The U.S. Trade Representative (USTR) announced today that the U.S. and China have reached a broad agreement governing Chinese exports of textile and apparel to the U.S. This agreement will replace the special safeguard procedures and is expected to bestow a predictable and stable environment the industry was lacking since the worldwide removal of quotas on January 1, 2005.

The deal will take effect on January 1, 2006 and cover 34 clothing and textile categories, significantly above the 19 categories currently subject to safeguard restrictions.

The agreement calls for progressive increases of Chinese exports through 2008 as follows:

• 2006 - 10% for apparel products; 12.5% for textiles
• 2007 - 12.5% for almost all products (fiberglass and threads 15%)
• 2008 - 15% for eight sensitive products, i.e., cotton shirts and pants, bras, underwear; 17% for fiberglass, thread, knit fabric, window shades; and 16% for all other categories

The agreement, which runs through 2008, is one year longer than a similar agreement China recently reached with the EU. In addition, under the agreement, the U.S. retains its right to impose special safeguard limits for Chinese textile and apparel imports not covered under this agreement. At this time, the list of categories covered by the agreement has not been released, and we will keep you informed, as details become available.