Europe and the United States Joined China-Mexico Textile Subsidy Measures

Recently learned from the Ministry of Commerce of the People's Republic of China that the Delegation of the European Union to the World Trade Organization (WTO) submitted to China and Mexico in the WTO delegation and the Dispute Settlement Body in accordance with Article 4.11 of the Understanding on Rules and Procedures Governing the Settlement of Disputes. Application for the consultation procedure for Mexico textile apparel subsidy measures. The application was formally announced to all WTO members on October 29.

It is reported that in 2011, the EU was the world’s second largest exporter of textiles and apparel products, with exports amounting to 115 billion euros, and therefore had substantial trading interests in the case.

At the same time, the relevant agencies of the US textile and apparel industry also urged the U.S. government to support Mexico’s lawsuit against China. The National Committee of the American Textile Organization (NCTO) also contacted industry associations in other countries (including Central American and Latin American countries) and urged the government to support the litigation in Mexico. It is worth noting that the National Committee of the American Textile Organization had previously approached the relevant industrial associations of the European Union and stated that the subsidies provided by China for the textile and garment industry have a significant impact on the EU.

A series of textile attacks

According to reports, the National Committee of the American Textile Organization stated in its application to the U.S. government that in the Western Hemisphere, the countries that have been greatly affected by Chinese products include Mexico, Dominica, Guatemala, Honduras, El Salvador, and Colombia. At the same time, the committee further pointed out that from 2001 to 2011, despite the "North American Free Trade Agreement" (NAFTA), the Mexican products to the United States enjoy zero-tariff access, but China is still the largest importer of US textile and apparel products.

According to the statistics of the Ministry of Commerce of the People's Republic of China, since the beginning of this year, China's textile and apparel exports to the EU have continued to decline. From January to August, the total EU textile and apparel products imported from China totaled 25.63 billion U.S. dollars, a decrease of 14.7%, which was more than the average. The share of Chinese products in the EU market fell to 38.2%, down 0.4% from the same period last year. Among them, the proportion of clothing fell to 39.5%, down 1.4% over the same period last year. The share of ASEAN countries in the EU textile and apparel market rose to 8%, an increase of 0.6% over the same period last year.

According to statistics from Mexico, from 2001 to 2011, Mexico’s textile and apparel exports to the United States fell from US$8.3 billion to US$4.0 billion, a decrease of 48.3%. From 2001 to August 2012, China’s total textile and apparel exports to the United States have increased from US$4.6 billion to US$29.2 billion, and its market share in the United States has increased from 8% to 38%.

In this regard, Wang Tianlong, an associate researcher at the China International Economic Exchange Center, said that the recent increase in foreign trade protection measures against China has a lot to do with the sluggish global economic growth. The economic downturn has caused some major advanced economies such as the European Union and the United States to reduce domestic demand and increase the unemployment rate. In order to protect domestic companies and increase employment opportunities, they naturally adopt trade protection measures to increase the barriers to entry of goods from other countries.

On October 15, 2012, Mexico appealed to the WTO Dispute Settlement Body on China's subsidy measures for textiles and clothing. This is the first case of WTO disputes filed so far for China's textile and clothing subsidies. “Different from developed countries, the purpose of the trade remedy lawsuits initiated by emerging economies for Chinese products is to create good market conditions for domestic industries and reduce external dependence, which also makes them use trade remedy to attack a wider scope and attitude. It is also more resolute," said an official from the Fair Trade Bureau of the Ministry of Commerce in an interview with reporters.

Manufacturing is facing an upgrade

As the first batch of Chinese products that knocked on the gates of overseas markets, textiles have been favored by “good quality and low price”. Nowadays, textiles have become a weapon of international trade protectionism against "Made in China," causing many domestic export-related companies to become trapped in "trade wars" and it is difficult to get out of the country in the short term.

According to a statistical report obtained by the China Textile Industry Federation (hereinafter referred to as China Textile Federation) from the reporter, in the first half of this year, China’s textile and apparel export products are still the main targets for global trade protection, and new technical and trade barriers have been introduced in Europe and the United States. Measures have seriously affected the export of Chinese textile and apparel products.

The report pointed out that since the beginning of this year, the U.S. government has successively issued a number of trade protection measures, including the establishment of an inter-departmental trade enforcement center that will enforce third-party testing and certification requirements for children's products and will implement new standards for lead content in U.S. children's products; The textile and clothing labelling standards have been revised; the new European Union regulation on textile labels has been officially implemented since May. With the introduction of these standards and regulations, China's textile and garment products are facing greater cost pressures and trade risks.

In response, the Ministry of Commerce reminded domestic foreign trade companies that they should respond to trade frictions rationally. On the one hand, through the transformation of foreign trade development methods, accelerate the transformation and upgrading, enhance the core competitiveness of the industry, increase product prices, jump out of the low-price competition circle, and change the “winning by price” to “win by quality”. On the other hand, it is necessary to standardize internal financial and management processes, cultivate professionals who can deal with trade frictions, and establish and improve early warning mechanisms and rapid reaction mechanisms for trade frictions so as to avoid situations that are unprepared if trade frictions are encountered.