Updated: 2005-06-13
HONG KONG - Chinese Vice Premier Wu Yi criticized the U.S. on Monday for unilaterally slapping a restriction on textile imports from China, saying that America should have tried to resolve the trade dispute with trade talks.

Wu said during her keynote lunch speech to the biggest Asia-Pacific business organization that it was natural for countries to have some friction as global trade ties economies closer together.

"The key is how to handle this friction," she told the Pacific Basin Economic Council.

Wu said that the United States caused serious damage to Chinese businesses by recently imposing a 7.5 percent cap on the increase in Chinese textile exports this year. She said the United States should first try to resolve such disputes with negotiation.

International textile quotas were scrapped on Jan. 1, and the U.S. and the European Union have complained that cheap Chinese textiles have been flooding into their markets, hurting their industries and threatening jobs.

Both the U.S. and the Europeans argue that measures were needed to better manage the swelling imports and claim that under the rules of the World Trade Organization, they can restrict imports that are disrupting their markets. But China has countered that such disruptions have not yet been clearly proven.

Over the weekend, the EU and China agreed on limits on Chinese textile exports. The deal allows for gradually rising caps on allowed increases in Chinese textile exports to Europe over the next three years, with all limits to be done away with in 2008.

China has no agreement with the United States on textiles.

Earlier Monday, the head of the World Trade Organization, Supachai Panitchpakdi, said ending the textile quotes has benefited global trade. He added some nations must adjust to the change ¡ª an apparent veiled reference to the U.S. and European Union, which have complained about the flood of Chinese textile exports.

"For some countries, there should be some adjustment costs," Panitchpakdi said, without identifying the nations.

Malaysian Prime Minister Abdullah Ahmad Badawi was scheduled to give a keynote dinner speech.

The Hong Kong-based Pacific Basin Economic Council is an international business association that says it represents about 1,000 companies in 20 economies across the region.