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New pact limits Chinese textile exports to U.S.

WASHINGTON—U.S. textile and apparel manufacturers welcomed an agreement Tuesday that limits China's exports to the United States of everything from trousers and towels to bras for three years.

The deal signed in London removes a major irritant to U.S.-Chinese trade relations shortly before President Bush's scheduled Monday visit to China. It gives breathing room to American textile manufacturers in the Carolinas, Georgia and elsewhere that have been hurt by surging imports from China.

Global rules governing the textiles trade expired last year, giving China unrestricted access to developed markets such as the United States and Europe. Clothing imports from China—worth billions—surged in January and February, and the United States and European Union rushed to impose quotas to protect domestic manufacturers.

The accord inked Tuesday takes force Jan. 1. It effectively promotes managed trade over free trade by setting market-share caps on Chinese products in 34 sensitive categories. China will limit the average growth of exports in those categories to about 10 percent in 2006, 12.5 percent in 2007 and 15 to 16 percent in 2008.

Beijing abandoned its demand for a two-year deal and Washington gave up its demand to limit growth to 7.5 percent in sensitive categories such as cotton trousers, knitwear, underwear and bras.

"When a patient is bleeding, the first thing you've got to do is deal with that wound. In essence, we had to stabilize the situation by limiting China's ability to come in and overtake the U.S. market," said Auggie Tantillo, the executive director of the American Manufacturing Trade Action Coalition.

"The next step is to continue to pressure China to become more of a responsible trading partner, to wean themselves from their subsidies, currency manipulation and other activities that give them unfair pricing advantages," Tantillo said.

In 2009, the 34 affected product categories no longer would be subject to any U.S. safeguards and Chinese exports could move freely into the United States.

"2008 should be the end of special protection for the textiles sector," said Julia Hughes, the senior vice president of the U.S. Association of Importers of Textiles and Apparel. Her group opposed limits that it said interfered with the long lead times that importers who buy products from China needed.

U.S. importers and manufacturers are clashing over efforts by the Bush administration to carve out a new global textiles accord during global trade negotiations, the so-called Doha round.

"We spent decades ending special treatment for textiles, so certainly we're not going to support putting it back," Hughes said.

U.S. trade statistics show that for the first eight months of this year, textile and apparel imports from China rose by 64 percent, to $15.4 billion. American manufacturers said the 34 categories in the deal accounted for about a third of that figure. The flood of Chinese clothing and textile imports adds to the U.S. trade deficit with China, on pace this year to top $200 billion.

U.S. Trade Representative Rob Portman called Tuesday's deal "fair to the industries in both countries."

The dispute was about jobs.

States including North Carolina, South Carolina and Georgia complain that cheap Chinese textiles explain why there are 38 percent fewer workers in textiles and apparel manufacturing since 2001, leaving just 648,600 such jobs nationwide as of last month.

Chinese Commerce Minister Bo Xilai said that almost 2 million Chinese were directly employed in textiles and apparel manufacturing. Access to the U.S. market means jobs for Chinese workers, he said, making the textiles issue "a very important social issue in China."

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(c) 2005, Knight Ridder/Tribune Information Services.

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