S. market," said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.

Textile and apparel imports from China rose 64 percent, to $15.4 billion, in the first eight months of this year, U.S. trade statistics show. U.S. manufacturers said the 34 categories in the deal accounted for about a third of that figure. The flood of Chinese clothing and textile imports adds to the U.S. trade deficit with China, which is on a pace this year to top $200 billion.

States such as North Carolina, South Carolina and Georgia blame cheap Chinese textiles for a 38 percent decline in textile and apparel workers since 2001. As of last month, the industry had 648,000 jobs nationwide.

Chinese Commerce Minister Bo Xilai said almost 2 million Chinese are directly employed in textiles and apparel manufacturing. Access to the U.S. market means jobs for Chinese workers, he said, making the textiles issue "a very important social issue in China."

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