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Last Updated: Monday, 13 December, 2004, 15:27 GMT
China to place duties on textiles
Chinese textile fair
China is a dominant force in textile production
China is to impose tariffs on textile exports following criticism from other producers that it may distort world markets after a quota system is ended.

The move may reassure major trading partners, including the United States, that China will not flood the market after quotas end on 1 January 2005.

China, which made 17% of the world's textiles in 2003, said the move was designed to spur higher-quality goods.

The US is considering import tariffs to protect domestic textile producers.

China's move, reported by state media on Monday, may placate US producers and reduce the prospect of a potentially damaging trade dispute.

Growing production

A World Trade Organisation accord coming into force at the beginning of next year will abolish a decade-old system of quotas known as the Multi-Fibre Agreement.

This placed duties on textile and garment trades to ensure that no single country dominated the market.

China's share of the market could increase to more than 50% within the next three years as a result of the reforms, the WTO believes.

China's decision to impose tariffs was one of eight measures announced to help the industry adjust more smoothly to freer trade.

"We hope that by adopting this measure, we can encourage the export of high-value products and further optimise the structure of China's textile industry," the Chinese commerce ministry said.

Fabric glut?

The ministry did not disclose which products would be affected or when the duties would be instituted.

The US and the European Union have expressed concerns that the abolition of worldwide quotas will lead to a glut of Chinese goods entering the market.

US textile producers have argued for quotas to be placed on Chinese imports but importers and retailers have fiercely opposed this.

The EU recently urged China to moderate its export policies to avoid disrupting the economies of smaller developing nations which rely heavily on the textile trade.

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