TOH HAN SHIH

The export tariffs on garments China published over the holidays may help appease the United States and other nations worried about their textile industries, but they are far too low to have a significant impact on businesses, industry players say.

The tariffs, to be imposed on 148 products after global textile quotas expire on Friday, range from 20 fen to 50 fen per garment. Products to be taxed include underwear, pyjamas, trousers, blouses and dresses, according to the mainland's Ministry of Commerce.

"The tariff is not that significant, as you are talking about 50 fen on an individual garment, such as trousers, whose export price is typically US$7," said Peter Liu Sin-shing, the chairman of the textile and apparel committee at the American Chamber of Commerce in Hong Kong.

"Quota prices cost more. For a pair of trousers with an export price of US$7, the quota price is US$2 to US$3," Mr Liu said.

Textile quota allocations for the US are often traded on the secondary market.

Henry Tan, the chief executive of Luen Thai Holdings, the largest listed garment manufacturer in Hong Kong, said: "The tariffs are not big, so they won't have a major impact on our company.

"What is more important is whether US safeguard quotas will go through or not."

Mr Liu said that the new export tariffs fell short of what the US government had anticipated.

"The US government always wanted a comprehensive agreement regarding the volume of exports to the US that is more wide-ranging and longer term, not a piecemeal solution," he said. "The volume of China's garment exports can still go up."

The export tax would do little to mitigate the overall competitive advantages of mainland textile and garment exports, he said.

"[Nonetheless], the tax probably scores some points for the Chinese government, as it will be seen to be responding to rather than ignoring the requests of [affected] nations."

US officials had repeatedly asked Beijing to compromise on the textile-quota issue, but until now Beijing had not been forthcoming, Mr Liu said.

"I think the export tax is a gesture by the Chinese government, which hopefully will give the US government something to work with to avert ... safeguard quotas."

The safeguard mechanism, allowable under World Trade Organisation rules until 2008, permits countries to impose special quotas of up to 7.5 per cent annually to restrict import growth of textile products causing "disruption" to their markets.