Doubts Remain as EU Claims Textile Success

European Union delegates left China Monday after lengthy textile negotiations, as a spokesman insisted talks were continuing on what to do about above-quota Chinese garments piling up in European ports.

"What's happened now is the team from Brussels is returning to Brussels to report back," said Michael Jennings, an EU spokesman in Beijing, adding that they had departed. "The talks are still ongoing in Beijing, the contact is still ongoing, the discussion is still ongoing," he said.

He said that while the entire delegation, headed by Trade Director Fritz-Harald Wenig, was going back to Europe, the dialogue was being carried on by the resident EU mission in Beijing.

"Our delegation, the delegation of the European Commission, is continuing the talks," he said.

Jennings said he had no details on the results of the four-day negotiations but described them as "constructive."

Mandelson claims imports could resume next month

EU Trade Commissioner Peter Mandelson on Sunday outlined a possible make-shift deal, saying that the EU could resume imports of textiles from China next month, allowing blocked shipments into the 25 member states.

"I shall make proposals tomorrow (Monday) morning to begin proceedings to unblock all the goods that are currently held at customs," Mandelson said in a British television broadcast.

Some 75 million garments, including sweaters, trousers, blouses, T-shirts, bras and tons of flax yarn, are being blocked at customs in European ports. They are barred from entering into the continent because they exceed an EU quota imposed in June to protect European manufacturers.

Chinese observers said they were optimistic since they were not facing a monolithic European bloc.

"The two sides will probably reach a compromise," said Liu Li, vice director of the China WTO Research Institute, a think tank attached to the commerce ministry. "Currently, there are different voices among the EU countries, so the situation is good for China."

Two solutions but many stumbling blocks

Two main solutions appear to be on the table. The first, favored by Germany, the Netherlands and the Scandinavian countries, all traditionally free-traders, would consist of raising the permitted level of Chinese textile imports.

The second, more attractive to France, Italy, Poland and Spain, would allow China to use some of its 2006 quota to export blocked garments into the EU this year.

"Personally, I think the two sides will reach a compromise which will allow China to use some of next year's quota, and then come next year, the EU will give China extra quotas," Li said. "Both sides have a strong wish to reach a consensus."

China and US preparing for talks

One reason why China may be eager to wrap up the talks now is that it is getting ready to host yet another negotiating team, this time from the United States.

Chinese and American delegates will begin a fourth round of textile talks Tuesday, with the US pushing to limit Chinese imports to protect its own industry.

The talks, scheduled to last just two days, follow a meeting in San Francisco this month at which negotiators failed to overcome "fundamental differences" on how to cap the exports.

Observers say Europe and China are also eager to make the embarrassing textile dispute go away as soon as possible since Beijing will host an EU-China Summit attended by British Prime Minister Tony Blair next week.