The Bush administration has a tentative agreement with China on imports of Chinese clothing and fabric, a deal that would resolve a festering dispute between the two nations, industry sources said yesterday.
Although a few details remain to be resolved, the agreement is likely to be signed next week by U.S. Trade Representative Rob Portman and Chinese Commerce Minister Bo Xilai, according to the sources, who spoke on the condition of anonymity because they had learned the details from administration officials at a confidential briefing.
The deal would begin on Jan. 1 and last through 2008 -- a concession by China, which wanted it to expire in 2007. It would allow imports of most major textile and apparel products from China to increase by 8 to 10 percent in 2006, by 13 percent in 2007 and by 17 percent in 2008 -- a concession by the United States, which had proposed keeping annual growth close to 7.5 percent.
Other economic disputes between the two countries -- regarding copyright infringement and China's currency -- are unresolved. But, if approved, the textile agreement would ease U.S.-China tension over the issue, which became inflamed early this year when shipments of Chinese T-shirts, jeans, underwear and many other such products soared at rates near 1,000 percent over the previous year's level.
Imports surged suddenly because global trade in textiles and apparel was supposed to become much more free this year, like the trade in other goods such as electronics and automobiles. On Dec. 31, 2004, a global arrangement expired that for more than three decades had strictly limited the amount of textiles that individual countries could ship to the United States, the European Union and other major markets. Many experts predicted that China's low-cost, efficient factories would soon dominate the world's trade in clothing, bedding and other fabric products -- a prospect that threatened tens of thousands of jobs in other developing countries and caused alarm in the battered U.S. textile industry.
To China's anger, the Bush administration responded to pleas from politically powerful U.S. textile-makers by imposing new limits -- called "safeguards" -- on Chinese imports such as cotton knit tops, socks, bras and dressing gowns. Such limits, which could restrict the growth in imports as low as 7.5 percent a year, were allowed until 2008 under the terms of China's entry into the World Trade Organization.
But the safeguards could legally stay in force only for a year at a time, and imposing them is a cumbersome process. So businesses in both countries -- manufacturers in China and importers and retailers in the United States -- have struggled with the unpredictability of how many Chinese shirts, pants and other items could legally be shipped in the coming months.
As a result, U.S. and Chinese officials began discussing an agreement a few months ago to restore predictability to the market by capping Chinese shipments to the United States. They differed, however, over the terms.
The agreement is similar to one this year between China and the European Union. But industry officials said they expect to avoid many of the logistical problems that plagued the E.U. arrangement, under which shipments of Chinese clothing were stranded on ships waiting to dock while shelves of European retailers were empty because of their inability to obtain merchandise they had ordered. Because the U.S. deal won't take effect for another couple of months, China will have time to allocate shipment rights to its manufacturers, while the United States will have time to set up the procedures for clearing imports into its market, the industry sources said.
Administration officials did not respond to requests for comment.