U.S. Resumes Quotas on China Goods

The Bush administration reimposed limits on Chinese-made synthetic fabric, brassieres and other undergarments Thursday after U.S. and Chinese negotiators in Beijing failed to agree on how to rein in apparel and textile exports to the United States .

The two countries had hoped to resolve the textile dispute in time for Chinese President Hu Jintao’s visit to Washington next week. The steep rise in textile imports has been a major contributor to the soaring U.S. trade deficit with China, which topped $162 billion last year.

Beijing and Washington were under pressure from U.S. importers and Chinese factory owners to resolve the dispute, which has triggered uncertainty in the global apparel industry.

“I thought they would reach some kind of an agreement,” said Dan Ikenson, a trade expert at the Cato Institute in Washington. “On principle, I was against an agreement, but from a commercial sense, everybody had something to gain.”

After a brief meeting Thursday, U.S. and Chinese negotiators were still far apart on key issues such as the size of quotas and duration of the pact, according to industry officials. In a statement posted on its website, the Chinese Ministry of Commerce said the two sides had agreed to “maintain a clear channel” for future talks.

David Spooner, the top U.S. textile negotiator, said in a statement that the United States remained optimistic.

But Mei Xinyu, a researcher with the Research Institute of the Ministry of Commerce, sharply criticized U.S. negotiators for making “unreasonable requirements.” He said the U.S. should realize the harm that its trade policies are having on China, which relies on foreign trade for as much as 70% of its economic livelihood.

U.S. officials ratcheted up the pressure Thursday on China to return to the negotiating table, extending until Oct. 1 a decision on whether to impose quotas on sweaters, dressing gowns, knit fabric and wool trousers. So far this year, the U.S. has imposed limits on 16 categories of Chinese-made goods and is considering 10 more. Because it was a renewal of existing quotas, the latest decision probably won’t affect the price of synthetic fabric and bras from China.

This year, U.S. retailers and importers were eagerly awaiting the removal of a decades-old global quota system that restricted the ability of developing countries, particularly large producers including China and India, to ship goods to the United States and Europe. Trade advocates say the quota system is inefficient and significantly raises the price of apparel.

But a surge of cheap goods from China triggered an outcry for protection from struggling U.S. and European manufacturers. When it joined the World Trade Organization in 2002, China agreed that other governments could impose quotas of up to 7.5% above the previous year’s level if a surge in Chinese-made textiles and other imports disrupted their markets.

Since January, imports of Chinese apparel and textiles to the United States were up 47% over the previous year, according to the latest U.S. government figures. During that same period, 18 textile plants were closed and 16,600 jobs were lost in the U.S., according to the National Council of Textile Organizations.

The Bush administration is under pressure from domestic manufacturers that claim they can’t compete against subsidized Chinese factories and big retailers that want access to the highest-quality goods at the cheapest price.

Finding a balance has proved difficult. In Europe, trade officials are trying unsuccessfully to renegotiate a similar textile deal that imploded after a surge in imports filled quotas faster than expected, leaving nearly $500 million of pants, shirts and bras piling up in warehouses in Europe and factories in China.

European Union Trade Commissioner Peter Mandelson said Thursday he was unable to persuade China to cut future quotas in exchange for releasing goods caught in this year’s quota bind.

U.S. textile manufacturers want a wide-ranging deal that keeps quotas at about 7.5%, covers a broad range of products and is valid at least through 2008. But U.S. importers said the Bush administration needs to strike a deal that allows for greater growth in Chinese imports, or risk a replay of the events roiling Europe’s apparel industry.

“We need a realistic transition” to a quota-free world, said Julia Hughes, vice president of trade at the U.S. Assn. of Importers of Textiles and Apparel.

The political uncertainty is taking a toll in China. He Weidong, general manager of Casual Textile Co., in Nantong, said he had hoped to double his exports to $10 million a year after the quotas were eliminated. Instead, he worries his shipments will fall well below last year’s level.

Early this year, his 200-plus workers put in 10-hour days. “We still had difficulty meeting deadlines for orders,” he said. Now they “have time to idle around and rest.... I don’t know where this Chinese industry will go.”

Times researcher Cao Jun in Shanghai contributed to this report. Iritani reported from Los Angeles and Lee from Hong Kong.