China to Limit Some Textile Exports
Sunday December 12, 9:54 pm ET
Red China has a new tax on clothes leaving the country.
BEIJING (AP) — China said Monday it will slap a tax on some of its textile exports in a nod to trading partners who fear that cheaper Chinese goods will flood their markets when global quotas on textiles expire next month.
China will impose an export duty on certain, unspecified textile products, the English-language China Daily newspaper said, citing Ministry of Commerce spokesman Chong Quan. The report did not say when the tax would be instituted.
The report said the duty would be calculated based on the quantity of the export rather than the value of the goods in order to “encourage high-end textiles.”
China is a dominant competitor in the US$350 billion-a-year (euro265 billion) world textile trade.
World Trade Organization members, including China, will see all quotas on textile and clothing trade expire on Jan. 1 as part of the WTO Agreement on Textiles and Clothing.
The United States and the European Union have expressed concern that the change will result in a glut of Chinese-made goods.
The reason is simple enough. After the end of the Multi-Fibre Arrangement international textile quota regime, China and India are going to be the big winners. They have cheap labor like Vietnam and Honduras, but much larger populations allow for much greater economies of scale. China also grows a lot of its own cotton, so it will be a one-stop shop.
This is scaring a lot of small countries, not to mention U.S. clothesmakers. Of course the devastation to this coddled American industry would have been mitigated if they would have supported the Central American Free Trade Agreement, allowing for tigher supply chains with much nearer latin producers…
Regardless, China is a big winner, and she knows it. Voluntarily limited exports for a time is a way of dampening protectionism in countries with the most losers. It’s disappointing rich countries are so captured by small special interests that the world price for textiles will remain higher than they should be for a time. It’s disappointing that the leading administrations don’t have the courage to face down the special interests, and instead allowed this regressive-tax-by-stealth on the world.
But January 1, 2005 will still be better than December 31, 2004 for the clothes trade. It’s all a step in the right direction.