Posted on: Saturday, May 28, 2005
China balks on U.S. textile limits
By Peter S. Goodman
Washington Post
BEIJING — China yesterday said it would not restrain its surging textile exports to the United States unless Washington first removes limits it has imposed on some Chinese-made goods, ratcheting up a simmering trade conflict.
Associated Press At a conference in Seoul, South Korea, China's central bank governor, Zhou Xiaochuan, said any changes to China's currency policy would be introduced at a pace of the government's own choosing, with an eye toward protecting the country's fast-growing exports — a crucial source of employment.
Textiles and the value of the yuan have emerged as the two primary issues at the center of an evolving trade conflict between the United States and China. Beijing's twin pronouncements yesterday underscored its resolve to give no ground in the face of sustained pressure from abroad.
China's trade policy has also come under fire by the European Union. The EU took its dispute with China over textile imports to the World Trade Organization yesterday, forcing Beijing to immediately curb shipments of two sensitive goods — T-shirts and flax yarn.
China's Communist Party government leans heavily on nationalist sentiments as a justification for its continued authoritarian rule in an era in which Cadillac sedans are made on Chinese soil and Starbucks coffee shops dot urban landscapes. Officials apparently calculate that any concession to foreign pressure would be an invitation for more.
Last week, China appeared to take a step back from the textile dispute when it said that it planned to sharply increase tariffs paid by its producers — a self-imposed restraint. But yesterday's announcement undercut that gesture: China said that it would not increase tariffs on any goods that have been limited by foreign countries.
"Enterprises that already are subject to textile limitations abroad will not be subject to the export tariffs," state television said during a national newscast, citing the Commerce Ministry.
China reinforced its stance ahead of a visit by U.S. Commerce Secretary Carlos Gutierrez. He is scheduled to arrive in Beijing next week for talks aimed at easing the conflict.
The current conflict stems from the ending of a four-decade-old system of quotas that limited how much clothing could be exported from any country to the United States and Europe. Since the lifting of those limits on Jan. 1, the volume of Chinese-made clothes into the United States has surged by more than 50 percent, according to the U.S. Commerce Department. Imports of some goods, such as cotton shirts and pants, have swelled by more than 1,000 percent.
The Bush administration this month began to crimp the flow by invoking a so-called safeguards clause written into the 2001 agreement under which China entered the World Trade Organization. That clause gives Washington the right to cap the growth of imports of selected goods at 7.5 percent annually for the next three years if it finds a threat to U.S. industry.
Much of the rhetoric in recent weeks has had a theatrical flavor: The Bush administration signaled last year that it was almost certain to invoke the safeguards clause and limit China's shipments, and Chinese officials have long said that they have expected such a move even as they have assailed it as a violation of the spirit of the global trading system. Many analysts see the heated talk of recent weeks as aimed primarily at shoring up negotiating positions on a range of issues, including the value of China's currency.
"Everybody acts very surprised and China acts mortally offended, but they agreed to (the safeguards clause) when they joined the WTO," said Pietra Rivoli, a trade expert at Georgetown University and author of the recent book "The Travels of a T-Shirt in the Global Economy."
China yesterday also continued to rebuff pressure from Washington for a swift increase in the value of its currency, the yuan. The Bush administration and a vocal contingent in Congress accuse China of keeping its currency artificially low to make its goods unfairly cheap on world markets. China argues that it is being made a scapegoat for the inevitable decline of American manufacturing, which faces intense competition from dozens of other low-cost countries.
A vendor awaited customers for his clothing at a commercial stall in Beijing yesterday. China now finds itself embroiled in disputes over its textile and clothing exports with both the United States and the European Union.
