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China hits back in US trouser war

Beijing, May 14 (Reuters): China said today it opposed a US decision to restrict booming imports of Chinese trousers, shirts and underwear, saying the move violates World Trade Organisation agreements and it urged Washington to reconsider.

China reserved the right to adopt measures within the WTO framework, commerce ministry spokesman Chong Quan was quoted as saying on the ministry’s website, www.mofcom.gov.cn.

The statement gave no details.

US commerce secretary Carlos Gutierrez said yesterday the US would restrict imports of three kinds of clothing from China that have surged dramatically since the beginning of the year unless the two countries work out a compromise.

The decision flowed from three investigations the Bush administration launched last month, and Gutierrez said it showed the administration’s commitment to levelling the playing field for US industries.

Preliminary US figures suggest imports of cotton trousers from China have increased around 15 fold in just four months. The EU is also considering curbs on Chinese clothing imports following dramatic increases.

But Chong said China’s exports of the three kinds of clothing have not caused disorder in the US market and the US move “violates WTO agreements on textiles and clothing and deviates from the spirit of the WTO’s advocacy of trade liberalisation”.

The decision would damage the interests of Chinese companies and “seriously blunt the confidence of Chinese people and industries in the international trade environment since China joined the WTO”, he said.

“The Chinese government reserves the right within the framework of the WTO to take further measures,” he said without elaborating. He urged the US to “correct its erroneous measure”.

The quotas on billions of dollars of clothing imports will take effect from the day the US formally requests consultations with China, which is expected by the end of May.

Washington and Beijing will have 120 days to find a solution. If the talks fail, the quotas will remain in place until the end of the year, the commerce department said.

Although clothing and textiles were not mentioned by name, Chinese vice-premier Wu Yi told US ambassador to China Clark Randt yesterday she hoped the trade disputes between the two countries would be solved through consultation based on “equality, mutual benefit and development”.

“We also should avoid mixing economic and trade problems with politics,” the official Xinhua news agency quoted Wu as saying, adding there were “great opportunities” to improve and develop ties.

The Bush administration has been under tremendous pressure to curb a trade deficit with China that reached a record $162 billion last year.

A WTO rule allows members to restrict growth in clothing imports from China to 7.5 per cent above the previous year’s level when there is a surge. Beijing accepted that as a term of its entry into the WTO.

US textile groups hailed the move, which they have urged for months, but US retailers condemned it and accused the Bush administration of ignoring their concerns.

Preliminary US data showed a 1,505 per cent increase in cotton trouser imports from China in the first four months of 2005 and increases of 1,346 per cent for cotton shirts and 347 per cent for underwear.

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