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Last Updated: Tuesday, 8 November 2005, 20:57 GMT
US and China sign textiles deal
Chinese textile worker
Chinese textile exports to the US have soared this year
The US and China have signed a deal resolving their long-running trade dispute over Chinese textile exports.

The US trade representative, Rob Portman, said the agreement was fair to both sides. Chinese Commerce Minister Bo Xilai said China had hoped for more.

It follows a similar deal China signed earlier this year with Europe.

The dispute started in January when Chinese exports surged following the end of a long-running global deal that set strict quotas on textile exports.

Good faith

Under the new agreement, exports of most Chinese clothing and textiles goods to the US will be allowed to rise between 8% and 10% in 2006, by 12.5% in 2007, and by 15% to 16% in 2008.

Bo Xilai (left) and Rob Portman making the joint announcement
I know that Mr Portman has shown some flexibility at the end of the day, but I don't think that's enough
Chinese Commerce Minister Bo Xilai

These are an increase on the temporary 7.5% limit the US imposed on China earlier this year under World Trade Organisation safeguard rules to protect domestic industries.

Mr Portman said the deal, which followed talks over five months, had been achieved through hard work and good faith.

"I believe the textile agreement shows our ability to resolve tough trade disputes in a manner that benefits both countries," he added.

While Mr Bo initially called the deal a "win-win" situation, he then appeared to add that he did not think the US had conceded enough.

China had initially sought for the limits to finish at the end of 2007 rather than the agreed 2008.

'Far cry'

"I know that Mr Portman has shown some flexibility at the end of the day, but I don't think that's enough," said Mr Bo.

"That's still a far cry from our original expectations."

Lasting from 2006 to 2008
Quotas applying to 34 products such as shirts and bras
Exports to grow by a maximum of 10% in 2006, 12.5% in 2007 and 16% in 2008
The US to use restraint in limiting products not covered
Mechanisms in place to help China manage exports

The agreement comes ahead of a scheduled visit to Beijing by President George W Bush later this month.

Chinese clothing and textile exports to the US rose by more than 50% in the first eight months of this year to almost $17.7bn (10bn), following the expiry of the Multi-Fibre Agreement.


The agreement was hailed as a "victory" by US textile manufacturers which have accused China of predatory pricing and other trade distorting practices.

The US industry will know with certainty that China will not be able to flood the US market
Jim Chesnutt, National Council of Textile Organisations

"This agreement is goods news for the US textile industry," said Jim Chesnutt, chairman of the National Council of Textile Organisations.

"The US industry will know with certainty that China will not be able to flood the US market during the next three years."

But the industry also called on the WTO to prevent China wiping out the rest of the world's fabric and clothes production in a few years.

Industry leaders said the booming Asian country's "unfair trade practices" had not completely gone away.

Meanwhile, Chinese textile experts said the agreement would only meet the industry's minimum expectations on permitted sales.

"This is the most we can gain for our textile industry because a cloud is hanging over our heads and this deal will avoid a sharp disruption in production," said Wen Jibin, an analyst at Sanyi Securities.

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