By  on January 18, 1994

WASHINGTON -- The U.S. and China on Monday agreed to a new, three-year textile pact, averting the dramatic 25 to 35 percent reduction in China's apparel quotas that was slated to take effect the same day.

However, for the first time, the U.S. froze China's silk exports at 1993 levels and severely restricted the growth rates of quotas for all other Chinese apparel and home furnishing textiles.

Kantor estimated that by limiting growth, the new textile agreement in effect will reduce U.S. imports of Chinese apparel by 13 percent, or $700 million, over three years. China is the U.S.'s top apparel source, shipping $6.58 billion worth of apparel and textiles to the U.S. for the year ending last October. These measures "are entirely justified, given the substantial transshipment and overshipment [by China] in violation of previous agreements," U.S. Trade Representative Mickey Kantor said at a press conference here Monday.

The pact, reached by negotiators Monday in Beijing, not only dropped the threatened quota cutback -- a penalty proposed to offset alleged massive Chinese transshipments -- but also a similar quota reduction proposed for each of the next three years.

The agreement runs through Dec. 31, 1996, retroactive to Jan. 1 of this year. The U.S. previously had insisted on a 25 percent cut in 73 categories of Chinese cotton and manmade fiber clothing and by 35 percent on eight wool categories, while not limiting quotas on seven silk categories, which are not covered by the Multi-Fiber Arrangement.

Following 2 1/2 days of talks in Beijing, the two sides agreed that in all but two categories, U.S. quotas on Chinese apparel would be frozen this year at 1993 levels. In 1994 and 1995, quota growth rates for these imports would be pegged at those for Hong Kong, Taiwan, or South Korea, whichever is lowest -- probably 1.5 percent in 1994 and 1995.

In addition, the U.S.-China pact provides a 2 percent annual quota growth rate over 1993 levels for cotton bedspreads and quilts, category 362, and manmade fiber sheets, category 666.

The U.S. previously had not controlled silk imports, which are not covered by the MFA. China's silk shipments to the U.S. rose 103 percent to $1.8 billion for the year ended last October.

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