It was always expected that the United States and China would prove to be hard bargainers in their efforts to reach a new textile agreement to replace the one that expired early this year. But, with the collapse of trade talks, each side has felt it necessary to impose new curbs on imports from the other. Thus there is a special urgency in resolving the textile dispute before there is any long-range damage to US-China relations in general.
Even before the current impasse over textiles, it must be recalled, Secretary of State Shultz had his hands full in addressing complaints from China. The Chinese are irritated about continuing US arms sales to Taiwan, as well as American export controls on high technology goods which China would like to purchase. Now Mr. Shultz must deal not only with those issues but also with the textile dispute when he visits Peking early next month.
Surely, the current bickering over textiles need never have resulted in the first place, given a little bending on each side. Nor is there any reason why a reasonable settlement cannot yet be reached. China, which is the fourth largest exporter of textile products to the US - behind Hong Kong, Taiwan, and South Korea - wants to expand its exports by some 6 percent or so annually, which is more than that allowed under the agreement that has just expired. The US, because its own domestic textile industry has been hit hard by recession, wants to restrict China's growth rate to between 1 percent and 2 percent annually. The US has now reached accords with the three other Asian nations that are far more restrictive.
Despite the current retaliatory steps now being taken on both sides of the Pacific, not all that much mischief has yet been done. In unilaterally slapping quotas on Chinese imports last week, the US was in effect freezing imports at current levels. And although China this week announced that it would ban further purchases of cotton, soybeans, and chemical fibers from the US, the fact is that in each instance it was already backing off from new contracts in these areas. In the case of cotton, for example, China has just had its third bumper crop in a row. Chinese farmers are also being encouraged to expand soybean production. And China is overstocked with textile fibers. Thus the import curbs are more symbolic than actual.
Still there is always the danger that China could restrict future purchases of US grains - or that other Asian producers could step up future textile exports to the US at China's expense. China is now the number one importer of US wheat. And in terms of overall trade between the two nations - reaching close to over $600 million.
Given the vital importance of the US-China political relationship, as well as the growing two-way trade, it is crucial that both sides reach a fair settlement on a new textile agreement as expeditiously as possible.