Archive for Wednesday, November 19, 2003

U.S. raises tensions with China by imposing quotas on imports

Bush administration seeks compromise with Europe to avert $2 billion in sanctions

November 19, 2003


— The Bush administration increased trade tensions with China on Tuesday by announcing it would limit clothing imports to protect struggling U.S. companies, even as it searched for a compromise to end a bitter trade dispute with Europe over steel.

Commerce Secretary Don Evans said the administration was granting an industry request to impose quotas on Chinese imports of knit fabric, dressing gowns and robes and bras in an action that "demonstrates our commitment to our trade rules and America's workers."

The action was the latest response by the administration to America's soaring trade deficit with China, which hit a record $103 billion last year, and which American manufacturers believe is largely to blame for the hemorrhaging of U.S. factory jobs during the past three years.

"Clearly, the enormous surges we have seen in Chinese imports in these categories, and the damage they have caused to our industry, workers and communities warranted such action," said Cass Johnson, head of the American Textile Manufacturers Institute.

Critics warned that the decision would drive up the cost of clothing in American stores.

Trade expert Gary Hufbauer of the Institute for International Economics said protections already in place for textile and apparel companies cost the typical American family $400 in higher clothing costs annually.

"This ruling will create shortages that could lead to dramatic increases in prices for American consumers while doing nothing to protect American jobs," said Erik Autor, a vice president of the National Retail Federation.

In another trade dispute, the administration was exploring possible compromises that would avert $2.2 billion in threatened European sanctions against a wide array of U.S. exports from orange juice to pajamas.

They are to go into effect in mid-December if the United States does not agree to remove tariffs it imposed in an effort to protect the domestic steel industry, according to trade experts close to the talks.

These sources said a variety of ideas were being considered in discussions with the domestic steel industry. The Wall Street Journal reported Tuesday that the steel industry has agreed reluctantly to a proposal to trim the current peak tariff of 24 percent by about one-third immediately, then by another one-third in March 2004. The tariff would be phased out completely in autumn 2004.

The tariffs, imposed by Bush in March 2002 to give the U.S. industry time to modernize and consolidate, are scheduled to remain in place until March 2005.

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