18 May 2005

Chinese safeguards

The following article is excerpted from the 17 May 2005 edition of “The Journal of Commerce”.

The United States on May 13 agreed to limit imports of cotton shirts, cotton trousers, and both cotton and man-made fiber underwear made in China.

The move comes as the Bush Administration faces increasing political and industry pressure to curb a surge of Chinese apparel imports after quotas were eliminated Jan. 1.

As part of the formal process, the Committee for the Implementation of Textile Agreements (CITA) on May 13 announced that by the end of this month, it will request consultations with China regarding cotton knit shirts and blouses (338/339), cotton pants (347/348), and cotton and man-made fiber underwear (352/652).

… Quotas on these goods are expected to be reimposed as soon as the formal request is presented to the Chinese.

There is serious doubt as to the success of the negotiations in light of China's initial response…. (The Europeans are facing the same complaint and have begun their consultation process as well.) On a more positive note, there is information to suggest what the Chinese are willing to do is raise their export tax, but whether that will be sufficient is highly doubtful. …

There are also varying opinions as to how the quota will be calculated, but one thing is clear: this situation is going to get much more complicated before it gets resolved. American importers are cautioned to consider how they are sourcing their garments and textile products so as to limit the damage this reimposition of quotas is likely to cause.