WWD.com/fashion-news/textiles/u-s-china-close-in-on-deal-565871/
government-trade
government-trade

U.S.-China Close In on Deal

A broad agreement regulating U.S. apparel imports from China appeared close, as the two countries worked to hammer out a deal in San Francisco.

WASHINGTON — A broad agreement regulating U.S. apparel imports from China appeared closer late Wednesday as the two countries worked to hammer out a deal.

The head U.S. negotiator, David Spooner, said in a conference call with reporters from the talks in San Francisco that if the final session on Tuesday didn’t lead to an agreement, the two sides would likely be back at the bargaining table later this month, probably in China.

One of the stickier details to be worked out was how much growth an accord would allow, though Spooner said whatever percentage is ultimately agreed on would be based on a recent 12-month period.

“We’re both in the same ballpark, the talks are going well,” said Spooner, who is special textile negotiator with the U.S. Trade Representative’s office. “We will set up a future meeting today if we do not come to an agreement. I expect it will happen very quickly. There’s a desire on both of our parts to move fairly quickly to closure.”

All of the parties that would be effected — from U.S. textile firms and importers to retailers and Chinese producers — have pushed for a pact that would bring an end to the uncertainty of the current regimen of safeguard quotas.

The Bush administration imposed safeguards on $1.31 billion in Chinese imports in May to protect domestic firms from import increases in excess of 1,000 percent for some goods. Products in most of the categories under safeguard have been embargoed until next year.

The floodgates were opened when the countries of the World Trade Organization dropped the system of quotas that regulated global trade in January. But China’s entry agreement into the WTO allowed for the safeguards. Apparel and textile imports from China shot up 46.6 percent to 7.9 billion square meter equivalents, or $10.8 billion worth, during the first half.

The Bush administration deferred a final decision on six outstanding safeguard petitions until Aug. 31. Safeguards restrict goods to annual growth of 7.5 percent and can be renewed through 2008. Domestic textile concerns are pushing for an agreement that allows for limited growth over a broad range of goods, while importers and retailers are looking for higher growth levels.

This story first appeared in the August 18, 2005 issue of WWD.  Subscribe Today.

The U.S. made an initial proposal on Tuesday and China countered Wednesday morning, but Spooner declined to offer specifics.

“Our entire private sector, from cotton growers up through retailers and importers, want an agreement to last through 2008,” Spooner said.

China and the European Union reached a deal in June that allowed for 8 to 12.5 percent growth on 10 import categories through 2007.

One point that was to be worked out is whether categories embargoed under safeguards would be reopened this year, bringing more goods into the market and freeing up previous shipments that didn’t make it into the country in time and are stuck in bonded warehouses.

“There are concerns about what the impact of embargoes will be on retailer’s ability to stock their shelves,” Spooner said.

Textile and import trade groups were keeping close tabs on the negotiations at the InterContinental Mark Hopkins Hotel.

“We continue to be positive about the outcome,” said Jim Chesnutt, president and chief executive officer of National Spinning Co. and chairman of the National Council of Textile Organizations.

Chesnutt stressed the need for a broad agreement that is flexible enough to include categories of goods that might see future disruption and those now under safeguards.

“We want everything that has now been approved and or submitted wrapped up in a bilateral agreement that will specify where we need to be between now and the end of 2008,” Chesnutt said.

The American Manufacturing Trade Action Coalition said it would rather stay with the existing system if an acceptable deal can’t be reached.

“No deal is better than a bad deal,” executive director Auggie Tantillo said in a statement. “Whether we will be able to support any final agreement will depend on what’s in the fine print both on categories covered and growth limitations.”

Spooner stressed the importance of not rushing a deal.

“The tenor of our discussions has been very good,” he said. “Both sides are eager to solve this problem, but both sides also say they’d rather take a little bit longer to get a good deal than reach a bad deal.”

Chinese President Hu Jintao is scheduled to meet with President Bush next month and both sides would like to have an accord wrapped up by then.

The negotiations make up part of what has been an often tense trans-Pacific relationship in which there also has been friction on currency policies, enforcement of intellectual property laws and in foreign policy.

Some of the pressure was eased last month when China allowed its currency, the yuan, to appreciate slightly against the dollar and pegged it to a so-called market basket of currencies.