China and the US are close to a textile agreement that is hoped to stabilize the bilateral textile trade situation.

 

Anonymous US officials were quoted by AP (Associated Press) as saying that the two countries had agreed on certain issues at the 7th round of talks held last week in Washington.

 

They said the deal, similar to the one between China and the EU signed in June, would govern China's textile exports to the US over the next three years. It is likely to allow exports to increase by 8 to 17 percent annually. Confirmation of this is expected today.

 

"China has made concessions on the duration of the limits while the US has made concessions on the growth rate," Sun Huaibin, spokesperson for the China National Textile and Apparel Council (CNTAC), said.

 

He said an agreement, which would give textile dealers a clear trading environment, was much better than current safeguard measures the US has adopted.

 

Under the safeguard measures, only a 7.5 percent increase in China's textile and garment exports to the US is allowed annually.

 

Meanwhile, Sun said that there were still two major problems facing the Chinese textile industry.

 

The agreement is expected to take effect from the beginning of next year, so China must be cautious about how to deal with exports until then.

 

Millions of Chinese textile products piled up at European ports earlier this year, as companies rushed to export as much as possible during the "vacuum period" before the agreement took effect.

 

"Allocating quotas set by the US to domestic textile exporters is also very difficult," he added.

 

The Ministry of Commerce (MOFCOM), China's trade watchdog, is adopting a bidding method for the distribution of some EU quotas. Others will be allocated to enterprises based on last year's shipment volumes.

 

However, the revealed information does not give any indication of the base figure for calculation, Cao Xinyu, vice chair of China Chamber of Commerce for Import and Export of Textiles (CCCT), said.

 

"The lack of a base figure makes it difficult to valuate the possible agreement because we won't be able to calculate the specific quotas for the coming years," he said.

 

Under the possible agreement, China's textile exports to the US could be calculated according to a 12-month trade volume, which is regarded as a base figure, and the agreed growth rate of 8 to 17 percent per annum.

 

No formal comments are available from either the Chinese or US government.

 

The US government implemented safeguard measures against made-in-China socks late last year on the request of its domestic manufacturers.

 

After the decade-long global textile quota regime was eliminated in January this year, tension intensified between the two countries because the US placed more curbs on Chinese textile products. The US has so far imposed limits on nine categories of Chinese textile products.

 

The Chinese textile industry said the frictions were a big blow to them since their US customers declined to purchase products under US restrictions and placed orders with some Southeast Asian countries instead.

 

(China Daily November 8, 2005)