TOH HAN SHIH

Western governments and textile manufacturers are bracing for the January 1 end of global textile quotas as it heralds an unprecedented flood of cheap Chinese textile imports into the United States and Europe.

In the US, wool trousers are the latest addition to a list of "safeguard quotas" on Chinese apparel imports requested by domestic manufacturers. In the European Union, officials are drawing up a statement warning China of a backlash and urging restraint.

World Trade Organisation rules allow the US to impose one-year "safeguard" quotas on import categories if a surge in imports causes market "disruption". The quotas, which can be imposed until 2008, limit the annual import growth of a product to 7.5 per cent.

"US industry will continue to file more petitions [for quotas on Chinese apparel] because they want to protect themselves," said Peter Liu Sin-shing, chairman of the textile and apparel committee at the American Chamber of Commerce in Hong Kong.

The US government has interpreted the WTO safeguard provisions to mean that even a "threat" of disruption entitles it to impose the quotas.

Safeguards have already been employed on textile categories for which quotas were phased out earlier than the January 1 deadline and US textile manufacturers are calling for a renewal of the one-year safeguards, set to expire this month, on Chinese brassieres, dressing gowns and knitted fabric. Washington has yet to respond to a petition demanding the renewals.

The central government has objected to a renewal of safeguard quotas, noting that WTO rules do not provide for this. Beijing has also protested the imposition of safeguards based on a "threat" rather demonstrable disruption to domestic textile markets.

The US government will take 90 days to rule on whether to impose safeguard quotas on Chinese wool trousers and the other items under discussion.

China's exports of wool trousers to the US fell 57 per cent in the first nine months this year. China is the seventh largest exporter of wool trousers to the US, accounting for 4.6 per cent of total US imports.

Meanwhile, the EU will urge China this week to wield its dominance of the world garment market with care, or risk a backlash from developing nations, according to press reports. The 25-nation EU plans to set up a special monitoring system for textile imports from China.