The prospect that Chinese exports will soon overwhelm the worldwide clothing market was thrown into doubt yesterday after Beijing announced it will tax its shipments of textiles and apparel once the global market is liberalized on Jan. 1.
The move could help defuse a looming confrontation with the Bush administration, which is considering whether to limit Chinese clothing imports because of fears that China's textile industry will swamp producers in the United States and other countries, potentially throwing millions of people out of work.
Details of the decision were scant, and its impact will depend on whether Beijing imposes export duties high enough to make some Chinese textiles less competitive, industry and government officials said.
China's action, published on government Web sites late Sunday, comes less than three weeks before the end of a system that has restricted international trade in textiles and apparel for decades. Under that system, detailed quotas have limited the amount of clothing, towels, sheets and other textile items that each country can sell in the United States, Europe and Canada.
The end of the quota system will allow countries to sell as much clothing as they can around the world, and has prompted economists and industry experts to predict that China's low-cost factories will dominate the trade. Although that would benefit consumers by providing cheaper clothing, it could decimate the apparel industries in developing countries such as Bangladesh, Egypt and El Salvador.
The U.S. textile industry, already battered by low-price foreign competition, is seeking to fend off Chinese imports by demanding that the U.S. government impose "safeguards" -- limits that the United States and other governments can put on imported Chinese textile or apparel items. Beijing agreed to allow such safeguards until 2008 under the terms of its entry into the World Trade Organization.
Just as the administration had hoped, the threat of safeguards has evidently prompted China to act on its own. An article reporting the government's decision in China Daily, an English-language newspaper, said that at a closed-door meeting in October, 70 to 80 percent of 400 Chinese textile company representatives agreed that they "would support stricter industry management after quotas are lifted."
In its announcement, the Chinese government avoided any suggestion that it was bowing to foreign pressure. Chong Quan, a spokesman for the Ministry of Commerce, was quoted as saying, "This is part of a string of measures China will take to ensure a smooth transition for textile integration following the end of the quota system."
The response from Washington was cautious. "China has yet to provide critical details of its intentions," Mary Brown Brewer, a Commerce Department spokeswoman, said in a statement. "We will continue to work with China and other nations to facilitate an orderly transition from the textile quota system."
That statement left open the possibility that safeguards could still be imposed. As if to drive home the point, the department also announced it had agreed to consider a request by U.S. textile companies to limit imports of knit fabric from China.
U.S. textile industry representatives said that the Chinese announcement will not blunt their efforts to obtain safeguards.
"This is in keeping with the pattern that the Chinese normally exhibit in situations like this," said Augustine D. Tantillo, executive director of the American Manufacturing Trade Action Coalition. "They announce an intention to do something, and then six months later, it's kind of hard to find whether or not they've actually done it." Tantillo said that Chinese export prices are already so low that the duties are unlikely to make much difference. "It is like, instead of being 70 percent below the U.S. price, they're now going to be 58 percent below the U.S. price," he said.
The European Commission, the executive arm of the European Union, gave a much warmer reception, saying in a statement that the steps should help "ensure that the expansion of textile exports from China happens progressively."
But even representatives of U.S. clothing importers, who have been fighting against safeguards, acknowledged that China's announcement was vague.
"Their rhetoric is a good thing, showing that they're thinking about how to keep the transition smooth," said Julia K. Hughes, vice president for international trade and government relations at the United States Association of Importers of Textiles and Apparel. "But the devil's in the details."
The Chinese measure is similar to past actions by other governments, notably Japan, which in the 1980s "voluntarily" restrained exports of machine tools and automobiles to the U.S. market in a bid to avert protective tariffs. Such export restraints have since become illegal under WTO rules, but since no WTO member would likely challenge China's export duties, that probably won't pose a problem.
