Blog: Leonie BarrieChina scraps tariffs

Leonie Barrie | 31 May 2005

In an abrupt U-turn that does little to hide the increasing friction with its two main export markets, China has abolished tariffs aimed at slowing its clothing shipments to the US and EU.

The tariffs were introduced in two phases at the beginning of the year and increased just last week in response to US and EU decisions to re-impose quotas to limit imports in several product categories. But China now seems to have decided that these proposed safeguards are an abuse of trade protection measures and that it may consider complaining to the World Trade Organisation.

The trade conflict looks set to intensify, yet both sides seem to be boxed in by domestic pressures making it hard to see who will stand down first. The US administration will be keen to avoid accusations of appeasement from domestic textile groups, while China’s textile companies, trapped between new taxes at home and restrictions overseas, warn that this pressure could lead to heavy job losses.

While the EU has always stressed its willingness to talk and discuss matters with the Chinese, it will be interesting to see whether the US can enter into any meaningful dialogue to diffuse the situation. US commerce secretary Carlos Gutierrez is due to arrive in Beijing for trade talks in just three days’ time.


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