Textiles tiff 'unlikely to spark trade war'

PUBLISHED : Tuesday, 07 June, 2005, 12:00am
UPDATED : Tuesday, 07 June, 2005, 12:00am

US commerce official is upbeat over talks to resolve dispute

A trade war is unlikely between the United States and China over textile imports, and talks between the two countries over the issue are proceeding well, a senior US trade official said.

'The discussions [Commerce Secretary] Carlos Gutierrez had with Minister Bo Xilai were very good,' James Leonard, a deputy assistant secretary for textiles, apparel and consumer goods in the US Department of Commerce, said in Hong Kong.

'I don't think a trade war will happen,' said Mr Leonard, noting that textiles form 6 per cent of the mainland's trade volume. 'It will be unfortunate to have a confrontation over 6 per cent of your trade.'

Mr Gutierrez met Mr Bo, China's Minister of Commerce, and Vice-Premier Wu Yi in Beijing, with a significant part of their discussions devoted to textiles, Mr Leonard said.

According to state media, Ms Wu blasted the US officials for putting restrictions on Chinese textile imports, saying that they had had a severe impact on textile production.

The United States imposed quotas last month requiring the mainland to limit its exports of some textile products, a move that prompted Beijing to scrap certain export tariffs in retaliation

Cheap Chinese textiles and garments have flooded markets around the world since a global quota system ended on January 1.

As part of its accession to the World Trade Organisation (WTO), China agreed that other member countries could protect their textile industries with measures such as quotas if Chinese imports were seen as a threat.

Under WTO regulations, if one country takes safeguard action against another, consultations between the two must take place within 30 days.

Mr Leonard said his discussions with mainland authorities did not constitute those required by the WTO, but such talks would take place within the next two weeks.

Chinese officials had indicated they were prepared to have 'substantive consultations', he said, and that further talks would discuss quota levels.

Mr Leonard is also chairman of the US Committee for the Implementation of Textile Agreements, which supervises the implementation of all textile trade agreements and decides whether the textile and garment markets have been disrupted.

'It's good that we are having discussions even though we have disagreements,' he said.

He said the export tariffs imposed by Beijing were an acknowledgement that the mainland's cheap textile exports were a problem.

However, he said that a number of textile products were still cheaper than those made elsewhere even when the tariff was added to the average value of the item.

Sounding upbeat about the dialogue, Mr Leonard said Beijing had made progress on the issue of cheap textile exports.

'Hopefully we will have a good outcome,' he said of the upcoming talks.

Earlier, Mr Bo told his US counterpart that America stood to lose more than it could gain in the textile row.

'It is vital [for both nations] to resolve the issue in a reasonable manner as there is bound to be friction in trade development,' Mr Bo was quoted as saying in a report posted on the ministry's website.