EU and China agree textile pact
China's Commerce Minister Bo Xilai (right) presents a T-shirt to EU Trade Commissioner Peter Mandelson
The talks centred on avoiding a trade war over T-shirts and flax yarn
The European Union and China have agreed a deal to limit exports of Chinese textiles into Europe after last-ditch talks to calm a trade row.
EU Trade Commissioner Peter Mandelson said the curbs would give European firms time to adjust to China's growing power in the textile trade.
The measures will come into force immediately and last till 2008.
The EU was set to impose its own curbs if no deal was reached on Friday, as trade rules allow protection till 2008.
Compromise deal
Mr Mandelson said "the overall settlement offers a fair deal for China while giving respite and much-needed breathing space to textiles industries in Europe and developing countries".
CHINA'S GROWING TEXTILE EXPORTS
A T-shirt factory in China's Zhejiang province
Pullovers and men's trousers to EU: up 400%
T-shirts to EU: up 157%
Shoes to EU: up 700%
fSource: EU
It limits growth in imports of 10 categories of Chinese made clothing and fabrics - including T-shirts and flax yarn - to 10% a year until 2008.
Mr Mandelson and China's Commerce Minister Bo Xilai spent Friday locked in detailed negotiations in Shanghai.
Under global trade rules, the EU could have restricted growth in Chinese imports to 7.5% a year.
The EU fears Chinese products could overwhelm Europe's textile producers, while China had said the EU was acting unfairly.
The US has levelled similar complaints about Chinese textiles and has already re-imposed caps on seven products.
The explosion in China's textile trade has followed the scrapping of the global Multi Fibre Agreement on 31 December 2004.
Since then, both the EU and US say that textile exports have soared.
As he arrived in Shanghai, Mr Mandelson told reporters that he looked forward to reaching a last-minute deal - but would not shrink from taking action.
"If we don't make an agreement, we will have to take other measures. This question has been dragged on over many days. We have a limited opportunity."
The agreement comes as China on Friday reported its biggest monthly trade surplus so far this year.
Chinese exports in May rose 30% from the year before, with the trade surplus - the difference between exports and imports - doubling from April to $8.99bn, far above most predictions.
Also on Thursday, shoes came under scrutiny after the EU said shoe imports from China had leapt 700% since the start of the year.
Evidence
The EU wanted China to agree to limit export growth to 7.5% on T-shirts and flax yarn - or face imposed quotas, perhaps within days, and was investigating seven other categories of textiles.
EU Trade Commissioner Peter Mandelson (left) shakes hands with China's Commerce Minister Bo Xilai
China's trade partners can protect their clothing firms till 2008
The EU position rests on China's agreement when it joined the World Trade Organization in 2001 to allow other members to curb its clothing exports if their markets were disrupted.
China says that Europe and the US need to provide better evidence before moving ahead with sanctions, and warns that as many as 400,000 workers could be affected.
Mr Bo has warned that it may delay opening up its markets to agricultural products.
On Thursday, he said that China saw the textile row as a test of whether developed countries were serious about fairness in enforcing free trade rules.
"China will protect its industry's legitimate rights, and on the other hand will act in line with WTO regulations," he told reporters.
The US, meanwhile, held its own abortive talks in Beijing earlier this month. |
