US softens stand on garments

PUBLISHED : Tuesday, 11 January, 2005, 12:00am
UPDATED : Tuesday, 11 January, 2005, 12:00am

Tit-for-tat restrictions dropped in favour of calls for opening of China markets

The United States will continue to urge China to open its markets rather than actively seek to restrict mainland exports to America, US Undersecretary of Commerce Grant Aldonas said yesterday.

This was a sharp contrast to earlier remarks he made during a visit to Hong Kong in September last year, as the US presidential election campaign neared its climax, when he said the US was 'well within its rights' to impose pre-emptive quotas on Chinese textile products.

Last month however, the US Court of International Trade ruled the Bush administration could not act on a perceived future threat alone and, instead, should prove that mainland textile imports were causing actual market disruption.

With President George W. Bush having won a second term, Mr Aldonas yesterday seemed much more relaxed about the idea of letting free trade run its course.

US textile companies, he argued, should seek to maximise their technological advantages rather than tackle China head-on at the labour-intensive processing end of the market.

'Where the textile business is capital-intensive, the US can compete,' said Mr Aldonas, considered a possible candidate to succeed US Trade Representative Robert Zoellick, who is taking up the No2 post at the State Department, serving under former National Security Adviser Condoleezza Rice.

'I'd like to see US textiles in the China market. Those [US] companies that will survive are the ones who can adjust to the market,' he added. 'We want one man and his dog to work machines in the US. This way, US industry will be more competitive. Competing with China is like competing with Wal-Mart - you don't compete on cost.'

Peter Liu Sin-shing, textile and apparel committee chairman of the American Chamber of Commerce in Hong Kong, lamented the decline of the US garment industry.

'The garment industry is labour-intensive and there is not much of it left in the US,' he said.

Although global textile quotas formally ended this month, the US is entitled to impose 'safeguard quotas' on Chinese textile and garment products until 2008.

The beleaguered US garment industry had petitioned the Bush administration to impose quotas on 12 Chinese textile products based on their potential threat to US businesses, but their action was blocked last month by the US Court of International Trade.

'We seek access to China's market and the elimination of market-distorting practices in China,' Mr Aldonas said, adding that the mainland was still far from a market economy. The central government aids local firms through 'market-distorting' means such as waivers on debt and rentals, he said.

Mr Aldonas dismissed the significance of China's 2 per cent to 4 per cent 'export tax' on garments that took effect on January 1, saying it would have only a cosmetic effect and was 'technically illegal' under the rules of the World Trade Organisation.

'China's tax is for its image in the developing world,' he said. 'A 2 to 4 per cent tax is negligible for exports to the US.'

At a private luncheon yesterday, Mr Aldonas told industry executives the US had rejected appeals from some developing countries for US support for their garment industries in the face of serious competition from China after the January 1 lifting of global textile quotas.

'Economic relations between the US and China have never been better,' he said. 'US exports to China have grown significantly.'