WASHINGTON — China, under increasing pressure to curb exports of apparel and textiles, said on Wednesday it would not bow to U.S. requests to extend the restraints on certain Chinese products that are scheduled to be eliminated on Jan. 1.
China’s hard line intensifies tensions between the two powerful trading partners and other Asian, African and Caribbean countries — from Bangladesh and Pakistan to Mauritius and Honduras — that fear losing jobs and market share once quotas are lifted Jan. 1 among all 147 World Trade Organization members.
It also comes as the AFL-CIO and a group of businesses, including textiles, steel, auto parts and plastics, plan to file an unfair trade complaint today with the Bush administration calling for U.S. action to counter allegations that China is undervaluing its currency by as much as 40 percent.
“China will not accept any kind of voluntary export restraint agreement,” Haiyun Liu, first secretary of the commercial department at the Embassy of China here, said at a trade forum on quota elimination. “Any extension of [quotas] would be a breach of the WTO agreement.”
Liu said that his government believes existing U.S. procedures to deal with so-called safeguard petitions based on a threat to the market rather than an actual disruption are “unfair.” Beijing reserves the right to challenge the safeguard cases and appeal them at the WTO, he said.
The remarks may undermine talks involving Grant Aldonas, undersecretary of commerce for international trade, who is in China through Sept. 18 .
The U.S. textile industry, given the go-ahead by the Bush administration that it can file safeguard quota petitions against China, announced last week that it will file the documents before the end of the month. Domestic textile groups say lifting quotas will be a blow to the remaining 696,500 apparel and textile jobs in the U.S. Developing counties also fear China will take over the global market.
Liu said that U.S. safeguard procedures do not provide a definition or standards for market disruption or threat of market disruption. But he left open the question of whether that is the basis on which China would file a WTO case to contest the petitions.
The U.S. last December imposed safeguard quotas on three Chinese import categories: bras, dressing gowns and robes and knit fabric. They are set to expire in December.
“We believe that no WTO member has the right to reapply for restraint action against Chinese exports,” Liu said, citing China’s WTO agreement.
Aldonas said at a news conference before his trip that he planned to use the safeguard petitions as leverage to compel the Chinese to negotiate a comprehensive quota agreement covering several apparel and textile categories. The Commerce Department on Wednesday declined comment on Liu’s remarks.
“There is never a time we don’t have a conversation about a negotiated solution,” Aldonas said on Friday. “In our discussion to date the Chinese have rejected a comprehensive arrangement and I will try to remind them when we say ‘comprehensive’ we mean a limited number of sensitive categories.”
Liu’s remarks left open the question of whether the U.S. would get any commitments from the Chinese.
“The only reason the Chinese would ever agree to extend quotas is if they believed the safeguard mechanism would produce a worse environment for them,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.
Tantillo said it is now up to the U.S. government to “expeditiously and effectively use the safeguard to prevent the Chinese from overrunning the market.” He said, “The Chinese need to understand the U.S. is serious about using the safeguards in a very demonstrative manner. Until they are convinced of that, I don’t think they will be serious about discussing a bilateral arrangement.”
Importers and retailers, many of whom were in the forum audience, continued to argue against the Bush administration accepting threat-based safeguard petitions that could restrain trade. They said the elimination of quotas will energize global commerce, lower costs for consumers.
“Obviously, all [Liu] could say is China has the right to take the issue to the WTO, but that decision has to be made at a much higher level,” said Brenda Jacobs, counsel to the U.S. Association of Importers of Textiles & Apparel. “He did have instructions [from Beijing] to say that it’s quite clear neither the government nor the industry in China has any interest in a voluntary restraint agreement.”
The developments came as House Democrats sent a letter to President Bush renewing their call for the administration to address the “imminent expiration of textile and apparel quotas” and to take action to curb imports from China.
The allegation that China is low-balling its currency — giving Chinese exports a lower-price advantage — has been brewing for years. The Bush administration said it has been working with Chinese officials to bring the yuan’s value into line with world currency markets. However, the new China Currency Coalition, led by the AFL-CIO, has grown impatient.
“We agreed four months ago…to give the administration time to make its strategy work and it has not worked, at least not soon enough,” said Cass Johnson, president of the National Council of Textile Organizations, citing price increases of as much as 53 percent on Chinese textile and apparel imports unregulated by quotas. “Chinese imports are continuing to skyrocket, manufacturing is not recovering.”
The administration already has indicated it would reject a claim based on currency manipulation. In April, Bush officials staked their position while rejecting a separate case filed by the AFL-CIO that argued Chinese labor abuses were unfair trade practices.