Textiles Agreement & Trade Growth

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The U.S. and China have come to an agreement, in principle, over their textiles dispute. The three-year plan allows Chinese producers faster access to the US market, but retains controls on exports through 2008. Under the agreement, shipments from January 1 2006 would increase by 10 to 12.5 percent. In 2007, imports would grow by 12.5 percent, except for fiberglass and thread, which would increase by 15%. Further increases in 2008 would allow for growth of 15 to 17 percent.

According to reports, although the earlier EU-China textile agreement set annual growth rates of between 8 and 12.5 percent, the US figures are closer to that than the headline figures suggests, as the growth is taken from a baseline that was already affected by the controls put in place this year.

Meanwhile, EU trade chief Peter Mandelson met with Chinese trade Minister, Bo Xilai on Friday, and asked that China further open its markets to EU goods – and do more to combat piracy and counterfeiting. The talks come ahead of global trade talks in Hong Kong, and follow recent disputes arising from imports of Chinese textiles to the EU. More clouds on the horizon include EU antidumping investigations into imports of footwear with leather uppers from China.

Despite the problems associated with textiles, IPR protection, and market access in some areas, China has made huge progress since joining WTO in 2001 – trade has more than doubled to US$1.2 trillion (import growth has exceeded export growth in the past two years), and import tariffs have continued to fall (from around 40 percent in the early 1990s to around 9.9 percent).

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