Jeanne Aversa, AP Economics Writer
A Chinese accountant counts Chinese yuan notes in an office in Shanghai yesterday. China dismissed riticism of its fixed currency peg and attacked European and U.S. steps to curb Chinese textile exports as unfair. - REUTERS
TRADE TENSIONS between the United States and China escalated yesterday when the Bush administration said it will set new limits on the amount of clothing that China can ship to America.
It was the second time in five days that Washington announced such quotas, acting on complaints that a surge of Chinese apparel was hurting U.S. companies.
The new batch of Chinese goods facing restrictions are men's and boy's cotton and man-made fibre shirts; man-made fibre trousers; man-made fibre knit shirts and blouses; and combed cotton yarn.
A textile industry representative said the categories of trousers as well as shirts and blouses would affect men's and women's products.
American retailers are concerned the quotas will raise prices of these goods for U.S. consumers.
A THREAT TO US MARKET
The government committee, led by the Commerce Department, that made the decision found that those categories of imports threatened to disrupt the U.S. market. Shipments of Chinese textiles and apparel to the U.S. have surged since the end of global quotas Jan. 1.
Just on Friday, the administration said it was re-imposing quotas on three categories of clothing imports from China ? cotton trousers, cotton knit shirts and underwear.
Commerce Secretary Carlos Gutierrez said Wednesday's decision "demonstrates the administration's continued commitment to America's textile manufacturers and their employees."
The United States, he said, "will enforce our trade agreements to ensure that U.S. companies get a fair deal as they compete in the global marketplace."
The step will mean that shipments of the categories of clothing cited Wednesday will be permitted to increase this year by just 7.5 percent compared with shipments over a 12-month base period.
The U.S. has the power to set the limits on Chinese goods under an agreement that cleared the way for Beijing's membership in the World Trade Organization in 2001.
The American Manufacturing Trade Action Coalition, a textile industry group, praised the move.
"Failure to act would have cost tens of thousands of U.S. jobs," said the group's executive director, Auggie Tantillo.
But Laura Jones, executive director of the United States Association of Importers of Textiles and Apparel, was critical.
"These restrictions on imports from China will do absolutely nothing to help the U.S. textile industry ? and the government knows it," said Jones, whose group includes large retailers.
Target Corp. said it could shift the source of its imports, depending on changes in quotas.
"China is very important to us, but it still represents less than half of our direct imports," the company's president, Gregg Steinhafel said Wednesday at Target's annual meeting, before the new limits were announced.
Tim Lyons, a spokesman at J.C. Penney Co., said "It was expected that a safeguard would be imposed at some point. We are adequately prepared."
U.S.-China trade is a politically sensitive issue for the administration. America's trade deficit with China set a record last year, $162 billion. That was the largest imbalance ever with a single country.
Democrats have accused the president of not doing enough to protect American workers from unfair foreign competition.
The administration on Tuesday stepped up pressure on China to overhaul its currency system, which manufactures and other critics also blame for the soaring U.S. trade deficit and the loss of American factory jobs.
The Treasury Department threatened to brand China, if it failed to change its currency policy soon, as a manipulator of currency. That designation could lead to economic penalties against Beijing.
Over the past two years, the administration has tried to prod China to stop linking its currency, the yuan, to the U.S. dollar.
American manufacturers say China's system has undervalued the yuan by as much as 40 percent. The weaker yuan makes Chinese goods cheaper in the United States and American products more expensive in China.