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US Government Seeking New Trade Agreement With China

Washinigton Outlook

James A. Morrissey, Washington Correspondent

US Government Seeking New Trade Agreement With ChinaUS government trade officials are making moves toward negotiating a new comprehensive textile and apparel import quota agreement with China that would replace use of the piecemeal safeguard mechanism approach that has been used extensively over the past few months. Commerce Secretary Carlos Gutierrez announced the Committee for the Implementation of Textile Agreements (CITA) was postponing until August 31 any further action on six product categories in order to give government trade officials time to consult with domestic textile and apparel industries and members of Congress on whether and how to pursue a broader agreement with China.The products involved are man-made filament fabric, mens and boys wool trousers, cotton and man-made fiber dressing gowns and robes, cotton and man-made fiber brassieres, knit fabric and cotton and man-made fiber sweaters. CITA was planning to seek consultations with China on those products. At the same time, CITA announced it has accepted for consideration requests for safeguard action limiting imports on cotton, wool and man-made fiber socks, womens and girls cotton and man-made fiber woven shirts, cotton and man-made fiber skirts, cotton and man-made fiber nightwear and cotton and man-made fiber swimwear.In announcing the postponement of consultations on the six product categories, Gutierrez said, This action will allow us time to engage in substantive discussions with our domestic textile and apparel industries and members of Congress on whether there is interest in a broader textile agreement with China. We look forward to working with industry and Congressional leaders to get their views on the best way to ensure a level playing field.Industry lobbyists in Washington have made it clear they would like to see a comprehensive, long-term agreement with China that would stem the flood of imports that has occurred since import quotas were removed last January. They are supporting the administrations decision to consult with them on a possible new agreement.Rep. Robin Hayes (R-NC ), one of the textile state House members whose votes were key to passage of the Dominican Republic-Central American Free Trade Agreement, applauded the decisions, saying a comprehensive agreement is the first essential step in addressing the Chinese import problem. He said the agreement must include tight limits on sensitive textile and apparel products and must extend until the end of 2008 when the current safeguard mechanism expires. Hayes also said it must cover not only products where safeguard decisions already have occurred or are pending, but also other categories where China is having a disruptive impact on the US market.Although the Chinese government has strongly opposed use of the safeguard mechanism to impose new quotas with a 7.5-percent annual growth, a comprehensive agreement may have some interest, because it would result in certainty as to what products will be controlled and how and take the issue out of the political arena. China has entered into a comprehensive agreement with the European Union setting quotas ranging from 8- to12.5-percent growth on 10 product categories.

By James A. Morrissey, Washington Correspondent August 2005