The world's most powerful commercial forces started proceedings on Thursday that could end up with Chinese exports of clothes being slapped with restrictions to protect US and European industries from undue harm.
Such a move would spell a serious escalation of trade tensions that have begun to boil over as China grows in economic clout.
Beijing has already responded furiously to the prospect of action against its textile exports, and warned against a return to global protectionism.
In Washington, officials said a government committee on Wednesday agreed to consider a request from the US textile industry for "safeguard action" limiting imports of seven types of textile and clothing products from China.
The Committee for the Implementation of Textile Agreements, which is led by the US Department of Commerce, said it would launch 30 days of public soundings before spending 60 days deciding whether quotas should be re-imposed.
In Brussels, the European Union's executive commission said it was opening a 60-day review of nine categories of Chinese textile imports to see whether restrictions should be enforced.
"If there is a way of resolving this short of applying sanctions, it should be taken"
The rag trade on both sides of the Atlantic complains that thousands of jobs have been lost since the full force of China's textiles industry was unleashed with the end of a 31-year-old global quota system on 1 January this year.
The expiry of the quota system left producers in developed and developing countries dealing with a wave of imports from China, whose manufacturers benefit from cheap labour and huge economies of scale.
After joining the World Trade Organisation in 2001, China agreed to let WTO members restrict its exports of clothing and textiles until 2008 if a sudden surge in shipments threatened to disrupt their markets.
The US textiles industry says that that disruption has been manifest since 1 January, with government figures showing just one category of Chinese imports under investigation -cotton trousers - rising 1500%.
Importers accuse the textile groups of promoting hysteria and say freer trade will benefit all countries. China's competitors in places such as Bangladesh and North Africa, however, are feeling the pinch.
Even though France is one of the strongest backers of EU action against China, the French state rail system SNCF said 25,000 new shirts it is ordering for its train inspectors would be manufactured in China.
The order has been placed with Oxbridge, a French supplier that used to make shirts in Morocco until transferring production to
China has made some effort
lately to rein in its textile exports
China about a year ago.
The US and EU steps will see informal consultations held with Beijing in a bid to find a solution bilaterally.
China has made some effort to rein in its textile exports by slapping punitive duties on some categories of garment. But overall it is adamant its industries have every right to exercise their competitive advantage.
Chinese Commerce Ministry spokesman Chong Quan on Tuesday called on Europe to "acknowledge fully the negative influence on bilateral trade relations" if it pressed ahead on the textiles front. Much the same message has been given to Washington.
Watching anxiously from the sidelines is the WTO, the scene of fraught negotiations on liberalising global trade that will culminate at the end of the year with a ministerial gathering in Hong Kong.
"If there is a way of resolving this short of applying sanctions, it should be taken," WTO spokesman Keith Rockwell said in
response to the latest steps taken in Brussels.&n