Abstract

This paper explores the trade disputes about China's textile exports that escalated after the expiration of the global quotas on January 1, 2005 and settled down after months of intensive negotiations. Particular attention is paid to China's export taxes which were revoked following the U.S. and E.U. decision to impose import quotas. Noting that the real issue was bigger than just textiles since the backbone of the disputes was the mounting trade deficits and flight of jobs from the U.S. and E.U., the paper studies the debates from a range of perspectives and concludes that the optimal solution is free trade.

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