US and EU should keep their nerve on textiles free trade

By Alex Singleton | 11 April 2005

From the China Post, Taiwan:

Since the end of the old textile quota regime on Dec. 31, 2004, Chinese textile exports to the U.S. and the EU have increased by leaps and bounds. In the first quarter of this year, according to U.S. Commerce Department, imports of Chinese textiles and apparel were up 62 percent over the same period for the previous year. For certain items under scrutiny at Commerce, the gains are much larger, ranging from 300 percent to 1,500 percent.

The Bush administration is launching an investigation into this "disruption" of the U.S. market. Washington may re-impose the quota regime if the findings of the probe turn out positive. The EU is likely to do the same by applying restrictions again.

Such measures of protectionism, however, are permissible under the World Trade Organization's "safeguards" provision. Beijing accepted the safeguards, which may last until 2008, when it entered the WTO in 2001.

Beijing is rightly upset. "Any attempt or moves to extend the quota system would go against the principle of free and fair trade and shakes the foundations of the multilateral trading system," Beijing responded this week.

As I argue in Trade Justice or Free Trade?, China - a poor country - deserves just as much as anyone else to sell textiles. Textiles quotas cause economic efficiency and make clothes more expensive. It was right to end the Multi-Fibre Agreement. Temporarilly going protectionist, and then liberalizing again by 2008, would be disruptive and increase insecurity.