About 50 major textile exporters have agreed to self-regulate by
setting up six price coordinating panels to monitor export orders,
as textile quotas are set to be removed on Saturday.
According to an official from the China Chamber of Commerce for
Import and Export of Textiles (CCCT),
the panels will oversee six categories of goods: knitted shirts,
non-knitted shirts, trousers, underwear, cotton sheets and
socks.
The categories are the areas in which the US is considering
safeguard measures for fears that their domestic markets could be
hurt, said the official.
The panels will establish floor prices, the official said,
adding that prices will not otherwise be fixed.
More than 50 companies are involved in the six groups, all
members of the chamber, and others are keeping a close eye on the
price coordination, the official said.
A number of big names are included in the panels, such as
Jiangsu Sainty Co., Younger, Esquel Group, Orient International and
Hongdou.
The official said the panels would supplement the aims of the
export tariffs that will be imposed from January 1. Big companies
fear that tariffs alone will not be enough to prevent small
manufacturers selling their products at lower prices once quotas
are lifted.
The price coordinating bodies and support for export taxes
indicate the intention of major textile companies to take a more
tempered approach to expand into global trade.
"The impact of the export tax is not significant as we will save
on paying quotas," said Wei Bensen, a manager of the
Import?and Export Department of the China Yeliya Garment
Group.
Bill Shields, vice president of global sourcing at Pacific Trail
Sportswear, said his company is used to paying US$3-4 in quota
charges per garment made in China.
Replacing that with a 2 or 3 percent tariff is fairly
insignificant and would not prompt relocation of production from
China, he said.
It remains to be seen if the panels and export tax will move the
US government, which is being lobbied by US-based manufacturers to
cap the growth rate of Chinese textile imports.
Officials from the Ministry of Commerce flew
to the US last week to discuss the issue with the US Department of
Commerce. The US department felt positively about the new export
tariffs, said an official from the Chinese ministry, which plans to
stage further negotiations next month.
The US has taken safeguard measures, and Turkey and Argentina
have decided to join them.
?
Both the US and EU have asked the Chinese government to keep a
leash on the growth of textile exports after the quota is
lifted.
The EU's Commission said in a statement that the steps taken by
China should help "ensure that the expansion of textile exports
from China happens progressively."
But the Financial Times commented that the collection
of export tariffs was a step backward for the world trading system
and a blow to the world's consumers.
"However, it would be unfair to blame China. The fault lies with
the EU and US. If some restraints were becoming inevitable, it made
sense for Beijing to move first and capture the rent for itself,"
the newspaper said.
Some have said the Chinese measure is similar to past actions by
other governments, notably Japan, which in the 1980s voluntarily
restrained exports of machine tools and automobiles to the US in a
bid to avoid protectionist tariffs. But since no WTO member would
likely challenge China's export duties, it is unlikely they will
pose a problem.
However, some US manufacturers are still arguing the export tax
will do little to mitigate the overall competitive advantages of
Chinese textile and garment exports.
"Yes, they are right. The move will not have a big impact on
Chinese textile exports," said Sun Huaibin, spokesperson of the
Chinese Textile Industry Association.
Even in the long run, the tax, a heavy blow to producers of
low-end goods, will push companies to make higher quality goods and
help the industry become stronger, he said.
"But China has given up something it's honored by world trading
rules. Those who are still unsatisfied should make improvements in
their own production rather than try to stop others," he said.
Countries strong in the textile industry have prepared to cash
in on the quota-free trade. India and Pakistan have decided to
increase their textile export in coming years.
(China Daily December 30, 2004)