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Korea-US FTA to adversely impact China's textile exports
Oct '11
The Republic of Korea-United States Free Trade Agreement (also known as KORUS FTA), is likely to adversely impact China's textile exports to the US. Under the FTA, South Korean textiles and apparels enjoy tariff preferences ranging from 8 to 30 percent when being exported to the United States. This will put similar textiles and apparel products from China at a competitive disadvantage.

It is likely that Chinese textiles may lose its US market share owing to the 'trade diversion effect' that will ensue following the implementation of the KORUS FTA. Korean textile and apparel exports to the US are expected to grow by around US$ 3 billion per year compared to earlier years. Of these, around 85 to 90 percent will be mere diversion of trade from other countries to Korea.

The impact of KORUS FTA would be felt on several other Asian countries, but it will be greater on China. The tariff reduction arrangement in the FTA will have most direct impact on China's textile and apparel exports to the US. Other clauses in the FTA such as the rules of origin, customs border measures and protective measures may not have immediate impact, but may cause subtle changes in trade structure in the medium to long term.

Fibre2fashion News Desk - China

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