U.S., China Reach Agreement Over Textiles

LONDON – The United States and China reached a three-year agreement on Tuesday to rein in China's booming clothing and textile shipments to the United States, solving an issue that had threatened to cool ties.

U.S. Trade Representative Rob Portman and Chinese Commerce Minister Bo Xilai at a joint news conference in London announced a deal that covers more than 30 clothing categories including socks, T-shirts and bras.

Both sides hailed the accord as a success but China warned that free trade in textiles was inevitable.

"I believe the textile agreement shows our ability to resolve tough trade disputes in a manner that benefits both countries," Portman said.

The deal follows a similar accord between China and the European Union signed in September, as industrialized countries grapple with China's emergence as an economic superpower.

Bo described the outcome as a "win-win result," though he later said the agreement was "a far cry" from Beijing's original expectations.

Thanks to its cheap and deep pool of labor, China's clothing exports surged following the abolition of global textile quotas on Jan. 1 but Washington later slapped emergency curbs on an array of goods to protect manufacturing jobs.

The accord was reached after seven rounds of negotiations over five months and at some points Bo said the two sides had been "almost at the edge of a cliff."

"Developed countries should be aware that textile integration is an inevitable trend and to have quotas is not correct," Bo said after signing the deal.

"I am aware of the pressure given by the U.S. [textile] industry but it doesn't mean who shouts loudest is most reasonable," said Bo, who announced the deal as Chinese President Hu Jintao headed for London on an official visit.

The accord is aimed at smoothing over a rough spot in the U.S.-China trade relationship before President George Bush visits Beijing in the middle of this month.

"It will enable us to maintain jobs and even add jobs," Portman said.

The agreement comes as world trade negotiators intensify efforts to reach a new global trade deal before the 148-member World Trade Organization meets in Hong Kong between December 13 and 18.

Booming Exports

China's exports of clothing and textile products to the United States jumped more than 50 percent in the first eight months of 2005 to nearly $17.7 billion following the end of a global quota system on January 1.

That prompted U.S. textile producers to seek protection under a "safeguard" provision of China's 2001 entry into the World Trade Organization.

The Bush administration has imposed safeguard curbs on billions of dollars of Chinese clothing imports this year.

But because the curbs have to be renewed annually, textile groups have pushed for a comprehensive agreement that would limit imports until 2008 when the safeguard provision expires.

A U.S. negotiator said the accord would allow hundreds of thousands of Chinese garments piled up in U.S. ports to be sold.

The new deal will restrict growth in trousers, shirts, knits, underwear and bras to 5.5 percent in 2006, 7.8 percent in 2007 and 10.3 percent in 2008 compared to 7.5 percent annually under the safeguard mechanism.

Growth rates in other categories would average about 10-12 percent in 2006, 12-15 percent in 2007 and 15-16 percent in 2008, the U.S. negotiator said.