In the 1995 Uruguay round of the World Trade Organization talks, developed countries agreed to phase out quotas on textiles imports within 10 years. But countries kept most of their quotas in place right up to the end of last year, leaving their industries unprepared for the change. In January quotas vanished and textile imports from China "surged" in the U.S. and in Europe – or so the media say.

First quarter textile imports to the United States valued US$ 22.6 billion this year. The first quarter 2004 imports were US$ 20.3 billion. The 2004-2005 first quarter "surge" was 11.5% – significant, but not extraordinary.

In the first quarter 2003 only US$ 13.3 billion worth of textiles were imported. The 2003-2004 first quarter y-o-y rise was 52%. Now that might have been qualified as a "surge". But did anyone call for additional quotas in 2004?

In 2005 the Chinese textile exports to the U.S. did increase by 54%. But the exports from Hong Kong did sink by 18.7% and the exports from Macao did sink by 17.6%. Both are Chinese Special Administrative Regions. Why differentiate them in the statistics? Other loosers in the move to China were Taiwan, South Korea and Mexico.

A shift of U.S. imports from those countries to China does make textile goods cheaper for U.S. consumers and it does even lower the overall U.S. trade deficit. Without quotas free market forces are working as they are supposed to do.

But that is not the point to make for China bashers. So Friday the United States announced to re-impose (temporary) quotas on Chinese-made cotton trousers, cotton knit shirts and underwear. The European Union opposes a return to quotas, but called on China to impose some self restrictions.

The smart move came, of course one might say, from China. To avoid further pressure it increased the export tax on Chinese textiles by some 480 percent. Impressive it seems, but the tax will be a mere US$ 0.12 per t-shirt.

Now the U.S. and European consumers will have to pay more for their t-shirts and underwear which would not have been produced in their countries anyhow. The Chinese state will have a new blooming source of income. The Chinese textile industry will move to produce higher value textiles which are not effected by quotas and where the per-item-tax is negligible. That move than indeed might endanger domestic textile industries.

Meanwhile patriotic consumers will continue to wave flags and wear "USA" sweatshirts bought cheap on special offers thanks to being made in China.

Now how about a quota on imports of the Stars and Stripes?