China revokes export tariffs on textile

Associated Press

Beijing, May 30:

China on Monday lashed back at the US and European Union in a spat over pants, shirts and underwear, accusing the two of violating trade rules and withdrawing planned tariffs meant to restrain a surge in Chinese-made textiles flooding their markets. China’s commerce minister criticised new US and EU textile quotas as a violation of World Trade Organisation rule and said Beijing would ‘firmly protect’ its legal rights, though he didn’t say what steps his government would take. Beijing last week announced it would quintuple export tariffs on 74 types of goods on June 1, trying to persuade its trading partners not to restrict textile imports that have soared since a global quota system expired on January 1. The announcement of plans to scrap the tariffs cited the US and European steps to restrict imports of Chinese clothing and textiles. Chinese producers shouldn’t face “double pressure,” Commerce Minister Bo Xilai said at a news conference.

The announcement came as China prepared for a visit this week by US Commerce Secretary Carlos Gutierrez. Textiles are among a series of disputes that have strained China’s relations with the United States, the European Union and other major trading partners. China also is under pressure to raise the government-set exchange rate of its currency, the yuan, and stamp out rampant piracy of music, software and other goods. The US and European decisions on textile quotas cited terms of China’s WTO membership agreement that let its trading partners restrict imports that are disrupting their markets. But Bo accused Washington and the EU of violating WTO rules by failing to provide adequate evidence of market disruption. He said they used data from too short a period and made an “easy decision” to impose quotas. “In our opinion, this move lacks legal grounding and therefore is incorrect,” Bo said at a news conference. “The United States and European Union have not provided adequate data. That is unreasonable and unscientific.”

The United States says imports of Chinese clothing and other textile goods are 54 per cent above last year’s level. The EU says imports of Chinese-made T-shirts rose by 187 per cent in the first four months of this year, while flax yarn imports rose by 56 per cent. The EU took the dispute to the WTO on Friday, giving China 15 days to react. It means the EU will be allowed to restrict the growth of imports of flax yarn and T-shirts to an annual rate of 7.5 per cent. Washington earlier imposed controls restricting growth of imports of Chinese-made cotton pants, underwear, synthetic fiber shirts and other goods to an annual rate of 7.5 per cent. Already on Friday, the Chinese government reacted to US import quotas by saying the new export tariffs wouldn’t apply to goods already affected by foreign controls. Bo complained that the foreign quotas were damaging a Chinese industry that employs 19 million workers, many of them poor. Bo said the United States and European Union were partly to blame for the jump in Chinese textile imports because they failed to carry out earlier promises to lower market barriers ahead of the January lifting of the quota system.