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    Greater China
     May 20, 2005
Fresh US salvo in trade spat with China
By Brian Wingfield

WASHINGTON - The Bush administration said on May 18 that it will impose new restrictions on clothing imports from China, escalating trade relations between Washington and Beijing that have already grown tense during the past week.

In a late afternoon statement, the US Commerce Department said that it would place "safeguard" restrictions on four types of goods from China: men's and boys' cotton and man-made fiber shirts, man-made fiber knit shirts and blouses, man-made fiber trousers, and combed cotton yard. Last Friday, the administration announced that it plans to place similar limits on imports of Chinese cotton trousers, cotton shirts, and man-made fiber underwear.

American textile manufactures have complained that since global trade rules were changed on January 1, imports of Chinese goods have disrupted US markets, surging by as much as 1,500% in some cases. "We will enforce our trade agreements to ensure that US companies get a fair deal as they compete in the global marketplace," said Commerce Secretary Carlos Gutierrez in a statement placed on the department's website Wednesday.

The proposed quotas - permissible under the rules of the World Trade Organization - would limit growth in Chinese imports of the affected goods to 7.5% above the level they had reached the previous year. The quotas will not go into effect until the US formally consults with China on the matter, which must be done within the next 30 days.

The Chinese Embassy did not return calls for comment on Wednesday. However, Chinese Minister of Commerce Bo Xilai, speaking in Beijing, said the textile limits are "unfair", according to the embassy's website. Bo said the US and the European Union, which has also urged China to curb its textile exports, should have gradually phased out their quota systems over a 10-year period, as outlined during WTO talks in 1995. "[The US and EU have] kept 70-90% of their most important quotas in place till the end of last year," Bo said. "Their activity caused the short-term rapid growth of China's textile exports in the first several months this year." According to news reports, Beijing has said it will fight the proposed limits on its textiles exports.

Laura E Jones, executive director of the United States Association of Importers of Textiles and Apparel, a trade group, called the administration's decision "absurd," adding, "the truth of the matter is, it won't bring any jobs back," she said in an interview Wednesday. Jones said she believes the Bush administration has specifically singled out the Chinese because "they're threatening to a lot of people in the Unites States".

US manufacturing groups, however, hailed the proposed import restrictions. "Failure to act would have cost tens of thousands of US jobs," said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, in a statement released Wednesday.

Underscoring the trade tension is a dispute over currency policy, in which the yuan is pegged to the dollar. American critics of this fixed exchange rate system argue that the yuan is valued too low, making Chinese goods less expensive in American markets. Advocates of the exchange rate say that allowing the yuan to appreciate could cause monetary instability in China and could allow the dollar to depreciate even further, thus paving the way for higher interest rates.

On May 17, US Treasury Secretary John Snow sharply criticized China's currency policy, arguing that it distorts world trade, but stopped short of accusing China of manipulating its currency. Several Congressmen have threatened to levy high tariffs on Chinese imports if Beijing does not allow the yuan to appreciate, and a Senate bill is under consideration which would slap a 27.5% tariff on all Chinese exports to the US if China does not revalue within six months of the bill's passage, a time lapse intended to allow further negotiation with Beijing.

Brian Wingfield is a freelance reporter based in Washington, DC.

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Globalization ideologues have no clothes (May 7, '05)

US walks China trade tightrope (Apr 29, '05)

China trade costs US 1.5 million jobs (Apr 9, '05)

West blocks China's cotton route (Apr 7, '05)

China spins out more demand for cotton (Jan 28, '05)

China, US textiles, quotas and votes (Oct 29, '04)

More risks ahead for textile industry (Aug 3, '04)


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