Chinese textile exporters, already slapped with dumping charges and safeguard measures, now face a potential US countervailing investigation, the state media reported on Friday.
The US National Council of Textile Organisations (NCTO) is consulting lawyers representing US paper enterprises, which initiated the first countervailing case against Chinese products, to launch similar charges against "Made in China" garments, according to China Chamber of Commerce for Import and Export of Textiles (CCCT).
The US Department of Commerce in March announced a preliminary countervailing duty on "Made in China" coated paper. With that, it contravened a two-decade rule of not applying the trade remedy to goods from ’non-market economies’ like China.
"The US industrial organisation may not launch the case in the near future, but it is likely to make the decision for the next step after the final ruling on the coated paper case," an official with CCCT was quoted as saying by ’China Daily.’
US industry or Government might stir into action when the Sino-US agreement on textile trade, which caps the growth of China’s textile and garment exports to the United States, expires in 2008, the paper said.
China’s textile exports last year was valued at $174 billion, an impressive growth of 25 per cent over the previous year. The removal of quotas in global textile trade in 2005 triggered a surge in its textile exports to the US.
The American Government, which feared this might hurt its domestic industry, launched special safeguard measures on a few categories of Chinese textiles and garments. The two countries finally reached an agreement after months of negotiations.
"If the NCTO does file a complaint against Chinese garments at the US Department of Commerce, the investigation will affect a much larger scale of subsidies than in the coated paper case," a CCCT official said.
CCCT noted the possible investigation on Chinese garment industry, which is mainly export-oriented, is likely to target export-promoting subsidies, policies and taxation.
Some experts worry that other industries in China are also likely to face similar cases in the United States.
"Within six months, we think a dozen or so new preliminary countervailing findings will be in place against Chinese firms," a senior economist with Standard Chartered, Stephen Green said.
An expert from US-based law firm DLA Piper, Matthew McConkey said a number of US firms are "watching and preparing".
The US flooring industry, for example, is likely to file a countervailing complaint against its Chinese rivals.
He predicted there would be at least three to four similar cases from the United States this year and said the scale of the cases would also increase.
