European Union (EU) and Chinese trade officials, hoping to avoid a repeat of the 2005 ”Bra Wars” row, have agreed on a new way to handle Chinese textile exports to the bloc when quotas expire on December 31, trade officials said. The officials said the plan might help improve cooperation between the EU and China over the Asian economic powerhouse’s snowballing trade surplus with the 27-nation bloc.
European trade commissioner Peter Mandelson, trying to fend off pressure for tougher action from leaders such as French President Nicolas Sarkozy, has urged Beijing to play its part in ensuring smoother trade flows in goods including textiles.
The EU’s retail industry was thrown into chaos in 2005 when a long-standing quota system for Chinese textile exports expired, triggering a flood of clothing items into the bloc that prompted the European Commission to ask China for new quotas.
Those limits quickly filled up while imports piled up in ports and Brussels, despite opposition from many EU governments which favour free trade, had to ask Beijing for fresh, higher quotas which are now due to expire on December 31.
Mandelson has resisted recent calls from France to seek yet another extension of the quotas.
Instead, he proposed this year that the Chinese authorities agree to a so-called double-licence monitoring system which would keep a close check on export licences issued in China and import licences issued in the EU.
China opposed the idea in talks in July but has since said it can accept the double-checking system for eight of the 10 categories of textiles still subject to the import quotas, trade officials said.
Best worst solution
The double-licence system would put the onus on China to keep exports under control and would stop shipments from unlicensed producers, EU diplomats have said.
Retailers who want freer access to Chinese suppliers say the system is cumbersome and bureaucratic but is preferable to an extension of the quotas.
”It’s the best worst solution but retailers are still frustrated because we have been promised free trade and Europe needs to adjust to that,” said Alisdair Gray, a director of the British Retail Consortium based in Brussels.
Two trade officials said the commission, which negotiates trade issues on behalf of the EU’s 27 member states, is due to put the proposal to national trade experts next week.
But a commission spokesperson was more cautious on the timing. ”We continue to work with the Chinese on a double-monitoring mechanism and we will propose it to member states when we are ready to put it to them. Nothing has been finalised,” Commission trade spokesperson Peter Power said.
An EU trade diplomat said the arrangement was a step forward in the way Brussels and Beijing deal with trade disputes.
As well as textiles, many EU countries are concerned about a sharp rise in Chinese steel exports, and European steel executives have said they are drawing up a formal request for the commission to launch an anti-dumping investigation.
The EU executive has said it may be unable to resist calls for action on Chinese steel if Beijing does not take measures of its own, such as taxing exports, to slow the surge. – Reuters