Dalton, GA, November 18, 2005--The American Floor Covering Alliance yesterday released a statement discussing the recently announced textile and apparel agreement between the U.S, and China.
The association said that the agreement followed five rounds of intensive negotiations, which saw the United States and China concluded a broad trade agreement in textile and apparel products on November 8, 2005. This agreement has been widely applauded on all sides, including U.S. retailers and importers, who can now rely on established limits as they make important ordering and strategic decisions. The agreement continues through the life of the China WTO Textile Safeguard, which terminates at the end of 2008, and covers more than 30 individual textile and apparel categories. The agreement does not include carpets, rugs, or textile floor coverings at this time. Some key components of the agreement include:
-The term of the agreement is January 1, 2006 through December 31, 2008.
-The agreement covers 34 categories of textile and apparel products.
-Growth rates vary by product category and year.
-To assist in administration of the agreement, both sides have established an electronic export license system.
-The United Stats pledges to exercise restraint in taking further safeguard actions. However, it retains the right to implement additional safeguards on products not covered in the agreement currently, as it determines necessary.
The retention of the right to impose future safeguards on products not presently covered under the agreement will include the right to safeguard imports of carpet and textile floor coverings. Manufacturers of products, which are not currently included among the present categories, should be wary of shifts by Chinese interests toward the manufacturing and distribution of those products not covered within the agreement. The Chinese may begin to place emphasis on those non-covered products during the agreement period, seeking to increase their export volume.
The U.S.-China agreement may prove to be a boost for the member countries of the Central American Free Trade Agreement (CAFTA), at least until the end of 2008, as CAFTA countries move to narrow the gap left by the reduced Chinese exports. It may also provide energy to the current discussions on the proposed U.S.–Andean Free Trade Agreement. The CAFTA is to become effective on January 1, 2006, although no Presidential Proclamation has been issued as yet to confirm the date. Discussions are continuing among the countries to provide “fixes” and to arrange deals on specific provisions and language within the CAFTA. Costa Rica is the only CAFTA country that has yet to formally ratify the agreement. Although many of the CAFTA provisions are modeled after the NAFTA, it remains to be seen how the actual operation and administration of the CAFTA will progress.
The upcoming Hong Kong Ministerial Conference of the WTO in December will be an important session in determining the future of safeguard mechanisms and the level of tariffs applicable to textile sector products. Certain textile interests are, in fact, seeking a special textile sectoral to allow for separate and specific consideration of textile related during the Hong Kong talks. The Hong Kong Round is viewed as one that will highlight the well being of developing countries and may result in a direction toward the drastic reduction or elimination of certain tariffs, including textile duties, as a way to stimulate the growth of the economies in those developing nations. AFA will be attentive to the discussions that take place during the Hong Kong meeting and will have access to closed briefings and information updates as they occur, beginning on December 13th. AFA will provide appropriate information to its’ members as it becomes available for distribution.
