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Dialogue, Not Quotas, the Best Way to Solve Trade Disputes

Despite restrictions from the United States and the European Union on its textile exports and its own decision to abolish export tariffs on certain lines of products, China remains firm in seeking a proper solution to international trade differences through dialogue rather than quotas or any means of retaliation.  

Minister of Commerce Bo Xilai reaffirmed on Monday China's stance to solve the ongoing frictions with these two major trading partners over an allegedly drastic surge in textile exports through "equal consultations on the basis of mutual benefits."


But with only China's unilateral effort, the new world textile trade order will never be established.


Since the US and EU turned a blind eye to the voluntary measures of the Chinese government to curb soaring exports, China announced on Monday morning it will abolish export tariffs on 81 lines of textile products starting June 1 and will revoke its earlier decision to quintuple export taxes on 74 product categories.


At a press conference Monday afternoon, Bo said the Chinese government will definitely not accept the overall arrangement proposed by the US and the guideline by the EU for textile trade, both refuted as "inventions" beyond the arrangement and mechanism of textile integration.


By doing away with export tariffs on certain lines of products, the Chinese government is trying to ease the double pressure upon domestic textile companies and provide them with a fair and just trade environment.


Yet the barrier hindering Sino-US, Sino-EU trade and economic cooperation remains and amicable consultation on equal footing will prove the ultimate way to lift such barrier.


Informal talks between the Chinese Ministry of Commerce and the European Commission, EU's executive arm, last week were welcomed by the Chinese government as a constructive step toward finding a solution satisfactory to both sides. China hopes that such moves will continue toward a proper solution satisfactory to both sides.


Meanwhile, China is also prepared to discuss the textile issue with US Commerce Secretary Carlos Gutierrez who is scheduled to visit China later this week.


In fact, China itself has taken voluntary actions, including imposition of export tariffs and cutting export tax rebate rates, to curb soaring textile exports after the global quota system ended at the start of this year.


On January 1, China began to impose export tariffs between 2 and 4 percent on 148 categories of textile and clothing products including jackets and skirts.


Its efforts have started to pay off and latest Chinese customs statistics say China's apparel exports in the first four months of 2005 rose 15.6 percent over the same period last year to US$19.27 billion, while the country's overall foreign trade growth for the four-month period was 34 percent year-on-year.


In another move to help establish a new world textile trade order and ease trade friction, China has decided to raise export tariffs on 74 lines of textile and clothing products as of June 1 by as much as five times.


All these voluntary approaches are aimed at seeking amicable and win-win settlement of the issue and avoiding a "trade war" that will be destructive to all.


The US has already set up a very bad example to that effect. Its recent move to slap quotas on seven categories of Chinese textile and clothing products has proven detrimental to the fundamental interests of businesses in China as well as its own.


The US restrictive measures affected a total of US$2 billion of China's export and job opportunities of 160,000 people.


More importantly, the restrictions will eventually backlash to hurt the Americans themselves: ordinary consumers will have to spend 20 percent more on clothing; importers will shift to other low-cost foreign suppliers and retailers will probably have less clothing categories to choose from -- and at higher costs, too.


Inexpensive Chinese-made children's wear, for example, has helped American parents save US$400 million between 1998 and 2003, according to a Morgan Stanley survey.


It is widely believed among the Americans that curbing imports from China does little to help the ailing textile industry of the US, which has been at a competitive disadvantage even before China became a full member of the world trading conglomerate in 2001. Nor will it help other developing nations much because the law of nature in the global trading system is for textile and other labor-intensive industries to be transferred to countries like China that enjoy rich resources and low costs.


Should the EU follow the US suite, it will also suffer the consequence and put the welfare of its 25 member economies at risk.


In today's world of economic globalization, it would be unwise to let the textile trade issue hinder the all-round growth of trade relations because after all, textile trade makes up only a tiny percentage in China's total trade with the US and the EU.


Last year, China's trade with EU and the US hit US$177.3 billion and US$169.62 billion respectively. Its textile exports to these two destinations, however, were valued at US$10.79 billion and US$9.06 billion, 6 percent and 5 percent respectively of their total trade volumes. 


(Xinhua News Agency May 31, 2005)

China to Scrap Export Tariffs on Some Textiles
China 'Strongly' Opposes EU Decision to Impose Quotas on Textile Imports
EU Holds Constructive Talks with China on Textiles
Hopes for Textile Disputes' Resolution Through Talks
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