US, China Reach Trade Agreement on Textiles

UNITED STATES and Chinese negotiators signed a textile agreement yesterday, averting a trade war over illegal Chinese sales of billions of dollars worth of clothing to the US.

The agreement is a three-year renewal of a US-China textile pact that expired on Dec. 31. The US had planned to impose large quota cuts on Chinese textile exports effective yesterday.

The top Chinese negotiator, Shi Guangsheng, said the US canceled plans to impose the cuts, according to the official New China News Agency.

Textile trade is controlled by agreements that set export quotas for different kinds of cloth products. The US says China has exceeded its quota by $2 billion a year, mostly by shipping goods with fake labels through third countries.

The agreement provides for ``strong tools to ensure that the transhipment problem is addressed forcefully,'' said chief US negotiator Jennifer Hillman at the signing ceremony.

The US had demanded permission to make surprise visits to factories suspected of quota violations, but Mr. Shi said the agreement provides for visits only with the permission of the Chinese government, the New China News Agency reported.

The US had also been demanding punitive action against Chinese companies that violated the quota agreement, and Shi said the two countries agreed quotas could be cut by three times the size of any violation.

The agreement came just as a US order slashing textile imports from China by more than $1 billion was going into effect. On Jan. 6, US Trade Representative Mickey Kantor announced quota reductions of 25 to 35 percent on 88 categories of Chinese cloth products including sweaters, knitted shirts, and cotton trousers.

The agreement came two days before US Treasury Secretary Lloyd Bentsen's visit to China. He will be the highest-ranking Clinton administration official to visit China. US-Indonesia Labor Tiff

US Treasury Secretary Lloyd Bentsen said yesterday that the issue of workers' rights in Indonesia had not been resolved, leaving Jakarta less than a month to convince Washington to renew trading privileges.

He told a news conference at the end of a two-day visit that despite moves by Indonesia to address US concerns ahead of the Feb. 15 deadline, Indonesia must do more to remain part of the Generalized System of Preferences. Mr. Bentsen is on a six-day tour of Indonesia, Thailand, and China.

The issue of preferences has taken center-stage in US-Indonesian relations, which have frayed in recent months over human rights in the former Portuguese colony of East Timor and labor conditions in Indonesia.

Next month, Washington will decide whether or not to extend trade preferences, worth about $650 million, to Indonesian goods. Bentsen said the US government had yet to receive a report from Jakarta, due last Thursday, on moves to change its labor policy.

US concerns focus on Indonesia's treatment of the few independent unions that challenge the All Indonesia Labor Union, the country's only formally recognized union.

He said these issues would be discussed in March with finance ministers from the Asia Pacific Economic Cooperation forum.

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