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China Calls for Lifting of Textile Quotas

The Ministry of Commerce called yesterday for World Trade Organization (WTO) members, developed ones in particular, to remove textile and apparel quotas as scheduled.

It also cautioned that US attempts to limit Chinese textile exports would have a negative impact on bilateral trade and economic relations.

An official from the Ministry of Commerce's Department of Foreign Trade emphasized that there is no ambiguity in the WTO commitments.

"If the integration of textile trade [into WTO trade framework] cannot be realized as scheduled, it will be a reversal of the Uruguay Round Agenda of the WTO and will greatly test the multilateral trade system," he said.

All quotas restricting textile and clothing trade between WTO members will be eliminated by December 31, 2004, according to the Agreement on Textiles and Clothing reached under the General Agreement of Tariffs and Trade (GATT) in 1994. GATT is the predecessor of the WTO, of which China became a member in 2001.

The agreement is the result of decades of negotiations between developed and developing members and will ultimately be conducive to the health and sustainable development of the global textile industry, according to the official.

"The old quota system has for a long time greatly restricted the textile exports of developing countries, hindered their comparative advantages and overturned the free trade principles of the WTO," he said.

Only 30 percent of quotas have expired over the past 10 years because of the arrangements and safeguards made by developed countries and regions. These are the major factors causing the current problems in textile trade, the official said.

"The road towards the integration of the global textile trade will not be smooth, although the United States, European Union, Turkey and Canada have vowed to lift the quotas at the proper time," he said.

Since March, 115 textile organizations from 65 countries have signed a declaration asking to prolong the quota.

The Chinese government also noted that the US said it will revise regulations to accept applications from industries to impose import limits on Chinese goods in anticipation of market disruption. The current law allows such restrictions only when imports have actually caused disruption.

"Accepting these applications openly disobeys WTO rules. It will seriously hurt Chinese companies and people and influence China's fulfillment of WTO commitments," the official said.

He denied the existence of a "China Threat," saying that China's textile exports would not flood the world market as some have anticipated, although short-term growth after the phase-out of the quotas would be normal.

The rise would not be sustained over the medium and long term, however, because of such factors as environmental issues and insufficient supplies of raw materials and power.

The official said that China would not pursue a "more is better" goal. "Our direction is to promote the sustainable growth of exports of textile products," he said.

With the development of China's textile industry, its appetite for imports of raw materials and machines will also surge. Except cotton and wool, which are under an import tariff quota regime, other textile products are free to enter the Chinese market.

"China's advantage is only in relatively inexpensive labor and a complete manufacturing chain," the official said. Because it lags developed countries in terms of research and development, brand building and marketing, the growth of its textiles industry offers opportunities to developed countries as well.

Chinese companies have already felt the pinch of trade protectionism, which is likely to accelerate in 2005.

(China Daily September 24, 2004)


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