The European Union and China agreed today to curb a surge in imports of Chinese textiles into Europe until the end of 2008 in a bid to defuse an escalating row straining ties between the EU and Beijing.
EU Trade Commissioner Peter Mandelson welcomed the accord, struck during late night talks with Chinese Commerce Minister Bo Xilai in Shanghai. 'It's an agreement therefore that helps everyone's interests,' he said. 'It's a win-win-win agreement'.
The European Commission, the EU's executive arm, added in a statement: 'The EU and China have agreed a deal that will manage the growth of Chinese textile imports to the EU until the end of 2008.'
The accord aims to defuse a growing trade dispute triggered by the end of global textile quotas on January 1 which opened the floodgates to a surge of cheap Chinese goods into Europe.
China had until the end of today to agree to curb growth in exports to the European Union of T-shirts and flax yarn to 7.5% a year or face temporary caps on the products.
'The overall settlement represents a fair deal for China while giving respite and a much-needed breathing space for European industry,' Mandelson said. He declined to reveal the specific details of the agreement.
Bo said the agreement 'shows China is a responsible and co-operative trade partner'. 'In the past ten years, not only have China and EU economic and trade relations taken a big leap and the EU has become the largest economic partner of China, but we have learned to find ways to solve our differences,' he said.
His comments were echoed by Mandelson. 'Its a significant step forward. Europe and China are able to solve their disputes and these very difficult issues are tackled in a mature way', he said.
The EU had requested formal talks at the World Trade Organisation with China on the issue, citing a huge jump in exports of Chinese T-shirts and flax yarn following the end of the textile quota system.
Under the rules on China's WTO accession in 2001, a request for talks enables Beijing's trading partners to place a temporary cap on textile imports if China does not first take its own voluntary measures within 15 days.
Washington has already set limits on seven types of Chinese textile shipments. That dispute has also been fueled by concerns in the US that China's currency is undervalued, giving it an unfair advantage on the global market.
China has argued that attempts by developed countries to impose limits on textiles are discriminatory and protectionist, undercutting the very principles they are promoting.
Although the European Commission had taken action only against T-shirts and flax yarn, it was seeking a blanket agreement covering other categories of textiles still being investigated.
Prior to the agreement, the textile row had risked escalating after the EU Commission said earlier this week that it had found evidence of a 700% jump in imports of six types of Chinese-made shoes in the first four months of the year compared to the same time last year.
