China warns over textile tariffs
BBC News

China says that it will scrap recently agreed plans to increase export tariffs on textiles should the European Union and US also impose quotas on imports.

Relations between the trading partners have frayed, with China accused of flooding markets with cheap textiles.

To ease the situation, China agreed to raise export tariffs on goods in 74 categories by as much as five times.

That may not be enough, however, and EU trade commissioner Peter Mandelson will meet Chinese officials.

Priced to sell

The clash has been exacerbated by US claims that China is deliberately keeping its currency undervalued in an attempt to boost exports.

China has been quick to lay out its negotiating position with regard to the threatened import quotas or safeguard measures.

"If the US and the EU formally carry out restrictions on any of these categories, we will not impose tariffs on the items in question," the Commerce Ministry said.

The EU has been careful in its approach to China and has said it wants to work with Beijing in finding a solution.

It wants to launch formal consultations with China over T-shirts and flax yarn, a move that would allow it to step up pressure on China under World Trade Organization (WTO) rules.

"We want to analyze (China's tariff increases) in detail to measure their likely impact, and to explore whether an agreed solution is possible, rather than the imposition of safeguard measures," Mr Mandelson said.

Time limit

Under WTO rules, the EU could impose import limits within 15 days of the formal start of negotiations if China fails to curb its exports.

The US has already imposed limits on Chinese imports, claiming that its textile industry has lost more than 16,000 jobs since the start of this year.

Tensions surfaced after the Multi-Fibre Agreement, which governed the global textile trade, was replaced by a new system at the start of this year.

Following its entry into the WTO in January 2002, China agreed to allow countries to impose limits on imports for three years should markets become distorted.

According to figures from the US and EU, imports from China have surged since January and are now putting pressure on local producers.

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Trade gap hits 6-month low
11 May 2005, JOC Online

U.S. exports reach all-time high

The U.S. trade deficit fell sharply in March to the lowest level in six months as U.S. exports climbed to an all-time high and the surge of textile shipments from China slowed.

The Commerce Department reported Wednesday that the trade gap narrowed by 9.2 percent in March to $54.99 billion, down from the record monthly deficit of $60.57 billion set in February.

Even with the big improvement in March, the deficit through the first three months of this year is still running at an annual rate of $696 billion, 12.8 percent higher than the $617.08 billion record set in 2004.

The March improvement reflected a 1.5 percent increase in exports of U.S. goods and services, which rose to an all-time high of $102.2 billion, the fourth straight monthly record. The March improvement reflected gains in a wide range of products from commercial aircraft and telecommunications equipment to farm products and art work.

Imports, which had hit a record high in February, fell by 2.5 percent to $157.19 billion, on a sharp decrease in imports of foreign cars and in textile and clothing imports from China. This helped to offset a 4.1 percent increase in America's foreign oil bill, which rose 4.1 percent to $18.9 billion, the second highest level on record.

The deficit with China, which has become a growing target of attack in Congress because of its position as the country with the largest trade gap with the United States, declined by 7 percent to $7.83 billion in March.

Legislation that would impose 27.5 percent across-the-board tariffs on all Chinese imports is gaining support in Congress because of lawmakers' frustration with the refusal of the Chinese to stop linking their currency tightly to the U.S. dollar, a practice American manufacturers contend gives Chinese companies a tremendous price advantage over U.S. goods.

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U.S. approves China textile curbs
13 May 2005, JOC Online

The United States today agreed to limit imports of cotton shirts, cotton trousers, and both cotton and man-made fiber underwear made in China.

In volume terms, these safeguard petitions cover 1.97 percent of total U.S. textile and apparel imports from the world, and 7.4 percent from China, through April 2005. The three safeguards also cover 11.2 percent of total U.S. imports in the categories affected. However, in terms of value, the safeguards cover only 0.18 percent of total U.S. imports and 1.3 percent of total imports from China through the first quarter of 2005. The safeguards cover 3.28 percent of total U.S. textile and apparel imports, and 9.76 percent of U.S. imports in the categories affected. These categories comprise 14.48 percent of U.S. textile and apparel imports from China.

Under World Trade Organization rules, the safeguards cap growth of Chinese exports to the United States in these products to 7.5 percent after Washington sends China a diplomatic cable requesting consultation on the matter. The two countries will then have 90 days to reach agreement limiting the growth of Chinese exports to the U.S. in these categories. If they fail to reach agreement, the U.S. can maintain the 7.5-percent growth limit through the end of calendar year 2005.

In late April, a federal appeals court lifted an injunction issued earlier by the U.S. Court of International Trade that prohibited Washington from ruling on 12 threat-based China safeguard petitions the U.S. textile industry filed last year.

"We are pleased that the U.S. government approved these cases. The unprecedented surge of Chinese imports imperiled tens of thousands of jobs, leaving the U.S. government no choice but to act," said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.

The Bush Administration faced increasing political and industry pressure to curb Chinese apparel imports after quotas were eliminated Jan. 1.

According to the U.S. Office of Textiles and Apparel, the volume of U.S. imports from China through April 2005 surged by 150%  in cotton trousers; by 1346 percent in cotton shirts, and by 347 percent in cotton and man-made fiber underwear, on a year-to-year basis.

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PIERS Market Tip

Reduced dumping tariffs open new U.S. markets to Chinese furniture...

As 2004 drew to a close, the U.S. Department of Commerce determined that Chinese producers of high-end wooden bedroom furniture were not undercutting the prices on export sales as deeply as originally thought ... and accordingly trimmed antidumping tariffs by a bit over four percentage points.

The expected boost to sales of its high-end furniture seems likely to increase China's hold on the U.S. market. But other countries are up and coming for U.S. market share. Vietnamese shipments of furniture to the U.S. tripled in 2003 ... and could well surge if China revalues its currency.

Free Trade Agreements can reshape trends, too. Furniture shipments from Jordan tripled in the first year of the U.S.-Jordan FTA.