Textile Negotiations Fail; China Retaliates

The People's Republic of China has announced retaliatory measures against the U.S. following the collapse of the fourth round of trade negotiations between the two countries. The talks were held in Peking.

On January 20, Chinese officials said that Peking would "halt further purchases" of U.S. cotton, synthetic fiber and soybeans, and decrease imports of other agricultural products. But purchases of energy equipment from U.S. firms - a market expected to be in the millions of dollars in the next few years - were not included in the measures.

The failure of the negotiations came about after the U.S. announced new quotes on Chinese imports. Most of the quotas will hold Chinese imports at 1982 levels. Imports of print cloth from China was reduced by 40%, while shirts and trousers were reduced 20%.

In December, U.S. officials had told the Chinese that they would impose quotas if agreement was not reached by January 15th. The Chinese offered to negotiate an interim agreement, but withdrew the offer after the imposition of quotas.

After the collapse of negotiations, the Chinese charged that the U.S. had been "inflexible" in its position and accused the U.S. negotiators of "caving in" to domestic textile producers.

U.S. textile manufacturers were happy with the breakdown. "We are pleased that the government negotiators have held firm against China's attempt to negotiate a far from satisfactory bilateral pact," said James H. Martin, Jr. chairperson of the American Textile Manufacturers Institute committee on international trade in a prepared statement to Multinational Monitor. The American Apparel Manufacturers Association, on the other hand, favors a treaty, according to a spokesperson, because of the "benefits for planning" and "stabilizing effect on the market."

However, the AAMA spokesperson also expressed a preference for trade among developed countries with similar wage structures. The U.S. apparel industry, he said, is domestically competitive with imports from Europe, but not with lesser priced Chinese goods. According to the AAMA, Chinese textile workers are paid approximately 25` an hour compared to $5.00 an hour for U.S. workers.

The textile institute agreed, charging that U.S. production has dropped 15% because of a surge in low-cost imports. Last year 73.8 garments out of every 100 were purchases from foreign suppliers, according to the New York Times.

Such figures have caused textile and apparel groups to increase the pressure on President Reagan to impose strict quotas on imports. The groups are particularly concerned about imports from China, which have increased 32% since 1981.

The U.S. negotiating position in Peking was complicated by U.S. bilateral agreements with Hong Kong, Taiwan and South Korea, the main textile suppliers. These agreements link the growth of imports to the growth of the U.S. domestic market (predicted to be LS% in 1983 by the U.S. government). The U.S. pledged in these treaties that China would not be allowed to increase it exports at their expense.

In its negotiations with the U.S., Peking insisted on a 6% growth rate in its exports to the U.S. while the U.S. would accept only 2%. The Chinese felt that 6% was essential in order to redress the imbalance with the U.S. In 1982, China bought $2.57 billion of goods from the U.S. and sold $1.92 billion, leaving a deficit of $655.6 million.

The U.S. was unwilling, however, to give China special status and the talks collapsed.