TRADE THREATS BY CHINA GET COOL RESPONSE

Byline: Joyce Barrett

WASHINGTON — Chinese threats of retaliation against a U.S. penalty for alleged trade violations were being viewed Monday as a tactical move as the two countries enter a second round of negotiations on a textile bilateral agreement set to expire Dec. 31.
China said over the weekend that it would ban U.S. textiles, fruits, alcoholic drinks and other imports in response to a $19 million penalty the U.S. levied against it in September because of illicit transshipments.
The list of U.S. imports to be suspended is to be drawn up before Dec. 10, when the ban is set to take effect. China reportedly said the U.S. action violates the current Sino-U.S. textile agreement signed in 1994.
“It’s just a negotiating tactic,” Ron Sorini, a former textile negotiator and now senior vice president, government relations and international development with Fruit of the Loom, said Monday. “They are trying to intimidate the Clinton administration, to try and get them to back off on negotiating demands.”
Sorini noted that the Chinese have used such retaliation threats in the past in an attempt to gain leverage before pending negotiations.
Rita Hayes, chief U.S. textile negotiator and textile ambassador, postponed a trip to China last Saturday because the Chinese would not confirm that she would be negotiating in the second round of talks with “someone of authority,” a U.S. Trade Representative official said Monday. Hayes is awaiting a call from the Chinese on their decision before planning another trip, the official said. The USTR official said the administration heard about the threatened retaliation only from press reports.
“The press reports prove that they don’t understand the transshipment problem,” the official said. “We want to make it clear that U.S. sanctions were taken strictly under the provisions of the bilateral. They were made within the period of the bilateral, between 1994 and 1995.”
Yet that point is disputed by Brenda Jacobs, an attorney for the U.S. Association of Importers of Textiles and Apparel. Jacobs asserts that she had documents showing that the U.S. penalties, levied Sept. 6, date back to actions taken as early as 1990, which would not be covered by the bilateral.
“This was bound to happen,” she said. “The Chinese are angry that the U.S. has done nothing to correct any of the mistakes made in the original charges.”
Jacobs also said the Chinese announcement was a strategic attempt to give them the upper hand when U.S. negotiators finally come to the table.
“The Chinese don’t want us to negotiate from the upper hand,” Jacobs said. “They want more evidence about the transshipment penalties, and they have asked for more information. The U.S. has yet to respond to them.”
Jacobs also noted that both the U.S. and the Chinese want to rewrite transshipment rules and this threat likely is an attempt to get the U.S. to compromise.
Carlos Moore, executive vice president of the American Textile Manufacturers Institute, had harsh words for the Chinese threats.
“You have to wonder what the Chinese are really trying to do if they are threatening to retaliate against their biggest customer,” he said. “The key point is that while everyone knows that the Chinese send us $5.6 billion legally in textiles and apparel, they also send us that much illegally in transshipments.
“Here we have a country that has shown utter disregard for the trading rules, and they got caught and now they are threatening to retaliate. It seems a bit ludicrous.”
The U.S. in 1995 shipped $65 million in textiles to China, Moore said. Of that, about $10 million is industrial fabrics, $5 million in carpeting, $5 million in sheets and pillowcases and another $13 million in yarns and fabrics.
Moore reiterated ATMI’s position that China is not ready for membership in the World Trade Organization because of such behavior.
“This shows how much reform is needed in China’s trade practices and trade policy before they are considered for membership in the WTO,” Moore said.
The September action by the U.S. involved charges that the Chinese were illicitly shipping cotton underwear, men’s cotton knit shirts, women’s cotton coats, sewing thread and cotton pajamas to the U.S.
Acting U.S. Trade Representative Charlene Barshefsky charged at the time that the various products subject to the quota reduction were transshipped through seven nations, naming Mongolia, Fiji and Hong Kong among them.

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