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China Makes Quota Complaint

GENEVA — China blasted the U.S. in an international trade forum, claiming it has backtracked on?terms of a global accord governing?the growth-on-growth provisions for quotas on textile and clothing products, trade diplomats said.<br><br>Sun...

GENEVA — China blasted the U.S. in an international trade forum, claiming it has backtracked on?terms of a global accord governing?the growth-on-growth provisions for quotas on textile and clothing products, trade diplomats said.

Sun Zhenyu, China’s ambassador to the World Trade Organization, told a closed-door session of the WTO’s Goods Council late last month that Beijing is concerned the U.S. has not kept its commitments made in China’s accession accord to the global body, trade diplomats said.

The Chinese envoy reminded delegates from more than 100 nations that a ruling by the WTO’s Textiles Monitoring Body concluded in July that Washington must comply with the terms of the entry accord.

The U.S. delegation did not take the floor to respond to the allegations by China, trade officials said.

When contacted by WWD, U.S. trade officials declined to respond to the Chinese claims.

In the past, U.S. officials have contended that developing nations’ demands to step up the quota phaseout amount to an attempt to renegotiate a deal that’s already been signed. U.S. officials have repeatedly said they will not renegotiate the pace of the quota phaseout.

Meanwhile, Ambassador Sun said, “We would like to see the U.S. fully implement the Agreement on Textiles and Clothing.”

Under the ATC, products subject to quota restraints are supposed to be integrated in four steps over a 10-year period starting in 1995, with the final phase ending Jan. 1, 2005.

The quotas were to be lifted in stages over that decade, with 16 percent of trade being liberalized in 1995, another 17 percent by the close of 2002, 18 percent by the end of 2004 and the remaining 49 percent at the beginning of 2005.

The ATC also stipulates that quantities of imports allowed under the quotas should grow annually and that the rate of increase should increase at each stage.

The agreement states quota growth for stage two, which ended in 2002, should be “the growth rate for the respective restrictions during stage one, increased by 25 percent.”

Similarly, for stage three, ending in 2004, “the growth rate for the respective restrictions during stage two increased by 27 percent.”

This story first appeared in the December 17, 2002 issue of WWD.  Subscribe Today.

Other major importers have complied with the provisions of the global accord for 2001, the year China entered the WTO.

Both Canada and the EU increased the quota growth rates on the remaining restraint levels with China by 25 percent last year and by an additional 27 percent this year, the same sources said.

However, the U.S. told the TMB in July that since China entered the WTO on Dec. 11, 2001, it was appropriate to apply a prorated growth rate for that year. The intent was to prevent China’s quota allocation from shooting up by more than 50 percent this year.

But the 10-member TMB, which oversees the implementation of the ATC accord, concluded that since China became a member during stage two, these provisions should have been applied in full — for the entire year of China’s accession.

The TMB also said the prorated period of 21 days by the U.S.?”did not appear to be substantiated” by the relevant provisions of the working party report that outlined China’s WTO entry terms.

Finally,?TMB concluded, “the base levels in force on Dec. 10, 2001 had to be increased by the respective growth rates applied for the year 2001 [prior to China’s accession], increased by the full 25 percent applicable to stage two and further increased by the 27 percent applicable to stage three.”