China and EU agree '50-50' deal to free logjam of clothing imports

PUBLISHED : Tuesday, 06 September, 2005, 12:00am
UPDATED : Tuesday, 06 September, 2005, 12:00am

China and the European Union have reached a deal that will open the door to all the mainland textile products stranded at ports because quotas are full. But the solution reached yesterday in Beijing must still be ratified by most of the EU member nations.

An estimated 85 million garments and textile items are stuck in transit to EU retailers, because they exceeded this year's limits under an agreement reached on June 10.

'We'll take in everything at the ports,' EU Trade Commissioner Peter Mandelson said last night.

'Essentially, we're going 50-50.'

Under the deal, this year's quota limits will be raised by a certain undisclosed amount, and quota will also be borrowed from next year and from products that have not reached their limit. The June 10 agreement imposed annual quotas on 10 Chinese textile items until the end of 2007. Of these, seven have been filled, two others are over 80 per cent filled, and one is 40 per cent filled, according to EU data.

Commerce Minister Bo Xilai said: 'The vast majority of products at EU ports have been paid for by EU importers and retailers, but to accommodate their interests, we have already offered them a helping hand.'

Both men did not explain the 50-50 arrangement. Mr Bo called the deal 'reasonable and rational'.

The next step is to gain the approval of a qualified majority (roughly 70 per cent) in a vote by the 25 EU member nations. But this might not be easy, as six EU nations with substantial textile industries - Italy, France, Spain, Portugal, Belgium and Greece - last week opposed Mr Mandelson's proposal, according to Spanish news reports.

The move to increase this year's quota limits is also likely to draw opposition from some European industry groups. Filiep Libeert, president of Euratex, a European textile body, called the deal unacceptable because quota would be added to the amounts agreed on June 10.

Mr Bo said: 'I greatly regret the conservative attitudes adopted by certain EU states and companies.'

Hong Kong Textile Council vice-chairman Willy Lin Sun-mo was confident the agreement would prevent the problem recurring next year. The central government had told Hong Kong industry it was drafting rules on distributing textile quotas, he said.

'Next year, trade will be more orderly. EU importers will know how many orders they can get and which Chinese factories have quota.'

This EU-China deal would have a bearing on the ongoing Sino-US textile talks, as Beijing could not give the US more favourable terms than the EU, Mr Lin said.

Mr Bo was optimistic that China would conclude a textile agreement with the US soon.