EU and China seal 'fair' textile deal

The EU is to “share the burden” of releasing textile imports blocked at Europe’s ports with China in a deal to be discussed by national governments on Tuesday.

European Trade Commissioner Peter Mandelson has hailed a “satisfactory and equitable way” of resolving the EU’s textile crisis.

Mandelson hit out at summertime media presentation of EU-China ‘bra wars’ and is to make a keynote trade speech in Beijing on Tuesday.

“Textile wars’ have been blown up out of all proportion this summer, [although] the subject has served to raise some important issues of free trade versus protection.”
 
“China and Europe are not, have not and will not be at "war". We need each other - and access to each others market,” he said.

“We can help out each other's interests - in trade and in other things.”

Complicated quota juggling and the freeing-up of tens of millions of pullovers, bras and trousers over and above ceilings set to protect EU textile producers are the key to the deal.

“It is based on the principle that the EU and China will share responsibility for the goods that are blocked,” said a senior European trade official on Monday.

Beijing will transfer over 40 million garments into 2006 quotas, a move that will cut China’s textile growth rates in bras, pullovers and trousers from ten to 7.5 or five per cent.

“The agreement implies that for China growth rates for China in 2005 to 2006 will be lower that envisaged,” said the commission official.

“That is quite a significant contribution from China.”

On the European side, struggling EU textile manufacturers must cope with 40m garments on the market above targets set after a surge of imports threatened to wipe out producers.

EU officials will brief national governments on Monday with the details of a package that has emerged after weeks of haggling in Beijing.

National capitals will then decide on the deal at a Tuesday meeting of officials amid splits between textile producing nations and consumer orientated economies.

Spain, France, Poland and Portugal have been concerned at the impact of releasing textiles over and above ceilings set in June to protect their textile industries
.

“Of course, it is not perfect, it involves burden sharing, but it is I believe in the circumstances a very satisfactory agreement,” said the commission official.

“It is not an ideal agreement from the point of view of a number of members states.”

If EU governments can find agreement goods held at customs warehouses across Europe could be unblocked “next week”.

Under the deal ten million pullovers will be “borrowed forward” from next year’s ceiling, another 14m will be released  or counted under – unfilled – cotton goods quotas.

Nine million trousers and six million bras will be accounted for under 2006 quotas, the rest will be released on top of this years ceilings.

Textile quotas were introduced on June 10 after strong pressure to shield the EU clothing industry from cheap Chinese imports.

But administrative delays saw imports pile up in EU customs warehouses as quotas filled with orders placed before ceilings were in place.

The resulting textile crisis has threatened to hit retailers, empty shops and split clothing producing countries from free trade, consumer orientated member states such as the Netherlands, Denmark, Sweden, the UK and Germany.

Commission trade officials have denied blame for the crisis, but a new Brussels-Beijing working groups has been set up to spot future problems.

“I do not the argument this was ‘mishandled’,” said a senior EU trade official.

“What I do accept is there was a surge of imports and shipping that was not foreseen by the commission, China or by retailers themselves.”

“One of the lessons we learn is that we are dealing with circumstances that are unprecedented because of the sheer exporting power of China.”

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