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WASHINGTON — So much for the quota-free world.
Totally free trade among World Trade Organization countries lasted barely five months as the Bush Administration moved aggressively Friday to limit three categories of apparel imports from China. Reaction to the move depended on which side of the business you are on — manufacturer or importer.
Meanwhile, industry executives expect Friday's action to be the first in a string of similar quotas the administration will slap on other categories from China, as the European Union, Turkey and Brazil are moving ahead with their own limits on Chinese apparel and textile imports.
The Bush Administration's decision Friday involves imports of Chinese cotton knit skirts and blouses, cotton trousers, and cotton and man-made fiber underwear, valued at $624.5 million, which will be curtailed to protect U.S. businesses, the Committee for the Implementation of Textile Agreements, an interagency panel chaired by the Commerce Department, said on Friday.
"Today's action by CITA demonstrates this administration's commitment to leveling the playing field for U.S. industry by enforcing our trade agreements," Commerce Secretary Carlos Gutierrez said in a statement. "We will consult with the Chinese to find a solution that will permit the orderly development of trade in a quota-free environment."
A spokesman for the Ministry of Commerce said in a statement posted on the government's Web site that China believes its exports of cotton knit shirts, cotton trousers and cotton and man-made fiber underwear have not disrupted the U.S. market and it opposes the quota restrictions.
The spokesman said, "The U.S. decision runs counter to the World Trade Organization's agreements on trade of textile and apparel products, deviates from the WTO spirit of free trade, and fails to conform to the conditions…concerning China's accession to the WTO."
He said the decision sets a "very bad precedent" because it is based on figures "gathered in a short period of time." He said China reserves the right to "take further actions within the WTO framework."
Domestic textile companies viewed the new restrictions as an important buffer from harsh competition and importers saw them as expensive complications to the sourcing process. The government, while coming down on the side of the domestic industry, might also view new quotas as a pawn that could help move the rest of its trade agenda forward, particularly the pending Central American Free Trade Agreement.