Sino-US textile trade: a win-win game
(People's Daily Online)
Updated: 2005-11-10 10:00

A smile exchanged between Chinese Commerce Minister Bo Xilai and US Trade Representative Bob Portman marked that China and US had finally crossed the fishing line of their long haul of negotiation.

The seven rounds of negotiations just zigzagged ahead on the way with numerous hurdles and have been much harder than those between China and the European Union on textile trade.

Since the integration of the global textile trade on January 1 this year, the US government, pressured by its domestic industry, kept on imposing limits on Chinese textiles. The hard line the US side took on the talks led to the failure of the first six rounds of negotiations. Joseph Stiglitz, Nobel Laureate for the economic science in 2001, remarked that progress would be hardly possible on China-US textile trade talks if the US refused to make any changes on its mentality.

It is probably fair to say that the economic and trade ties between China and US are the most complicated economic and trade ties that the world has ever seen in the recent 30 years. Since 2003, frictions over the textile trade have been a hot issue for the China-US economic and trade relations.

That has been caused by several reasons. Firstly, the strong competitiveness of Chinese textile exports has been translated into great pressure on US textile manufacturers. Over the four years of China's WTO membership, China leads the world in the total of its textile exports and has outpaced Mexico to become the largest textile exporter to the US market. Export of 103 categories of Chinese textile products surged over the first nine months of the year after quotas of these products were lifted. The US textile industry which is downward in the post-quota time thus has more jitters and finally resorted to sticks. Another reason is that the upsurging Chinese products on the US market has taken some shares which previously belonged to some developing countries. That has affected the economic interest of the US and its trading partners. What's more, the US has the intention to make use of the textile row as a pretext to press China on its RMB exchange rate.

The textile sector, as a matter of fact, benefits more than any other sector in China from the country's WTO accession. However, the rights of enjoying benefits from the textile trade integration is only endowed after China has made many concessions. China has lowered its tariffs to 9.9 percent and opened more than 100 service trades, which benefits the US and EU the most. But the openness does not bring the share that is due to China.

When Bush nominated Portman as the US trade representative, he praised him for his devotion to the free and fair trade. However, the US set a precedent for the abuse of limitations on Chinese textiles right after the integration takes effect. That has resulted in disappointment at the WTO rules and the international trade environment.

The US textile industry is waning while the Chinese textile industry has long enjoyed comparative edges. The textile trade merely accounts for 6 percent of the total bilateral trade. Does such a small slice justify a fight on China which damages the overall bilateral trade, especially given the fact that Chinese manufacturers only take up 10 percent of the profits in the textile trade with the US while US importers and retailers scoop 90 percent. It is nothing but a satire that those who gained 90 percent lay the blame on those who got 10 percent!

Some 300 million US customers prefer "made-in-China" which is high in quality and low in prices. How can the interests of such a huge group be played down compared with the interests of a much smaller group of manufacturers? Mr. Lamy who has just assumed his job as WTO chief argued that the US holds so many products of comparative advantages in the world trade and can and should restrain its competition with developing countries for the textile trade, instead of wrangling over the production and sales of socks.

The China-US textile disputes have been finally solved thanks to the sincerity, wisdom, positive attitude and open-mindedness that the two sides have shown. The negotiations for the WTO accession and the trade talks that China has experienced these years also exemplifies the significance of these qualities.

It is predictable that China will increasingly interact with the rest of the world on the economic front and the trade protectionism will take on a new form in the next five years defined as China's 11th Five-year Plan period. But one thing is sure, as a Chinese saying goes: out of blows friendship grows. Economic and trade ties always press ahead on a road full of ups and downs. But the resolution on mutual benefits and win-win results will make every negotiation a step forward in any case of frictions.