China Deal

Ending a trade tiff on textiles

Though low-cost Chinese textile exports command less than 1% of the $100 billion U.S. market, they have grown at an average rate of 70% annually for the past three years. Among foreign textile suppliers to the U.S., China now trails only Taiwan, Hong Kong and South Korea. Prodded by the U.S. Government, the top three agreed to set a limit of 1.5% to 2% on the growth of their exports this year. The U.S. was willing to allow the Chinese an increase of slightly more than 2%, but Peking demanded 6%. When negotiations collapsed in January, the U.S. imposed quotas to hold the growth of Chinese textile imports to roughly 1.5%.

The Chinese retaliated by halting orders for American wheat. In recent years, China had become the top foreign customer for U.S. wheat, buying an average of 7 million tons annually, worth nearly $1 billion. Kansas Senator Robert Dole, a powerful Republican leader and farmers' advocate, last month urged President Reagan to press ahead with talks aimed at a Chinese textile deal, citing "the cost being paid by U.S. wheat farmers."

Last week U.S. and Chinese negotiators finally reached a compromise. Under the plan, which covers 33 types of products ranging from shirts to printed cloth, Chinese imports will be allowed to grow about 3% annually. After the agreement was signed, Chinese grain dealers were back in the market for U.S. wheat.

The deal was criticized by partisans on both sides of the issue. U.S. textile workers complained that increased imports would exacerbate a ten-year decline in jobs. Many economists argued, meanwhile, that any restrictions on imports would cause U.S. shoppers to pay unnecessarily high prices for clothing. This file is automatically generated by a robot program, so viewer discretion is required.