By and  on July 13, 2007

WASHINGTON — Imports of Chinese apparel and textiles shot up 21.8 percent in May, the Commerce Department said Thursday.

For the month, Chinese apparel and textile imports rose to 1.8 billion square meter equivalents, valued at $2.4 billion, as shipments from the rest of the world fell 5.6 percent, to 2.7 billion SME. Much of China's momentum came from apparel shipments that swelled 42.1 percent, to 588 million SME. The country showed particular strength in dresses and nightwear made with man-made fiber and cotton. Women's and girls' cotton trousers, one of the 34 types of goods still restrained by quotas, also had a strong showing.

The Democratic Congress is looking to seize the trade agenda from President Bush and the Republicans. The total U.S. trade deficit in goods and services grew to $60 billion in May, compared with $58.7 billion in April. The goods deficit with China rose to $20 billion from $19.4 billion.

The commerce report came as the Bush administration took a step forward in its World Trade Organization case against Chinese government subsidies.

The U.S., along with Mexico, asked the WTO to set up a dispute settlement panel to address the subsidies, which the White House maintains are granted to Chinese companies that meet certain export goals or use domestic products over goods from other countries. Launched in February, the case has gone through two rounds of consultations between U.S., Mexican and Chinese officials, and could lead to retaliatory tariffs to offset the impact of the government supports.

"China has taken a positive step by repealing one of the subsidy programs we challenged, but much more needs to be done," a spokesman for U.S. Trade Representative Susan Schwab said in a statement. "We continue to prefer a negotiated settlement to this dispute, but without assurance of complete corrective action by China, we must continue to pursue the WTO process to enforce our rights."

The WTO Dispute Settlement Body will consider the request for a panel at its meeting July 24.

One of the chief complaints of U.S. textile producers is that they cannot compete against myriad advantages given to factories in China, including subsidies and currency policies that restrain the value of the yuan.A Chinese trade diplomat, who requested anonymity, said in the two rounds of consultation in March and June, the U.S. and Mexico "just disregarded" the progress made in China's reforms, including scrapping the allocation of preferential loans to export enterprises.

Whatever the impact of subsidies, Chinese producers also enjoy other advantages, such as a large pool of cheap labor, ready access to raw materials and an infrastructure trained toward exporting on a grand scale. China has used these attributes to increase its share of U.S. apparel and textile imports to a commanding 37.8 percent in the 12 months ended May 31, up from 33.3 percent a year earlier.

Bangladesh also showed strength, with apparel and textile imports rising 16.7 percent from a year earlier to 135 million SME, led in part by increases in goods where China is restrained by quotas, such as cotton underwear, women's and girls' cotton trousers, and women's and girls' man-made fiber sweaters.

On the losing end was Pakistan, the number-two U.S. apparel and textile supplier, which saw its shipments drop 10.5 percent, with big decreases in combed and carded cotton yarns, and cotton poplin, broadcloth and twill fabrics.

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