US, China OK textile pact but trade disputes remain
WASHINGTON -- China and the United States agreed yesterday to a three-year pact to limit Chinese clothing and textile imports, a deal that will help the beleaguered US industry but cost the average American family $10 to $20 annually in higher clothing bills.
Even with resolution of the textile fight, many trade issues remain, from theft of US computer programs to Chinese manipulation of its currency. And with the trade deficit with China expected to approach a record $200 billion this year, the Bush administration will be under pressure to do more.
The biggest prize sought by American manufacturers is revaluation of the Chinese yuan, which US companies contend is undervalued by as much as 40 percent, making Chinese goods cheaper in the United States and US goods more expensive in China.
The Bush administration has been pressuring China and must report to Congress on the issue later this month. Legislation that would impose 27.5 percent across-the-board tariffs on Chinese goods has wide support among lawmakers, but analysts believe the administration is likely to avoid branding China a ''currency manipulator" in the upcoming report and will instead continue using diplomatic channels to get China to move faster.
''I don't think anything is going to happen in the short-term on currency," said Gary Hufbauer, a trade expert at the Institute for International Economics, a Washington think tank.
The administration has also been stepping up pressure on the issue of the copyright theft, asking China last month to outline the steps being taken to halt widespread piracy of American movies, computer software and music.
US officials said the information would be used to determine whether to file a formal World Trade Organization case against China.
The textile pact was disclosed by US Trade Representative Rob Portman and Chinese Commerce Minister Bo Xilai after a final round of talks in London. Bo called it a ''win-win" for both countries while Portman described it as a ''very good agreement for the American worker." The agreement comes just 11 days before President Bush is scheduled to arrive in China for an official visit.
The deal will impose annual growth limits on 34 categories of clothing and textile imports through 2008 with the products deemed the most sensitive by American producers -- trousers, shirts and underwear -- subject to the smallest increases.
Hufbauer estimated that the restrictions will drive up clothing prices by between $3 billion to $6 billion annually, translating into $10 to $20 higher bills for the average American family.
Clothing imports from China have risen by 46 percent this year by volume since global quotas expired on Jan. 1.
