TEXT: USTR PRESS RELEASE ON U.S.-CHINA TEXTILE TRADE AGREEMENT
(Pact will improve access to Chinese textile markets)

Washington -- The United States and China reached agreement February 2 on a four-year textile agreement that promises to provide meaningful market access in China for American textile producers, according to a February 2 press release from the Office of the United States Trade Representative.

"This is a solid agreement that meets our critical objectives," U.S. Trade Representative-Designate Charlene Barshefsky said. "The new agreement builds on our 1994 textiles agreement, and improves it in two important areas: We have our first textiles market access agreement with China and we have strengthened enforcement terms against illegal transshipments. This agreement provides a solid basis for us to strengthen our textiles trade relationship with China."

The agreement generally extends current quota arrangements for Chinese textiles and apparel exports to the United States, but reduces quotas in areas of repeated transshipment violations, according to the USTR release. The pact also commits China to reduce tariffs and bind tariffs at applied rates and provides for review of China's implementation of its commitments. China is America's third largest supplier of imported textile and apparel products, after Mexico and Canada. In 1996 total imports of textiles and apparel from China were valued at $10.8 billion ($10,800 million), while U.S. exports to China in these areas totaled $55.2 million.

Following is the official text of the release:

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OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON, D.C. 20508

U.S. AND CHINA REACH FOUR-YEAR TEXTILE TRADE AGREEMENT

U.S. GAINS MARKET ACCESS IN CHINA AND
TARGETS AREAS OF TRANSSHIPMENT VIOLATIONS FOR CUTBACKS

The United States and China today reached agreement on a four year textile pact that generally extends current quota arrangements in Chinese textiles and apparel exports to the United States, but reduces quotas in areas of repeated transshipment violations. For the first time, the new agreement provides meaningful market access in China for U.S. textile producers. The agreement was announced after five days of intensive deliberations in Beijing.

"This is a solid agreement that meets our critical objectives," said U.S. Trade Representative-Designate Charlene Barshefsky. "The new agreement builds on our 1994 textiles agreement, and improves it in two important areas: We have our first textiles market access agreement with China and we have strengthened enforcement terms against illegal transshipments. This agreement provides a solid basis for us to strengthen our textiles trade relationship with China."

Under the market access agreement, China has agreed to reduce tariffs and bind tariffs at applied rates, thereby increasing market access for U.S. exporters, and to ensure that non-tariff barriers do not impede the achievement of improved access. It also provides for review of China's implementation of its commitments. U.S. producers believe that they can effectively export a number of products to China including high volume, high quality cotton and man-made fiber yarns and fabrics, knit fabrics, printed fabrics; such high volume knit apparel as t-shirts, sweatshirts and underwear; and advanced specialty textiles used in construction of buildings, highways and filtration products.

While the agreement provides some adjustment to China's quota levels and growth rates, the new package addresses on-going U.S. concerns about illegal transshipment practices. The new agreement reduces quota levels in fourteen apparel and fabric product categories where there were repeated violations of the 1994 agreement through transshipment or overshipment. It maintains strong enforcement measures including the ability to "triple charge" quotas for repeated violations of the agreement, Also, a number of procedural measures have been agreed to in order to improve the bilateral consultation process, including arrangements to implement an electronic visa" information system to more effectively track textile and apparel shipments. The parties have agreed on the separate treatment of textile quotas for Hong Kong, Macau, and China after reversion of the territories to China.

"We have repeatedly taken enforcement action against illegal transshipments and overshipments," Ambassador Barshefsky added. "The new agreement underscores this Administration's emphasis on effective enforcement of our trade agreements. We have specifically targeted cutbacks in those areas where investigations have discovered illegally shipped products."

Under the 1994 agreement, USTR has imposed sanctions against China's apparel quotas on three occasions -- most recently, in September 1996 when Ambassador Barshefsky imposed triple charges for illegally transshipped merchandise. By increasing systematic intervention against illegal transshipments, this agreement should advance rules-based trading practices in textile and apparel trade with China.

After Mexico and Canada, China is our third largest supplier of imported textile and apparel products. Imports of textiles and apparel (including controlled silk products) from China amounted to 1.7 billion square meters equivalent in the year ending November, of which 1.0 billion square meters equivalent, or 59 percent, were apparel products. Total imports of textiles and apparel were valued at $5.9 billion; apparel imports were valued at $4.9 billion. In 1996 (annualized from October data), U.S. exports of textiles and apparel to China declined by 12.4 percent to $55.2 million.

"I particularly want to thank our negotiating team led by Ambassador Rita Hayes which has worked tirelessly to secure a solid agreement in the interests of U.S. workers and consumers."

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