Emad Mekay

WASHINGTON, Nov 9 2005 (IPS) — The United States and China reached a broad deal Tuesday that would regulate their textile trade through 2008, after Washington complained of surging Chinese imports, officials from both nations said.

“We sought an agreement that achieves the stability and predictability sought by our retailers and textile producers, who understandably found it hard to plan in the face of unpredictable safeguards,” said U.S. Trade Representative Robert Portman.

Chinese Commerce Minister Bo Xilai expressed similar sentiments.

“The result of the negotiations actually have provided a stable environment for the industries both in China and the United States and in this sense there is a win-win result,” the Chinese minister said at a joint press conference.

The two countries clashed over the issue after an international rule regulating textile exports expired at the beginning of the year.

The National Council of Textile Organisations, a U.S. industry group, says that Chinese exports of apparel to the United States have increased by over 800 million garments in just the first five months of the year. It blamed China, in part, for an acceleration of U.S. textile and apparel job losses, with 26,000 jobs lost and 19 textile plants closed.

The U.S. textiles industry has charged that the intense collaboration between the Chinese government and its textile and apparel sector enables Chinese exporters to under-price competitors like Bangladesh and India, which pay lower wages.

U.S. lawmakers have complained that China created an unbalanced trade climate, and repeatedly threatened retaliation. They said that China’s manufacturing subsidies amount to unfair trade practices that harm U.S. workers, that its agricultural and services sectors remain too difficult for foreigners to penetrate, and that violations of intellectual property rights remain commonplace.

Last year, the U.S-China trade deficit hit a record high of 162 billion dollars, sending the administration, lawmakers and economists searching for ways to narrow the deficit. The textile question has been particularly thorny, and the deal signed Tuesday eases some of the tensions between the two countries over trade.

“We don’t expect that this single achievement can help us to solve all the conflicts or problems between us, but we don’t want to see such a small trade obstacle impede the overall trade and economic cooperation between the two countries,” Bo Xilai said through a translator.

One of the reasons the issue has been problematic is that the textile industry directly employs 1.9 million people in China and some 20 million people in related fields, and is seen is highly sensitive. Most workers come from low-income families, giving the issue a strong social dimension in the Asian nation.

Under the new deal, exports of most Chinese clothing and textiles to the United States will rise between eight and 10 percent in the first year, by 12.5 percent in 2007, and by 15 to 16 percent in 2008.

Those rates are a clear win for U.S. manufacturers. For the categories covered by the agreement, year-to-date imports from China have soared 115 percent by volume compared to 2004, 185 percent for apparel and 44 percent for textiles. Some categories, such as cotton trousers, cotton knit shirts and synthetic fabrics, have even seen growth in excess of 1,000 percent.

The deal also covers more than 30 individual products and sets quotas that begin at low levels.

The agreement comes after three months of intense negotiations. It follows a similar deal earlier this month on a new quota for U.S. imports of Chinese-made socks.

The agreement also gives the U.S. the right to impose tighter limits on Chinese exports of “core” apparel products than any quotas that could have been imposed under the China World Trade Organisation safeguard in 2006, which gives Washington the right to restrict certain Chinese imports but only after formal complaints from the local U.S. industry.

Core apparel products are cotton knit shirts, man-made fiber knit shirts, woven shirts, cotton trousers, trousers, brassieres, and underwear.

A fact sheet by the U.S. Trade Representative says that the agreement’s broad coverage and three-year lifespan will allow all private sector companies in China and the United States and elsewhere in the world – including African producers – to operate in a more stable environment.

China can now borrow small amounts of its quota from future years to cover over-shipments. In addition, the agreement’s Jan. 1, 2006 start date will allow importers and retailers to prepare for changes.

“So, frankly speaking this is a very good agreement for the American worker,” Portman said.

The agreement also won quick applause from the industry. “U.S. textile and apparel manufacturing workers and their communities are big winners today,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, an industry group.

“This bilateral agreement represents a necessary and welcome step towards addressing China’s unfair trade practices and highly disruptive levels of textile trade,” he said.

But the Chinese say that the deal could have better given the fact that there is a huge economic discrepancy between the United States and China, and that the U.S. Gross Domestic Product per capita is 40 times that of China’s.

“If the Chinese government cannot maintain or secure the export interests of the textile workers, then lots of people will lose their jobs and this will have a greater impact, much greater than that of the U.S.,” the Chinese minister said.

“We know that Ambassador Portman has shown some flexibility at the end of the day, but I don’t think that’s enough, actually that’s still a far cry from our original expectations.”