China Wants EU to Increase Textile Quotas

Negotiators are scheduled to meet in Beijing on Thursday to work out a plan to alleviate millions of dollars of Chinese textiles that have surpassed import quotas negotiated in June and are now stranded in European ports, Chinese and EU officials said.

"Canceling the quotas is what we hope for most and is also the hope of England, Germany, Sweden, Denmark and Finland, but it will make other countries unhappy, so it's not a possible solution," Mei Xinyu, a leading analyst at the Ministry of Commerce told AFP.

One "measure is to use part of next year's quota this year, but it is not enough to solve the problem, so a much better idea is to lift the quota by a very large scale."

Some 48 million sweaters, 17 million pairs of trousers and nearly 500,000 blouses produced in China are currently blocked by authorities in European ports, according to the latest figures cited by the French trade ministry.

In addition to this, 1.6 million T-shirts, 3.4 million bras and 1,470 tons of flax yarn are also being kept back because they exceed the quotas.

Rush by EU retailers resulted in huge orders

Most of the products were ordered by European retailers in rush orders to beat the import restrictions and many contracts explicitly place the burden for losses due to the quotas on the importing side, the Beijing News said.

"Many companies were worried that they would not meet demand because of the EU quotas on Chinese textiles, so one by one they began to quicken the pace of their import orders," Shen Suqin, general manager of the Jiangsu Xiangsheng Textile Company, told the paper.

The daily said Chinese negotiators were expecting a victory in the talks and carried a cartoon with four half naked Europeans standing on a dock holding a welcome sign as a Chinese ship loaded with clothes is anchored off shore. "European apparel retailers are facing an embarrassing situation of having no goods because of the European Union quotas," the caption read.

Europe and US working to curb rampant imports

According to the Economic Daily, Chinese textile exports surpassed 50.2 billion euros ($61.5 billion) in the first seven months of the year, with textile export value exceeding 8.1 billion euros in each of June and July as the EU and the United States worked to curb the booming trade and protect local industries.

Chinese textile exports to Europe in June alone hit 1.7 billion euros, up 85 percent from the same month in 2004, coming just as the two sides were working out a deal to cap the surge, the paper said, citing customs statistics.

Chinese textiles have surged dramatically after a global textile quota system was abolished on Jan. 1 as part of World Trade Organization efforts to liberalize international trade.

The surge, however, prompted the EU and the United States to re-implement the quotas provisionally on Chinese textile exports in an effort to protect domestic manufacturers.

US, China also failing to find common ground

Similarly, Sino-US negotiators hope to hammer out an agreement on Chinese textile garments after talks last week in San Francisco failed to yield a deal to regulate rocketing volumes of textile shipments.

The US government says mainland textile imports have surged 54 percent since global quotas were scrapped on Jan. 1, smothering domestic producers in a blanket of cheap Chinese garments with which they cannot compete.

Both sides are hoping to hammer out a deal before a summit meeting between the US and Chinese presidents, George W. Bush and Hu Jintao, in Washington on Sept. 7.