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Moves to improve textile trading climate
By Dai Yan (China Daily)
Updated: 2004-12-14 08:49

Newly-staged measures on Chinese textile exports will help improve the trading climate for Chinese textile companies and benefit the industry's long-term development, industry insiders told China Daily yesterday.

China said yesterday it will impose a new tax on textile exports, responding to US and European pressure to restrain its growth amid fears that Chinese textiles will flood markets abroad when global quotas expire next month.

Domestic companies are not surprised at the news since they have long been talking about an industry management system in the quota-free age.

"At least, we will make sure that quotas will be lifted though we have to pay some export tariffs," said Ma Bin, manager of the department for US and European markets of the Ningbo Shenzhou Textile Co Ltd.

The Chinese companies are worried that textile quotas will not be removed as agreed. All quotas restricting textile and clothing trade between the World Trade Organization (WTO) members will be eliminated by December 31, 2004, according to the Agreement on Textiles and Clothing.

But some foreign textile producers have called for putting off the quota elimination.

"In recent months, we have been living in uncertainty, which also impacts on our business," Ma said.

He said local textile companies are not daring to sign big deals with US companies before the textile trade policy is clear.

Ma said he believed that the new policy will help to ease intended trade with the United States, which has threatened to impose any necessary safeguard measures on Chinese textiles.

China's export of textiles has been seriously affected by the quota restriction.

Trade volume put under quota restriction accounts for about 70 per cent of the total textile trade in the world, and the trade volume that is free of quota restriction is about 30 per cent of the total.

In contrast, China's export of textile products accounts for only 5 per cent of the total textile trade under quota restriction in the world, and 30 per cent of the total that is free of quota restrictions. But these textile companies are still unclear about the impact of newly-imposed export tariffs since the products under tariffs and the level are not specified.

Zhang Hanlin, a professor with the University of International Business and Economics, said it is a big concession for China to put such measures in place but they are practical given the current situation.

"Even if China wins every possible textile dispute, the business will still suffer," he said.

The European Union welcomed the Chinese decision to manage its textile exports. Franz Jessen, deputy delegation head of the EU Commission to China and Mongolia, said these measures will help China to develop textiles with high added value and ease concerns of other developing countries.

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