Chinese Tariff War Looming

[alex100]

US limits Chinese textile imports

Is this a sign of things to come will the Chinese currency be floated soon weakening the dollar against the baht.

Cheaper Chinese clothes have been flooding Western markets

The US has announced that it is to re-impose quotas on three categories of Chinese textile imports, arguing that thousands of jobs are at risk.

The moves follows a massive surge in clothing imports into the US since worldwide quotas were abolished at the beginning of this year.

The clothing ranges which will now be limited are cotton trousers, cotton shirts and underwear.

Last month the US and the EU began investigating Chinese import levels.

They said the goods were damaging their own textile industries.

Under the rules of the World Trade Organisation, countries have the right to act if it is determined that serious market disruption has taken place.

The US Commerce Secretary, Carlos Guitierrez, said a government investigation had established that this was indeed the case.

The EU has already urged China to curb its textile exports. Trade Commissioner Peter Mandelson said on Thursday that China should clamp down or face legal action.

Manufacturers' complaints

The US decision was taken by the inter-agency Committee for the Implementation of Textile Agreements (CITA).

It means that total shipments in the three categories will only be able to increase by 7.5% above shipments in the past 12 months.

"Today's action by CITA demonstrates this administration's commitment to levelling the playing field for US industry by enforcing our trade agreements," Mr Gutierrez said in a statement.

The action came partly in response to complaints from US textile manufacturers about the increase in imports since global quotas ended on 1 January.

The quotas could remain until the end of the year unless the US and China reach a "satisfactory" agreement, CITA said.

US retailers have opposed the quotas, on the grounds that they will raise prices for consumers.

Winners and losers in textile shake-up

By Kaushik Basu

Professor of economics, Cornell University

Indian textile firms made big initial gains in the quota-less world

The end of country quotas on textile exports marks one of the most major events of the world economy - one that can cause tectonic shifts in the global business landscape.

The Multi-Fibre Agreement (MFA), under which these quotas were organised, was put in place in 1974 to protect the textile industries in the US and Europe.

The MFA expired in 1994, but the quotas were continued and managed by the World Trade Organisation with the understanding that they would be terminated at the start of 2005.

That has happened now and the winds of change are palpable.

The US is expected to lose a large number of jobs in this sector, which has anyway dwindled over the past decades.

In 1974 there were 2.4m workers in the textile sector in the US. By 2000, 40% of these jobs were gone.

What is more worrying is that there are many poor countries that could lose out.

Anticipating the end of quotas, exports from El Salvador collapsed by 30% last November. It is expected that the apparel sector of the Dominican Republic will lose up to 40% of its jobs.

[chownah]

I thought I noticed an article on the net about China adding or increasing the export duty on textiles. This has the potential of satisfying the WTO requirements, avoids revaluation of the yuan (I guess...don't know much about this stuff), and cuts the gov't in on the profits of the industry...the gov't essentially gets the marginal difference between Chinese and other's prices.....pretty slick idea on their part I think!!!

Is this right or am I misunderstanding what I thought I saw?