EU and China Resolve Textile Dispute

European Commission President Jose Manuel Barroso confirmed Monday that a deal had been reached to settle a bilateral textile row with China that has left millions of Chinese-made textiles blocked at European ports.

"Today, our Trade Commissioner (Peter) Mandelson and (Chinese Commerce) Minister Bo Xilai ... made it possible to have an agreement for an equitable way to share the burden of unlicensed goods blocked in our ports," he told a press conference.

"Once again, we have shown ... that it is possible when there is real good will to achieve the objectives and priorities to solve all issues between China and the European Union," Barroso said.

Any deal between the EU and China must be accepted by all 25 EU member states.

Grueling talks

Negotiations between Mandelson and Bo started in Beijing on Sunday, a day ahead of the EU-China summit, and continued through the night into Monday. At one point during the talks, Bo stormed out of the meeting late Sunday, but discussions apparently continued as lower-level officials shuffled messages back and forth.

Millions of Chinese textile items including sweaters, pants, blouses, T-shirts, bras, and tons of flax yarn were impounded in European ports because they exceeded import quotas agreed to by both sides in June.

The backlog stems from goods that were already in transit when the two sides reached an accord in June to limit imports of Chinese textiles. There was also a surge in orders immediately after that deal was announced.

A logistical nightmare

Calling the June agreement "robust," Barroso said that a sudden surge in orders and shipments had "frankly overwhelmed administrative arrangements."

Releasing the blocked products should save European importers hundreds of millions of dollars in orders and other costly shipping and storage fees.

China shipped more than 300 million sweaters to Europe so far this year, compared to about 40 million last year.

The surge in textiles started after a global multi-fiber textile quota system was abolished in line with World Trade Organization guidelines to liberalize the garment trade on Jan. 1.

China has opposed efforts from the EU and the United States to block the surge of textiles as moves against free trade but WTO guidelines allow for re-implementation of quotas on a limited basis if such sharp increases are deemed "destabilizing" to importing countries.

Bolstering EU-Chinese relations

British Prime Minister Tony Blair, who is attending the EU-China summit as head of the rotating EU presidency, said Monday that strong relations between the EU and China were "immensely important."

"The strategic partnership between China and the European Union is of immense importance, not just in terms of trade and the economy, but also in terms of our cooperation in all the major political issues the world faces," he said in a meeting with Chinese President Hu Jintao.

Blair's spokesman said that on top of the usual trade-focused agenda, global political and security issues had been added in the wake of the terrorist bombings in London which left 56 people dead in July. Human rights issues would also be discussed.

Despite disagreements on issues including Europe's embargo on arms sales to China and its refusal to grant Beijing market economy status, Hu agreed that building understanding was crucial.

"Regular meetings between China and the European Union are good for enhancing our mutual understanding and are also good for mutual beneficial cooperation and moving forward our comprehensive strategic partnership," he told Blair.