New World for China Textile Exports as Quota Systems End

(Xinhua)

The sun set Wednesday on a quota and license system that governed China’s textile trade for decades.

As the United States-China and European Union-China agreements on textiles and clothing expired with the old year, the Ministry of Commerce terminated supervision over quotas on 21 categories of textile exports to the United States and licenses on eight categories to the European Union.

Textile companies might see Thursday — the first day of 2009 — as the beginning of an unfettered era of free trade, but the outlook is clouded by weakening demand and rising protectionism amid the financial crisis.

There are few signs that shipments by the world’s largest textile exporter will soar.

“With global demand slumping, the expirations will not bring about a repeat of the sharp increase in textile and clothing imports from China that occurred in early 2005,” said Sun Huaibin, spokesman for the China National Textile and Apparel Council.

He said that worries about such an increase and its damage to the U.S. market were “groundless.”

He said slackening demand resulted in a persistent low rate of quota usage this year.

Quota prices fell from a peak of nearly 20 U.S. dollars to less than 2 U.S. dollars within a year, said Liu Min, a trader with Shanghai Mai Si Ke Te International Trading Co. Ltd.

“Our exports declined more than 60 percent compared with last year. I heard many textile companies cut exports to the lowest level in recent years. Some even failed to use up the quotas acquired before the third quarter,” said Chen Shubin, general manager of Foshan Qiaoli Textile Import and Export Co. Ltd. in Guangdong Province.

Analyst said shrinking orders in the fourth quarter and dim prospects for next year would mean a “tight” year for textile makers. Textile companies’ top challenges would be to secure their market share and tailor production to the domestic market. Read more here.

U.S. Customs: Are Your Textiles Subject to Quota?

U.S. Customs and Border Protection (Customs, CBP) has published a web page titled, “Are My Goods Subject to Quota?” under the Textiles and Quota section of the agency’s web site.

Customs noted on the webpage that import quotas control the amount or volume of various commodities that can be imported into the United States during a specified period of time, adding that quotas are established by legislation and Presidential proclamations issued pursuant to specific legislation and provided for in the Harmonized Tariff Schedule of the United States (HTSUS).

“Absolute quotas strictly limit the quantity of goods that may enter the commerce of the United States for a specific period. Tariff rate quotas permit a specified quantity of imported merchandise to be entered at a reduced rate of duty during the quota period,” Customs stated.

“Once the tariff-rate quota limit is reached, goods may still be entered but at a higher rate of duty. Many free trade agreements and special trade legislation establish tariff preference levels (TPL), which CBP administers like tariff rate quotas.”

Customs stated on the new page that several key factors determine whether a shipment is subject to quota requirements:

• Harmonized Tariff Schedule (HTS) classification (based on merchandise description)
• Textile category number (also known as a “visa” category)
• HTSUS chapter note (for agricultural products)
• Country of origin (where the goods were grown, produced, or manufactured)

To determine the HTS number (classification) of the goods, Customs recommended the following:

• Contacting an Import Specialist at a CBP port of entry.
• Requesting a binding ruling from the Office of Regulations and Rulings, National Commodity Specialist Division.
• Querying the Customs Rulings On-line Search System (CROSS) for binding rulings previously issued for similar merchandise.
• Reviewing the Harmonized Tariff Schedule

“Determine the textile category number (if applicable),” Customs stated.

“The category is a three-digit number listed in parentheses next to the HTS number. Refer to the Daily Textile Status Report for Absolute Quotas, which lists categories subject to quota and fill status (percentage of the quota that is used) by country. Currently absolute quota and/or visa requirements exist for textiles from China, Vietnam, Russia and Ukraine.”

Customs added that if the country of origin and/or the textile category of the goods is not listed on this report, then the merchandise is not subject to absolute quota or visa requirements.

“Determine whether the merchandise qualifies for preferential treatment under a Free Trade Agreement or other special trade program,” Customs stated. “If the merchandise qualifies for preferential treatment, refer to the Commodity Status Report for Tariff Rate Quotas. This weekly report provides information on imported merchandise subject to Tariff Rate Quotas.”

Customs noted that if the merchandise is subject to quota/visa restrictions, there may be additional information for a particular quota listed on Customs’ website in the form of Quota Book Transmittals (QBTs) or Textile Book Transmittals (TBTs).

The “Are My Goods Subject to Quota?” web page, which provides links to the resources listed, can be accessed on-line here.