China, EU have textiles all sewn up

The European Union and China have clinched a deal limiting the rise in Chinese exports of textiles and clothing to the EU until the end of 2008, averting the imposition of quotas that could have soured ties.

    Peter Mandelson and Bo Xilai made a joint statement

    The agreement, thrashed out in Shanghai by EU Trade Commissioner Peter Mandelson and Chinese Commerce Minister Bo Xilai and announced on Friday, came after months of tension over an explosive rise in shipments of cheap exports from China.

     

    "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," Mandelson said.

     

    The rise, which has generated fears for the future of the garment industry and millions of jobs in Europe and the United States, was unleashed by the 1 January abolition of a decades-old global system of quotas.

     

    Resorting to terms agreed when China joined the World Trade Organisation (WTO) in 2001, the US has already slapped temporary restrictions on seven garment and textile products, provoking an angry reaction from Beijing.

     

    Safeguards

     

    The 25-nation EU had been due to follow suit by early next week, limiting shipments of T-shirts and flax yarn to 7.5% over the previous year had China not taken voluntary steps to curb exports of these products to this level.

     

    The pact involves a wider range
    of products than earlier ones

    These so-called safeguards would have been effective only until the end of this year, making it likely the EU would have had to seek their re-application in six months' time.

     

    The pact agreed by Mandelson and Bo caps exports on a wider range of products and will remain in effect for a longer period.

     

    "The agreement provides for agreed transitional growth rates between now and 2007, followed by a further year during which both sides will work together closely in the hope that trade is conducted without further interference in this sector," Mandelson told a news conference with Bo in Shanghai.

    SOURCE: Reuters


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