China's apparel and textile imports shot up 21.8 percent in May, according to statistics that were released Thursday and punctuated by a step forward in the Bush administration's trade case against subsides in the country.


The U.S. requested that the World Trade Organization set up a dispute settlement panel to address the subsidies, which the administration maintains are conditioned on exports or a firm's use of Chinese products over goods from other countries. Such supports would give an upper hand to Chinese manufacturers and are WTO-illegal.


Launched in February, the case has already gone through two rounds of consultations between U.S. and Chinese officials and could ultimately lead to retaliatory tariffs to offset the impact of the supports.


"China has taken a positive step by repealing one of the subsidy programs we challenged, but much more needs to be done," said a spokesman for U.S. Trade Representative Susan Schwab, in a statement. "We continue to prefer a negotiated settlement to this dispute, but without assurance of complete corrective action by China, we must continue to pursue the WTO process to enforce our rights."


One of the chief complaints of U.S. textile producers is that they cannot compete against a myriad of advantages given to factories in China, including subsidies and currency policies that restrain the value of the yuan.


Whatever the impact of subsidies, Chinese producers also enjoy other advantages, such a large pool of cheap labor, ready access to raw materials and an infrastructure trained toward exporting on a grand scale.


China has used its advantages to become an ever larger supply of apparel and textiles for Americans, commanding 37.8 percent of the import market the 12 months ended May 31.


For the month of May, the country's apparel and textile imports rose to 1.8 billion square meter equivalents, valued at $2.4 billion, as shipments from the rest of the world fell 5.6 percent to 2.7 billion SME.


Much of China's momentum came from apparel imports, which swelled by 42.1 percent to 588 million SME, according to a Commerce Department trade statistics. The country showed particular strength in dresses and nightwear, both in man-made fiber and cotton. Women's and girls' cotton trousers, one of the 34 types goods still restrained by quotas, also had a strong showing.


China wasn't the only winner in the trade game. Bangladesh also had a good month, with apparel and textile imports rising 16.7 percent from a year earlier to 135 million SME, thanks partially to increases in goods where China is restrained by quotas, such as cotton underwear, women's and girls' cotton trousers and women' and girls' man-made fiber sweaters. On the losing end was Pakistan, the number two apparel and textile importer, which saw its shipments drop off 10.5 percent, particularly in combed and carded cotton yarns, cotton poplin and broadcloth and cotton twill fabric.


Canada and Mexico, which have been tied economically to the U.S. through the North American Free Trade Agreement since 1994, also continued to lose ground with drops of 20.4 percent and 12.4 percent, respectively.


The total U.S. trade deficit in goods and services weighed in at $60 billion in May, compared with $58.7 billion in April. The goods deficit with China rose to $20 billion from $19.4 billion.


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CIAe News Room