Beijing's Levies Seen Having Little Effect

By Don Lee and Evelyn Iritani

May 21, 2005 12 AM PT

Times Staff Writers

China’s decision Friday to sharply hike export tariffs on various textiles will do little to stem the flood of Chinese-made goods or ease escalating trade tensions, said manufacturers and industry representatives on both sides of the Pacific.

China announced Friday that export taxes on 74 categories of textiles and apparel, including trousers, T-shirts and underwear, would increase starting June 1. Most of those products would see a nearly 400% hike in tariffs, from the 2 1/2 cents per unit imposed at the start of the year to 12 cents.

The move was seen as a concession to the U.S. and the European Union, which are facing increasing pressure to limit surging Chinese textile shipments after the Jan. 1 expiration of a global quota system that had limited China’s market share.

Thousands of American textile jobs have been lost this year because of heightened competition from lower-cost Chinese producers, according to industry trade groups.

Several textile manufacturers in China, however, said the tariff increase would hurt their bottom line but not deal a big blow to their business. Some factories are likely to change their product mix, shift some costs to buyers or ship goods out of ports in other countries.

“There are lots of ways to avoid the tariffs,” said Frank Fu, a textile trader in Shanghai.

Large U.S. importers said Friday that they were also unlikely to feel a significant effect, because they had already shifted production away from China this year because of fears the U.S. would clamp down on imports.

That happened in the last week, when the Bush administration announced it was reimposing quotas on seven categories of Chinese textiles, including cotton trousers, shirts and underwear, while reviewing expanding limits on other goods. The European Union gave Beijing a final warning this week that it might follow suit if China did not limit the surge of exports of T-shirts and flax yarn.

“It’s too little, too late,” Ted Sattler, executive vice president at Phillips-Van Heusen Corp., said of China’s action. “The Chinese should have started doing that in January when perhaps it would have had some impact.”

Sattler said importers were scrambling to get their goods to the U.S. because of fears that the quotas in some popular goods could fill as early as June.

Lloyd Wood, a spokesman for the American Manufacturing Trade Action Coalition, which had successfully petitioned the Bush administration for so-called safeguard restraints on imports of Chinese-made apparel, said China’s tariffs were simply “window dressing” aimed at mollifying U.S. and European critics.

Dan Nelson, a spokesman for the Commerce Department, said the agency planned to move forward with the safeguard procedures on the seven categories of goods. He said the Bush administration was going to request a consultation with the Chinese government before the end of May, at which time the quotas would take effect. He declined to say whether the latest move by China had allayed the government’s concerns about rising imports.

The reaction from the EU was more positive.

Anthony Gooch, spokesman for the European Commission in Washington, said the Chinese tariff measures were an “encouraging gesture” and would be considered favorably when his government meets with the Chinese for consultations on the textile issue. In Europe, unlike the U.S., consultations are held before the government decides to impose quotas.

China’s Ministry of Commerce maintained its vigorous opposition to what it calls trade protectionism. But a government spokesman was quoted as saying that higher tariffs would encourage China’s textile industry to produce higher-value goods and ensure its steady growth in the international arena.

Textile groups affiliated with the Chinese government said the increase in tariffs would be costly, and the government-controlled media cited analysts as predicting that 100,000 jobs might be lost as a result. But a number of Chinese textile and garment manufacturers seemed relatively unfazed by the latest tariff announcement.

That amount “is really nothing,” said Tao Qiang, vice general manager at Weihai Textile Group Ltd., which employs 4,000 workers.

Chen Guoqi, secretary of the Shanghai Underwear Assn., said most of his member companies could absorb the increase by lifting prices or adjusting labor expenses. “They won’t stop exporting,” he said.

In Shaoxing, a textile center in Zhejiang province, companies have been nervous about new quotas from the U.S. and Europe, which are seen as far more troubling than export tariffs at home. Those levies were first imposed on 148 items this year.

(BEGIN TEXT OF INFOBOX)

Sharp growth

After quotas expired in January, textile and apparel imports from China to the U.S. skyrocketed.

U.S. imports of cotton textiles from Chia

(In millions of square meters)

Jan. to April 2005

Trousers: 50.9

Underwear: 32.2

Knit shirts: 20.4

Jan. to April 2004

Trousers: 3.4

Underwear: 5.6