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Pants Exports Show Folly of US Quotas

Statistics from US customs have shown China filled more than 20 per cent of the quota for one textile product in just 11 days.


Chinese experts have seized on this as evidence that thresholds have been set too low.


Between May 23, when the US imposed its quota, and June 2, China exported 12 million pairs of cotton and man-made fibre underwear to the US - 21.6 per cent of the category's yearly allowance.


If exports continue at the same pace, the quota would be used up within a month.


"The quantitative restrictions the US imposed on textiles from China are not reasonable as they only allow a 7.5 per cent increase on shipments last year, when there was a quota regime," said Gao Hong, a researcher with the Chinese Academy of Social Sciences.


Although dents made in quotas for the six other textile categories have not been quite so dramatic, their allowances for the whole year could also be used up by the end of next month, experts predicted.


One reason for the rapid uptake is that companies are exporting as much as they can before the quotas are used up, said an official for China's Chamber of Commerce for the Import and Export of Textiles who did not want to be named.


"They have no other choice because they have to deliver the goods to their customers in time," she said.


Some Chinese textile companies have pushed their production lines to maximum output in recent weeks and are paying a premium on transport costs to deliver as much as they can before the US market is shut to them.


They also have to think twice before accepting any orders from the US or the European Union, which is also contemplating quotas on two categories, in case they are not allowed to deliver the orders.


Companies had a foretaste of things to come when a large US textile-purchasing group visited China earlier this month but placed orders for only a small quantity of goods.


China's terms of accession to the WTO include a "textile specific safeguard clause" that allows WTO members to impose quantitative restrictions on imports of textiles and clothing products if they are found to have actually disrupted markets. Under the safeguard, members can limit specific products to an increase of 7.5 per cent above the preceding year's import levels.


(China Daily June 7, 2005)


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