Iowa Public Television


Chinese Textile Policies

posted on April 29, 2005

Acknowledging U.S. dependence on foreign oil, the President also called on Saudi Arabia this week to increase production by more than 30 percent by the end of the decade to 12.5 million barrels per day.

For most trade-sensitive agricultural commodities though, an increase of foreign imports rarely would be viewed as a favorable development.

A case in point can be found in the textile industry where a flood of imports from China is hammering U.S. cotton producers and processors.

Quotas that had limited global textile trade for the past decade were lifted earlier this year, unleashing China's low-cost goods on the West. And this week, the European Union joined the fray.

Chinese Textile Policies U.S. trade officials have long been troubled by China's trade policies. They say its undervalued currency gives it an unfair advantage in competition for markets, both in the U.S. and in developing countries. Congress is working to increase pressure on China to revalue its currency. The European Union joined the United States this week in efforts to contain recent surges in imports of Chinese textiles.

The EU Trade Commissioner says that a 60-day investigation will be conducted to determine if market disruption has occurred. The Commission also will decide whether special safeguard measures should be imposed. These decisions will be made in conjunction with consultations with China in an attempt to find a satisfactory solution.

According to Chinese trade officials, the country's textile exports to the U.S. totaled $360 million in March, up 39.3% from the same month last year. China's exports of apparel to the U.S. grew by 48.8% on year. And in March, exports of textiles and apparel to the EU rose 15.5% and 8.6% respectively.

With China's admission to the World Trade Organization in 2001, countries are legally entitled to limit Chinese textile imports through 2008. The EU has been under pressure from various industry groups in several different countries to enforce restrictions on Chinese imports.

Chinese officials argue that they are operating within WTO rules. China is continuing to increase its dependence on world markets for its raw materials, including soybeans and cotton. Trade observers say developing countries will be watching U.S. and European reactions to Chinese export growth very closely.

The WTO this week said it would be a mistake for countries concerned with the surge in Chinese textile exports to act too quickly.

Tags: China European Union news trade