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SCMP Reporter

HONG KONG is taking a worsening trade row with the United States to the World Trade Organisation today as the territory's exports of wool clothing plummet.

The deterioration in the dispute follows two rounds of failed discussions on Washington's decision to limit the import of wool woven shirts and blouses from Hong Kong.

The attempt to lift the damaging restrictions on the territory's exports comes as the industry suffers a significant decline in sales of the clothing to the US.

During the first eight months of this year exports of woollen shirts and blouses were running at one-third below the level of last year - 978 dozens (11,736) compared with 2,962 dozens (35,544) during the same period in 1994.

Despite this, the US claimed the imports were harming its local industry producing woollen clothing and imposed the penalties in April.

But the Hong Kong Government delegation to a WTO meeting in Geneva starting today will argue the action was not justified.

The exports were small, said delegation leader and Deputy Director-General of Trade Thomas Yiu. Last year's sales of 5,046 dozens (60,552) were equivalent to only 2.3 per cent of the total US market, he explained. Even American's own market data failed to demonstrate an increase in sales had seriously damaged or posed a threat to the industry, he said.

  Mr Yiu will represent Hong Kong at the meeting of the WTO Textiles Monitoring Body which will offer recommendations on the US action.

'We have consistently argued that the US action is unjustifiable under the World Trade Organisation Agreement on Textiles and Clothing and have therefore demanded US withdrawal of the call,' he said, before departing for Geneva yesterday.

The US acted in April to restrain imports from Hong Kong of wool woven shirts and blouses, which are known as Category 440 goods, until the end of the year.

Its decision to set controls on the amount of textiles imported from Hong Kong has angered local producers which had imposed their own export controls for 30 years.

The Government criticised the US decision as being out of step with Hong Kong's other major trading partners which accepted the export control system.

It warned that the drastic change could cause uncertainty and disruption to local industry. The WTO move comes after two rounds of consultations with the US, in June and August, which failed to produce any mutually satisfactory results.

It is not the first time Hong Kong has sought resolution of a trade dispute in the multilateral forum of the WTO which was previously known as the General Agreement on Tariffs and Trade (GATT).

'We always fight our cases hard,' said Director-General of Trade Tony Miller last night.

The textile problems were a 'low-level irritant' in trade relations with the US which were generally good, he said.

Both Hong Kong and the US have been invited to make submissions to the body following the failure of consultations between them.



US trade row over clothing worsens