The Hindu : Business : Pre-accession accord sequel

Online edition of India's National Newspaper
Sunday, May 15, 2005

Business

Business

Pre-accession accord sequel

R. Gopalakrishnan

CHENNAI: The quota restrictions announced by the U.S. on Friday on imports of certain categories of textiles from China are in terms of an agreement reached by the two countries as part of their broad bilateral agreement reached prior to accession of the People's Republic to the World Trade Organization (WTO).

The accession agreement provisions enable the U.S. to impose safeguards against imports of Chinese textiles as envisaged under an earlier bilateral agreement (1997) on textiles. In the accession talks, the Chinese agreed that the mechanism for imposition of quotas (as distinct from tariff measures) envisaged under the 1997 accord could be triggered in the case of "market disruption'' in the U.S. as a result of a surge in imports from China. This provision covered all products that were under the purview of the Agreement on Textiles and Clothing (ATC, which was a part of the Uruguay Round accords which resulted in the establishment of the WTO and which expired in January year). The mechanism to prevent market disruption in the U.S. will remain till December 31, 2008.

China also agreed in the accession talks that product-specific safeguard measures (as imposed now) could be applied by the U.S. till 12 years after the accession of China to the WTO. (China joined the WTO on December 11, 2001). Other provisions of the accession accord included tariff reductions on textiles by both sides and lifting of restraints imposed by China on distribution channels for imported textiles.

In terms of the safeguards agreement of the WTO (as distinct from the U.S.-China bilateral agreement), safeguard measures cannot be targeted at individual exporting countries, though quotas can be allocated to different exporting countries. However, in extraordinary circumstances, where imports have increased disproportionately quickly from a single country, they can be slapped on the country concerned. Also, countries affected by safeguard measures can seek compensation, and failing agreement on this, impose punitive measures on the importing country. Developing countries exporting less than three per cent of the total imports or collectively exporting less than nine per cent have to be exempted from safeguard measures.

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