Thursday, September 01, 2005

China, US Fail To Agree Over Textiles

Wal Street Journal , BY Reppert-Bismarck in Brussels

Global opposition to the sharp rise in Chinese garment imports continued tomount as negotiators for the U.S. and China failed to resolve their differencesin Beijing trade talks yesterday while mounds of Chinese brassieres, sweatersand pajamas piled up at European ports.

With no agreement secured from the latest round of trade talks, U.S. textilelobbyists warn that China's garment manufacturers will continue to faceuncertainty as the U.S. pushes for emergency restraints.

"It would have been wise to go ahead and settle," said Augustine Tantillo,head of a coalition of U.S. textile manufacturers. "All these safeguards wouldbe usurped by a comprehensive agreement."

Cass Johnson, head of the U.S.-based National Council of TextileOrganizations, said the industry would be filing additional measures to curtailChinese imports shortly.

The U.S. government had until the end of yesterday to announce whether itwould curb the growth of Chinese wool pants, sweaters, bras, dressing gowns andknit fabric. Six other items will also be up for consideration in comingmonths.

Chinese garment imports rose sharply this year following the end ofworld-wide quotas, prompting calls for restraint. Under China's agreement withthe World Trade Organization, trading partners can implement safeguard quotasuntil 2008 on China's textile exports if they are shown to cause marketdisruption.

Several countries, including the U.S. and Turkey, already have imposedrestraints on several kinds of Chinese clothing. But they are facing oppositionfrom their retail industries, with U.S. and European retailers in particularanxious to stock their stores with low-cost Chinese clothes. This has forcedboth U.S. and European regulators to balance retailer interests against theinterests of domestic manufacturers.

During the latest Sino-U.S textile talks, both parties were unable to budgeon issues relating to the length of such an agreement, ranging from between 21/2 and 3 1/2 years, to the number of clothing categories covered, peoplefamiliar with the matter said.

U.S. authorities pushed for an agreement that would cover 30-odd clothingitems, well beyond the handful of categories under safeguard.

The talks were "very hard," said a person involved in the Chinesenegotiations. Sun Huaibin, spokesman for the China Textile Industry Council,said "the U.S. should make more compromises."

U.S. authorities declined to comment on the proceedings yesterday.

Some analysts say the failure of the latest Sino-U.S. talks partly stems froma desire to craft an ironclad agreement with no loopholes, especially because aSino-European Union agreement signed in June -- once upheld by Chineseauthorities as a prototype -- is now under revision as some 80 million Chinesegarments are embargoed from Europe.

The logjam is a result of European retailers' attempts to rush orders andbeat red tape resulting from the deal, which set new annual-growth limits ofbetween 8% and 12.5% on some garment categories, limits that were filled withinweeks.

Yesterday, the EU's 25 members moved toward easing the logjam as EU TradeCommissioner Peter Mandelson unveiled a plan that would essentially amount to afree pass for some Chinese garment shipments, according to diplomats present.

Under the plan, revealed in a meeting between member countries, some 135million Chinese-made sweaters ordered between June 11 and July 11 would be letinto the EU without being counted against this year's import ceiling. Thatwould be nearly twice the volume that Europe said it would admit from June 11until the end of this year.

Mr. Mandelson also suggested that goods ordered after July 12 be subtractedfrom next year's quota, said a diplomat who attended the meeting. China has sofar resisted such a move, which it says would eat into next year's exports.

Mr. Mandelson may also try to mollify EU textile makers -- who want to holdChina to the letter of the June agreement -- by proposing that quotas beprolonged one more year to the end of 2008, diplomats said.

The European Commission itself meets today to vote on Mr. Mandelson'sproposal. Afterward, governments must vote.

EU and Chinese officials say they want to see the dilemma solved before anEU-Chinese summit starts in China on Monday.

Cui Rong in Beijing contributed to this article.
(END) Dow Jones Newswires
31-08-05 1940GMT Copyright (c) 2005 Dow Jones & Company, Inc.


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