China slams US textile quotas, threatens to retaliate

BEIJING : China slammed a US decision to impose restrictions on Chinese textile exports, saying the move was a serious threat to the multi-lateral trading system and reserved the right to retaliate.

"The global textile system has just entered its fourth month and the US side has implemented restrictions on Chinese textiles based on short-term and inaccurate statistics," Commerce Ministry spokesman Chong Quan said on the ministry website.

"This is beyond a doubt an extremely bad precedent and will seriously harm the multi-lateral trading system. The Chinese government reserves the right to take further measures within the WTO framework."

"We urge the United States to correct its mistaken method and avoid from taking arbitrary trade protectionist measures that cast shadows over Sino-US bilateral trade relations."

The US on Friday ordered quotas to curb a flood of Chinese textile imports, four months after a textile quota system under a former WTO trade agreement was abandoned as part of efforts to expand trade liberalization.

Under pressure to preserve jobs, the US government's Committee for the Implementation of Textile Agreements (CITA) said it was re-imposing a quota on three categories of Chinese textiles.

"Today's action by CITA demonstrates this administration's commitment to levelling the playing field for US industry by enforcing our trade agreements," Commerce Secretary Carlos Gutierrez said in a statement.

"We will consult with the Chinese to find a solution that will permit the orderly development of trade in a quota-free environment," he said.

The US government will now request formal consultations with Beijing, officials said.

But the quota will be imposed regardless by the end of May, and will last at least for the rest of this year if the consultations do not resolve the matter.

The three categories of Chinese textiles are cotton knit shirts and blouses, cotton trousers, and cotton and man-made fibre underwear.

In reference to China's attitude to the upcoming round of WTO trade liberalization talks, Chong said the US action was a serious blow to China's confidence in the WTO system.

"The Chinese side believes that the export of the three products to the United States did not disrupt the market," Chong said.

The US decision "harms the interests due to Chinese enterprises and is a serious blow to the confidence of Chinese enterprises and the Chinese people to the WTO global trade environment."

He further called the move a violation of the WTO agreement on textiles and clothes, and to China's 1999 WTO accession protocol.

The European Union is also seeking to implement similar quotas, of which China has also voiced vociferous opposition.

The US quotas come as China announced a 21.18 billion dollar trade surplus in the first four months of the year, up from a 10.76 billion dollar trade deficit during the same period last year.

Chinese exports from January to April surged 34 percent over the same period last year to 218 billion dollars.

According to the US Commerce Department, Chinese imports of underwear have gone up 366 percent since January 1, cotton-knit shirts have increased 1,350 percent and cotton trousers by more than 1,500 percent.

US critics also argue that Chinese imports in general have enjoyed a massive boost from an artificially weak yuan currency. Beijing is under mounting international pressure to relax the yuan but has so far stood firm.

Beijing has argued the pressure on the yuan coupled the pending quotas has fueled Chinese exports as factories rush to beat an expected appreciation in the yuan and the reimposition of the import restrictions.