US Seeks Textile Quota Negotiations With China

The US government has taken two steps aimed at limiting the skyrocketing growth of textile and
apparel imports from China. Acting under the so-called safeguard mechanism in the US/ China
bilateral textile agreement, the inter-agency Committee for the Implementation of Textile
Agreements (CITA) has requested consultations with the Chinese government on limiting import growth
for bras, knit fabric, dressing gowns and robes, and it has imposed interim quotas limiting growth
in those categories to 7.5 percent over current shipments. There is some $700 million worth of
products involved.

China has 60 days from Dec. 24, 2003, to respond, and then, if consultations are not
successful within another 90 days, the US will impose the quotas on all trade in those categories
for 2004. While only three product categories are under discussion, other product imports could be
considered during the consultations.

Last November CITA announced it would implement the safeguard procedure and the action
announced last week will start the clock running on negotiations with China. The action was taken
in response to a petition filed by domestic textile interests after imports in those three product
categories rose sharply after quotas were removed when China was accepted into the World Trade
Organization and was allowed to catch up on the quota phase-out that had been enjoyed by other WTO
members. Textile and apparel importing interests have strongly opposed implementation of the
safeguard mechanism, charging that it has been based on politics rather than hard facts that
document the imports are disrupting US markets. As negotiations get underway, domestic industry
lobbyists will be pressing the US government to seek a broader textile agreement with China in view
of the impending phase out of all textile and apparel import quotas by the end of this year.

January 2004