China agrees limits on textile imports
Eleventh hour deal heads off sanctions
Retailers may see a cap on supplies of cheap clothing after China agreed to limit textile exports to the EU for three years.
After intensive negotiations between EU trade commissioner Peter Mandelson and Chinese commerce minister Bo Xilai, China agreed to a cap on exports. China has agreed to limit export growth to around 20 per cent a year on t-shirts and flax yarn until 2007. The EU had initially asked for a cap of 7.5 per cent.
The EU, concerned about the effect of large quanties of cheap clothing and textiles on European manufacturers since China joined the World Trade Organisation, had threatened trade sanctions unless limits could be agreed. The latest figures show Chinese exports in May were up 30 per cent year-on-year.
However, retailers’ organisations including the British Retail Consortium have opposed limits, arguing that consumers benefit from access to cheaper clothing.
The EU said the deal will manage the growth of Chinese textile imports, and provides for ‘reasonable growth’ during 2005-2007 while giving time for the the textile industry in the EU to adjust.
Mandelson said: “I have always called for this issue to be resolved amicably rather than through the EU taking unilateral measures, even though we are legally entitled to do so under China’s WTO Accession Protocol.
“My preference has always been to seek an agreement with China that reflects our strategic partnership and our mutual interest in strengthening our trade relations
“Today’s agreement will give players on both sides clarity, certainty and predictability. I believe that 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.”
However, fierce negotiations cane be expected to continue on a category-by-category basis. New EU figures also show that shoe imports from China have increased 700 per cent since the start of the year, making footwear the next battleground for trade talks.
