Under the WTO Agreement on Textiles and Clothing (ATC), by January 1, 2005, trade in textiles and clothing will be fully integrated into normal GATT rules as any other commodity and the prevailing quota restraints will be wholly eliminated. This is the matter the Chinese textile industry and the related industries should pay high attention to. On September 21 an official in charge of the commercial department under the Ministry of Commerce had an exclusive interview with a People's Daily reporter.
Reporter: It is an irreversible trend toward the integration of textiles and clothing into normal GATT rules as any other commodity under economic globalization. Would you please talk something about the relations between the end of quota system and China's textile trade?
Answer: The quota system, which has lasted for decades, will be eliminated completely by January 1, 2005. A true opportunity will come for free trade and fair competition in textiles and clothing globally. The textile integration will be beneficial to the effective configuration of the resources in a global range, to the technical transformation and structural adjustment in global textile production, and to offering global consumers with more better and cheaper textiles. In the end it will be in favor of the healthy and sustainable development of the textile trade in the world.
China is conscientiously carrying out all promises it made when entering into WTO. The integration of textiles and clothing is an important outcome of the Uruquay round of multi-lateral talks. As a responsible member of WTO, China not only has the right to enjoy the outcome, but also the duty to stand up for and carry out the outcome.
Reporter: It is learned that now it is not a smooth process for carrying out the integration of the textiles. As a big power in exporting textiles, China is hampered frequently. What are the actual conditions?
Answer: Officials from WTO have expressed more than once that the textile integration will be implemented according to schedule. However, the developed members including the United States and the European countries have tried to adopt various means in order to restrain the export growth of China's textiles. So far, the United States has applied special restraint measures against three Chinese knitting products for a year according to the 242 paragraph of the "Report of the Working Part on the Accession of China''. The European Union has also made an anti-dumping survey on the synthetic clothing made by China. A series of technical measures worked out by developed members has impact on the export of Chinese textiles. Not only that, 115 textile trade organizations from 65 countries have signed "Istanbul Declaration'', encouraging and prolonging the prevailing quota system. These acts are not in coincidence with the basic principles of WTO. If the integration cannot be put into effect according to schedule, it will be retrogression for the important achievement made during the Uruguay round of talks, bringing immense negative impact to the multi-lateral trade system.
We have noticed that the textile circles from the United States are preparing to raise a special application of restraint measures against Chinese textile products with restrictive quota in accordance with the 242 paragraph of the report with the reason that the United States faces disrupted market threat. The US Commerce Department expressed that it will amend the related domestic procedures and accept the applications like this. The Paragraph No 242 stipulates clearly that only when market disturbance occurs, puts a threat to and hamper the orderly development of trade can the related members adopt restraint measures. Hence, if accepting the application, the United States is in flagrant violation of the request of the WTO rules and the stipulation of Paragraph No 242. It is also in violation of the rules of its domestic procedures. So, this is completely away from the integration of textile trade. As a result, this will damage the confidence of the international trade environment the Chinese enterprises and the public have after entering into the WTO and has exerted impact in fulfilling the promise on the part of the Chinese side and played a negative influence in the Sino-US bilateral economic and trade relations. The Chinese government stands out against this.
Reporter: What is the reason for some WTO members to set quota limit? Is it true that Chinese textiles bring impact to international market?
Answer: In recently years, since quotas for some kinds of textile products are eliminated, rapid growth has been seen in the related textile products made by China and the integration of textiles into GATT rules in 2005 will bring great changes to the textile trade situation, which the potentials of exporting textiles by developing countries including China will be further released. Some countries and regions are worried about this. They claim that China products will have impact on their industries and occupy markets. Partially they blame China on their facing the textile trade problems.
We deem that the export growth of Chinese textiles to some extent is, for a short period of time, a normal phenomenon in a process of the quota system returning to free trade system. The unreasonable arrangement and over-protection made by the US and European countries in the process of integration of textiles are the main reasons causing the problems of the present textiles trade.
The original quota system distorts severely the textile trade of the world and oppresses the exports of Chinese textiles as China enjoys a very small part of quota, which is not in keeping with China's production capability. The textile integration has the trade distortion eliminated and the quota away. It is normal and predicted that the rapid increase of Chinese textile exports will be seen for a certain period of time. In a medium or a long term, limited by the factors including supply of raw materials, electricity and environment, the growth cannot be kept for a long time. According to the enterprises in China, there exist uncertain factors for the exports of Chinese textiles due to the trade protectionism from the textile circles of the developed countries. The quantities of order are not up with the arrival of integration and the exports to some countries and regions are on decline. The latest textile research report by WTO shows that the increase of the textile quota for China will be lower than expected after textile integration due to factors involving tariff limitation and the labor cost superiority in other developing countries.
As a matter of fact, the textile integration not only brings development opportunity to China, but also to the whole world. China is a production power in textiles and also a big consumption country. Eighty per cent of the textiles produced in China are sold domestically. The China's market with a population of 1.3 billion has offered other countries with an immense space for the exports of garments, textiles for home and industrial purposes, textile raw materials and machinery. After entry into WTO, China fulfilled its promise ahead of schedule with the general tariff level reduced to 10.4 per cent. With the exception of quotas on the import of cotton and wool there are not any restrictive measures in the import of textiles.
In addition, China's advantages are only limited in the manufacturing chains of lower labor cost. There are big gaps in capital, designing and development, brand name building and marking between China and the other countries in the world. So there exist many opportunities in the exchanges and cooperation of textile areas between China and other countries.
Reporter: Do you think what the domestic textile industries will do next step?
Answer: In short, simple growth in quality is not the object China is now pursuing in the export of textiles. It is our orientation to have the export of textiles developed in a sustainable way by grasping the opportunity of integration. The orientation includes the improvement of industrial structure, raising added value and the promotion of brand names. The central government and intermediaries should support enterprises in various ways to boost a basic change in the way of textile exports.
