HONG KONG — China is putting 30 percent of 2006 quota for goods exported to the European Union up for auction.
China’s Ministry of Commerce posted notice on its Web site on Wednesday stating that quota amounts will be available through a public bidding process via the Internet. The bidding applies to the 10 apparel and textile categories on which the EU and China agreed to growth caps in June. The deadline for submitting public tender offers is between Sept. 27 and Sept. 30.
“This will create a market for quota,” said Henry Tan, chief executive officer of Luen Thai Holdings, a leading global apparel supply chain services provider.
In order to qualify, a company must:
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- Have export qualifications.
- Be registered at China’s departments of Industry and Commerce Administration.
- Have an export record with China between January and July 2005.
Qualified companies that bid will be posted on the Web sites of the China International Electronic Commerce Network, on which directions for bidding are posted and the bidding will occur, and the China Chamber of Commerce for Import & Export of Textile.
There also is a minimum tendering quantity and price for each category and a maximum tendering quantity that have been established by the Bidding Committee of Textile Export, according to the ministry site.
Quotas were often traded like commodities in many countries for years, until they were dropped among all World Trade Organization countries on Jan. 1. However, China’s entry agreement into the WTO allowed for safeguard quotas to be imposed through 2008 as a surge protection for domestic industries.
Tan doesn’t expect quota for the EU to have a high value, at least not any higher than the charges for shipping goods to outward processing arrangements in Hong Kong or Macau, for example, to get around quota.
The bulk of goods coming out of China is on the low-quality end, he noted. With the EU and U.S. committed to having limits on Chinese imports for at least the next two or three years, these goods will shift to other low-cost manufacturing countries to avoid the quota price and problems, while China will shift to manufacturing higher-end garments, he added.