China Imposes Higher Export Tax on Textiles

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May 23, 2005--China, under fire from both the U.S. and the E.U. over surging trade deficits, has decided to fire back.

Beijing announced yesterday that it was raising export tariffs on textiles starting June 1. Textile exporters will now be taxed up to an extra 4 yuan (48 cents) on 74 types of clothing -- a five-fold increase over existing tariff levels.

The decision comes on the heels of warnings issued earlier in the week from Washington that the Bush administration was considering limits on the imports of Chinese textiles.

Domestic manufacturers, who continue to face pressure from cheap Chinese imports, cheered the news. "The fast action to re-impose quotas by the Bush administration today has saved thousands of textile jobs in this country, and we are extremely grateful," said Cass Johnson, president of the National Council of Textile Organizations, an organization that represents hundreds of small manufacturers.

France and other European nations have also raised alarm at the explosion of Chinese textile products around the world.

"This means that in this little round of arm wrestling that pits the Americans and the Europeans against the Chinese, the Chinese have decided to slow their exports of textile products," said Pascal Lamy, the recently nominated next director-general of the World Trade Organization, in an interview with French radio station Europe 1. "The Chinese are slowing their exports to avoid Americans and Europeans slowing their imports."

Lamy, set to assume his new role later this month, has spoken publicly about his support for China joining the WTO.

The controversy between China and its trading partners dates back to the beginning of the year when a four-decades old quota limit on textile exports expired on Dec. 31, 2004. U.S. imports of Chinese textiles like shirts and trousers have surged by up to 1,500% since the quota ended, the Commerce Department said.

Last updated: May 23, 2005

DARREN DAHL

Darren Dahl is a contributing editor at Inc. Magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, NC.




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