The Ministry of Commerce has issued a circular to alert domestic companies to the pitfalls of exporting textile products to the United States and the European Union using fake certificates of origin.

Under last year's Sino-US and Sino-EU memorandums on textile trade, the agreed trade volume for the following year will be slashed to penalize the whole industry if these illegal practices are carried out.

Sun Kaifen, from the Commerce Department of north China's Hebei Province, said that the ministry has ordered local departments to inspect companies and submit a report around mid-July.

The ministry will punish companies and individuals concerned strictly in line with the law, Sun said.

Since the EU and US imposed textile export quotas on China last year, the country's textile exports to these two economies have been slowing down and shifting to neighbouring countries and regions.

Hong Kong and the Republic of Korea, for instance, have registered year-on-year growth of 234 percent and 150 percent respectively in their textile exports to the EU between January and May. The customs authorities of some EU members said this rapid growth could be a sign of malpractice.

Customs statistics from China showed that over the first five months, a number of provinces including Guangdong, Hebei and Zhejiang have increased their textile exports to Myanmar, Vietnam, Thailand, the Republic of Korea, Russia and Pakistan.

Zhao Yumin, director of the International Market Department of the Research Institute for International Trade and Economic Cooperation, attributed the illegal trade to the import restrictions of EU and United States which singles out China.

She said that the motivation of domestic companies for conducting illegal trade was stoked up by the decrease in import demands of foreign countries and the smooth transfer of information, capital and commodities under economic globalization.

Zhao said that this phenomenon proves how costly it is to implement an agreement against the trend of free trade.

So far, the EU has imposed import restrictions on ten categories of textile products made in China while the United States has restricted the import of 21 categories of textile products from the country.

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