China to Raise Tariffs On Clothing Exports

By Paul Blustein
Washington Post Staff Writer
Saturday, May 21, 2005

China announced plans yesterday to sharply increase taxes on its exports of clothing, Beijing's clearest acknowledgment to date that it needs to prevent its apparel from flooding global markets.

The announcement came days after the Bush administration decided to impose new caps on imports of Chinese clothing.

China's announcement was evidently aimed at persuading Washington to roll back its protective measures, or at least forestall more such steps in the future, though industry insiders voiced doubt that Washington would change course simply because of the tax hike.

The Chinese action would raise export duties on 74 categories of Chinese clothing from token amounts announced late last year to a range of 12 to 48 cents per garment, starting June 1. Even at the higher rates, the taxes would not discourage sales of Chinese apparel much, industry experts said.

Still, by taking the step China effectively conceded that its export juggernaut poses a threat to textile and apparel companies in other countries. That could open the door eventually to negotiations on the issue, although it might also embolden Beijing's trading partners to crack down harder on Chinese imports.

"It is for the purpose of helping establish a new world textile trade order and ease the trade friction that the government has made the concession," Sun Huaibin, spokesman for the China National Textile Industry Council, told the state news agency Xinhua.

China is at the center of a revolution shaking the worldwide textile and apparel market because of the expiration on Jan. 1 of a quota system that for decades limited the amount of fabric and clothing that individual countries could ship to big markets such as the United States and European Union.

With countries now free to export as much as they want, China's highly efficient and low-cost apparel makers have been widely expected to devastate competing firms elsewhere. But Beijing agreed, as a condition of its entry into the World Trade Organization in 2001, to allow the United States and other countries to impose "safeguards" on Chinese clothing imports until 2008, capping the growth of such imports to about 7.5 percent a year.

The safeguard rule was the basis for the Bush administration's recent imposition of caps on imports from China of seven categories of clothing including cotton trousers, underwear and cotton shirts.

The administration responded cautiously to yesterday's announcement, noting that under the safeguard rules the United States and China are supposed to "consult" later this month on the import caps. "The consultations will represent an opportunity for discussion with the Chinese government of the measures just announced," said Dan Nelson, a Commerce Department spokesman.

The Chinese announcement drew some positive reaction. "There's no doubt it's in the right direction," said French Industry Minister Patrick Devedjian, whose government has been prodding the European Union to impose safeguards similar to Washington's. Devedjian's comment, which he made during a visit to Beijing, was reported by the Associated Press.

But representatives of U.S. textile firms were scornful. "We are completely underwhelmed," said Augustine D. Tantillo, executive director of the American Manufacturing Trade Action Coalition. "The Chinese see the U.S. taking action, so once again they are stepping up to say, 'We can deal with this; you don't need to implement these limits.' Our view is that this is simply a game of delay and confusion."

Even representatives of U.S. clothing importers, who have strongly criticized the safeguards, predicted that Beijing's move would not alter administration policy.

© 2005 The Washington Post Company