China Plans To Impose Export Duties On Textiles

In an apparent effort to head off mandatory unilateral import quotas and other trade sanctions, the
Chinese government has announced plans to levy an export tax on its shipments of textiles and
apparel to the United States and other countries. The government did not specify the amount of the
duties, which will take effect after January I, when virtually all import quotas on textiles and
apparel are due to expire. The action reflects China’s concern over the U.S. government’s use of
safeguard mechanism to impose new quotas or take anti-dumping ard countertervailing duty actions.
The announcement was viewed with skepticism by textile interests in Washington. They do not believe
the duties would be large enough to offset what they say is a 30 to 40 percent price advantage
China enjoys over other nations. They say it might just be a ploy to discourage use of the
safeguard mechanism against Chinese imports, which disrupt or threaten to disrupt the US market.
The interagency Committee for the Implemention of Textile Agreements currently is evaluating
safeguard petitions seeking new quotas on bras, dressing gowns and robes, trousers, shirts,
underwear and other products. Domestic textile interests have filed the petitions because they fear
China will have free reign to take over more and more markets in a quota-free world. Importers, on
the other hand, are strongly opposed to the use of the safeguard mechanism as they see it as an
illegal and counterproductive effort to reimpose quotas that limit their flexibility in sourcing

December 2004