Textile Industry's WTO Commitments

1. China automatically receives integration treatment of "ATC"

Beginning December 11, 2001, the European Union and the United States abolished quota restrictions on products that originated in China in the integration list of the first and second phases notified by the EU and the US to TMB, a World Trade Organization (WTO) supervisory institution for textiles and apparel.

At the same time, the EU also abolished quota restrictions on other products. From January 1, 2002, Turkey abolished quota restrictions on China-made products built into the integration list of the first and second phases presented to TMB. The USA, EU, Canada and Turkey abolished quota restrictions on products originating in China that incorporated the uniform treatment list of the third phase presented to TMB. China can adopt transitional protection measures for 49 percent of the 1990 imports volume as the base volume according to the sixth clause of the ATC Agreement to protect the interests of the enterprises.

2. Tariff cuts

Beginning January 1, 2002, China started bearing the liabilities of cutting tariffs for joining the WTO. According to the commitment, the average duty of textiles apparel should be reduced by 17.8 percent, 15.2 percent and 11.4 percent respectively from 2002 to 2005. In 2002, the average reduction would be 2.45 percent. The average duty level in 2005 will be reduced by 6.4 percent compared to that of 2002, with a reduction range of 36 percent. By 2005, all duties will reach the binding level except for one duty number. After the duty reduction, the "ladder" duty pattern (from low to high) will be created for products from raw materials, medium products and manufactured products.

3. Non-tariff measures subject to phased elimination

Upon joining the WTO, China will abolish the import quota and licenses for products under 42 duty numbers, i.e., wool, acrylic, terylene, etc. From 2002, all import quotas and licenses for textiles, raw materials, textile garments and textile machinery will be abolished. Apart from tariffs, China cannot re-adopt or implement any other non-tariff measures after entering the WTO unless a large volume of foreign products are dumped or the domestic industry suffers serious damages and anti-dumping, anti-subsidy and protection methods are applicable.

4. Gradual relaxation of import regulations

The tariff quota method is applied to cotton, wool and wool yarn imports. Within the quota, a 1-percent tariff will be applied while the public duty code tariff will be applied for imports exceeding the quota. In 2002, the quota for cotton was 818,500 tons, a figure that will climb to 894,000 tons in 2004. Domestic, non-State-owned trading companies will have 67 percent of the total cotton tariff quota and the exports subsidy of cotton will be eliminated.

Based on the relative agreement of the WTO, animal and plant products will undergo a quarantine inspection. In 2002, the tariff quota for wool was 264,500 tons and for wool yarn, 72,500 tons. These figures will jump to 287,000 tons and 80,000 tons respectively in 2004. From 2002, the number of companies appointed to trade wool, wool yarn and acrylic will also rise gradually. By 2005, trading rights will be relaxed completely. While cotton imports will still be traded by State-owned enterprises, with the increasing number of non-State-owned enterprises, cotton import rights will also be opened gradually.

5. Progressively liberalize the right to trade

Gradually abolish the State-owned trading system of silk by increasing and expanding trading rights. By January 1, 2005, completely abolish all active restrictions on silk exports, including all procedural fees. After the WTO accession, the State-owned trading system of the "two yarns and two fabrics" and silk, and raw silk will be amended and trading rights will be opened to all enterprises. Exports of cotton raw fabrics to Japan and Korea will still be exported under a quota, and export licenses should be applied according to relative regulations.

6. Protecting intellectual property

The exterior design of textile products mainly consists of the fabric pattern and the pattern and design of the garment style. This is a special type of intangible asset. The designer or owner will have independent rights to the design. The designs of WTO members will be protected as practical art works according to China's "Regulations on Implementing International Agreements." China has promised to devise special laws to protect textile product design.

7. Complying with TRIMs Agreement of the WTO

Currently, projects involving a capacity increase in cotton textiles, chemical fiber and wool textiles are checked and approved by relative government departments. Regarding chemical fibers, there are still restrictions on the proportion of shares held by foreign investors. For instance, no solely owned, foreign-invested enterprise in ammonia fabrics, polyester and acrylic is allowed. After the WTO entry, we should follow "TRIMs."

Under general circumstances the restrictions on geographical areas, quantity, proportion of shares for foreign-invested enterprises and other restrictions on investment should be relaxed. In the current clearing campaign of the administrative approval procedures, the procedure for approving chemical fiber and wool textile capacity will be abolished and the "two certificates" management system for cotton production capacity will be retained.

8. Agreement on special-protection measures

Should a WTO member country believe textile garment imports from China have harmed its enterprises, before January 1, 2009, via discussions, China will control the exports quantity of one or more types of textiles and garments "at a level no higher than 107.5 percent of the exports quantity to the member country in the first 12 months before the most recent discussions (wool products are 106 percent)." On one hand, this will enable the importing countries to adopt optional protection methods against Chinese products and, on the other hand, it will enable countries that did not implement restrictions on Chinese products to restrict Chinese exports.

9. Other methods kept by WTO members

Argentina abolished quota (bilateral) restrictions on textiles and garments before July 31, 2002 and will cut the excessive tariff every year. Although Hungary has proposed to restrict imports of textile products from China, it will open its market phase by phase. Mexico can use anti-dumping measures against textile and garment imports from China and is not bound by the relative WTO anti-dumping agreement and the documents relating to China's WTO entry. These countries promised to abolish regulations that do not comply with WTO regulations against China three to six years after China's entry into the WTO.

[Source: China Textile Industry Council]