U.S.-China Import Deal Faces Final Hurdle

U.S. negotiators wrapped up "productive talks" with the Chinese, but will have to meet again to reach a long-term deal on textile and apparel imports.

WASHINGTON — U.S. negotiators, after wrapping up what were described as productive talks with the Chinese Wednesday night, face at least one more round to reach a long-term comprehensive agreement on textile and apparel imports.

The discussions are likely to resume this month in China.

“Both China and the U.S. are working toward a broad solution that provides greater certainty for the textiles market,” said a spokesman with the U.S. Trade Representative’s office, which is leading the talks. “The U.S. would like to reach a deal soon, but we are not interested in a bad deal. Throughout this process, we are closely consulting with domestic manufacturers and retailers, as well as with Congress.”

China’s apparel and textile imports to the U.S. jumped 46.6 percent to 7.9 billion square meter equivalents valued at $10.8 billion during the first half of this year — the first six months since the countries of the World Trade Organization dismantled the global system of quotas that regulated trade for three decades.

The Bush administration countered this surge in May with new quotas on $1.31 billion in imports under the safeguard provision China agreed to when it joined the WTO in 2001. Petitions for six additional safeguards are pending, with a final decision set for Aug. 31.

Domestic textile firms charge that safeguards, which cap annual growth in a given category at 7.5 percent and can be renewed through 2008, offer a life raft in a flood of imports. Importers, however, say they unnecessarily hurt trade and raise consumer prices.

Textile firms and importers, as well as Chinese exporters, would prefer a broad agreement that replaces the uncertainty of the safeguard process with a more predictable environment that allows for cohesive planning.

With importers seeking to minimize trade restrictions and the domestic textile firms favoring a deal that holds imports to near safeguard growth levels, a pact that might not fully satisfy any faction, but would be deemed a fair compromise, seems possible.

Experts with knowledge of the talks said the proposals brought by the U.S. and China at the negotiations in San Francisco this week had substantial differences.

“They still have a good amount of work to do,” said Jonathan Gold, vice president of global supply chain policy for the Retail Industry Leaders of America.

This story first appeared in the August 19, 2005 issue of WWD.  Subscribe Today.

Gold said the two sides may reconvene during the last week of this month after exchanging additional proposals beforehand.

“We don’t want to see a restrictive deal put in place,” Gold said. “We want to see something that is flexible, has good growth rates and will account for actual trade, and won’t be trade restrictive.”

Gold said the existing situation is difficult for importers and that any deal would be an improvement. Textile groups were more wary of an accord that would let more Chinese imports into the U.S.

“It sounds like the U.S. came prepared to engage constructively, but the Chinese did not necessarily,” said Missy Branson, senior vice president of the National Council of Textile Organizations. “From what I’ve heard, the ideas that [the Chinese negotiators] were floating were completely unreasonable and not something that our industry could ever accept.”