RIO DE JANEIRO — China and Brazil have reached an agreement to limit imports of Chinese textiles and apparel through 2008 after Brazilian officials argued that a continued surge of goods could do economic harm to its domestic industry.
Similar deals are in place with the U.S. and European Union after the two regions saw substantial increases in imports from China last year following the end of the global quota regime.
The import caps for Brazil were set in an agreement signed in Beijing on Feb. 10 between Ivan Ramalho, the South American country’s vice minister of development, industry and foreign trade and Gao Hucheng, China’s vice minister of trade.
“These caps were necessary because, in the last few years, there’s been quite a spike in Chinese textile and garment textile imports into Brazil at prices that threaten to hurt local industries,” said Ramalho, adding that Chinese textile and garment exports to Brazil jumped from $153 million in 2003 to $251 million in 2004 and to $360 million in 2005. “The caps allow for an increase in Chinese imports, but in a gradual, monitored way that won’t destabilize and disorganize the local market.”
Fernando Pimentel, the head of the Association of Brazilian Textile & Apparel Industries, who was involved in negotiating the accord, said, “China textile-garment imports into Brazil have greatly increased, necessitating the caps, because China has artificially devalued its currency, allowing it to export these goods to offset its textile-garment production overcapacity. China must deal with that overcapacity by boosting its internal consumption or reducing production, not by greatly boosting exports to Brazil and creating a competitive imbalance in our market.”
The agreement puts escalating caps on 70 products in eight categories through 2008. In corduroy, polyester textured filament yarn, synthetic fabrics and outerwear, Chinese imports can’t grow over 2005 levels by more than 12.5 percent in 2006, 15 percent in 2007 and 20 percent in 2008. In embroidery, knit shirts and T-shirts, the cap is 12.5 percent in 2006, 15 percent in 2007 and 25 percent in 2008. In sweaters and pullovers and silk fabric, the cap is 8 percent in 2006, 9 percent in 2007 and 10 percent in 2008.
The 70 products account for 60 percent in quantity and value of all Chinese textile and apparel imports to Brazil. That makes the Brazil-China agreement broader than the U.S.-China accord, which accounts for 35 percent of all Chinese textile imports through 2008, or the EU-China accord, which accounts for 40 percent of all such imports into the EU through 2007, the ministry said.