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Business

EU, China Settle Textiles Row

China said Saturday it will limit growth in exports of 10 textile and clothing products to the European Union to 8 to 12.5 percent a year in a bid to defuse a trade row straining ties between them.

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No longer considered a threat for Europe

The announcement came after more than 10 hours of negotiations between Chinese Commerce Minister Bo Xilai and EU Trade Commissioner Peter Mandelson in Shanghai on Friday, in which the two sides agreed to curb Chinese textiles exports to Europe in the next three years.

Peter Mandelson EU und China einigen sich in Textilstreit

EU Trade Commissioner Peter Mandelson (left) and his Chinese counterpart Bo Xilai (right) toast the deal early Saturday

"China and the European Union have agreed that, in the period from June 11, 2005 to the end of 2007, with an agreed base quantity, we will determine China's amount of exports to Europe by a growth rate of between 8 to 12.5 percent per year," the ministry of commerce said in a statement on its Web site.

But Mandelson's spokeswoman, Claude Veron-Reville, on Saturday urged urged parts of the EU's textile industry to adapt to growing competition.

"There is a challenge for our industry to move up the value chain and to find its niche," she said. "An important part of the industry has already adapted, another part of the industry needs an additional breathing space, an additional respite, and they will have to make use of it to adjust."

In 2008, the EU will only apply "with restraint" paragraph 242 of China's World Trade Organization accession protocol on textiles, which requires China to limit exports of textile products, the statement said without explanation.

EU stops investigation

According to a memorandum, the EU has agreed to stop its investigation into Chinese exports of 10 textile products to Europe, including cotton cloth, T-shirt, flax yarn, bed sheets, table-cloth and trousers, the statement said.

"During the negotiations, both sides recognize that the textile trade is an important component in the China-EU bilateral trade relations," it said. "On the basis of all-round China-EU strategic partnership and bilateral cooperation, we agreed to abide by the win-win principle and to actively promote the stable and healthy development of the textile trade."

Textilindustrie in China

A customer browses as a sales clerk tries to find fabric to suit her needs at a textile shop in Beijing

China's textile exports to EU were worth $10.79 billion (8.9 billion euros) in 2004, 6 percent of the total China-EU bilateral trade, which totaled $177.3 billion, state news agency Xinhua said.

Better than US approach

China's official media Saturday hailed the agreement, saying the 25-nation bloc's positive approach contrasted sharply with that of the United States.

Xinhua published a lengthy commentary praising the EU for upholding "the principles of free trade" and criticizing the United States' "protectionist" stance.

"EU's move is in sharp contrast with the US slapping of import limits, an approach that is widely criticized by the international community as discriminatory and protectionist, undercutting the very principles it is promoting," it said.

China: Textilarbeiterin

Chinese worker adjusts threads in a weaving workshop at a Chinese private company in Shaoxing, Zhejiang province

The EU and the United States have both expressed concern over a huge jump in Chinese T-shirt and flax yarn exports following the end of the global textile quota system on Jan. 1.

Saving jobs

Washington has since slapped import quotas on seven categories of Chinese textile goods.

But Chinese official statistics showed clothing and apparel exports between January and April this year were only up 15.16 percent over the same period of last year.

Textilindustrie in China

Their jobs are at stake

Xinhua said the United States' restrictive measures will likely cause $2 billion in losses to the Chinese textile industry and will also cost some 400,000 workers their jobs.

State media said the agreement with the EU will safeguard the interest of the Chinese textile industry and provide a stable trading environment for Chinese companies.

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