US, CHINA TEXTILE DISPUTE: Accord inked, numerous trade hurdles remain

Washington, November 9:

China and the United States agreed yesterday to a three-year long pact to limit Chinese clothing and textile imports, a deal that will help the beleaguered US industry but cost the average American family $10 to $20 annually in higher clothing bills.

Even with resolution of the textile fight, many trade issues remain, from theft of US computer programmes to Chinese manipulation of its currency. And with the trade deficit with China expected to approach a record $200 billion this year, the Bush administration will be under pressure to do more.

The biggest prize sought by American manufacturers is revaluation of the Chinese yuan, which US companies contend is undervalued by as much as 40 per cent. That makes Chinese goods cheaper in the US and American goods more expensive in China.

The administration has been pressuring China and must report to Congress on the issue later this month. Legislation that would impose 27.5 per cent across-the-board tariffs on Chinese goods has wide support among lawmakers, but analysts believe the administration is likely to avoid branding China a ‘currency manipulator’ in the upcoming report and will instead continue using diplomatic channels to get China to move faster.

“I don’t think anything is going to happen in the short-term on currency,” said Gary Hufbauer, a trade expert at the Institute for International Economics, a Washington think tank. Hufbauer said he expected China would move in late December to allow the yuan to rise further in value against the dollar with promises to do more in the future.

He said lawmakers who have been pushing the 27.5 per cent tariffs will keep that measure alive next year as a way to bring further pressure on China.

The administration has also been stepping up pressure on the issue of the copyright theft, asking China last month to outline the steps being taken to halt widespread piracy of American movies, computers software and music.

US officials said the information would be used to determine whether to file a formal World Trade Organisation (WTO) case against China.

The textile agreement was announced by US trade representative Rob Portman and Chinese commerce minister Bo Xilai after a final round of talks in London.

Bo called it a ‘win-win’ for both countries while Portman described it as a ‘very good agreement for the American worker.’

The agreement comes just 11 days before president Bush is scheduled to arrive in China for an official visit.