EU in textile surveillance deal with China; seeks talks on yuan

EU in textile surveillance deal with China; seeks talks on yuan

	Published : Wed, 17 Oct 2007 07:08 By : Agencies Print this Story

BEIJING (XFN-ASIA) - The European Union and China's Ministry of Foreign Trade have agreed on a joint system of textile import surveillance in a bid to better protect European textile producers and ensure a 'predictable' trade, EU Ambassador Serge Abou, told reporters.

The EU also urged China to correct its mounting trade surplus and open discussions on the value of the yuan as European producers, including textile producers, continue to feel the pinch of China's growing exports, Abou said.

'From January 1, 2008, we will move from the current quantitative surveillance system to the issuing of trade licenses,' Abou said. 'The 'double checking system' will track the issuing of licenses for export in China and the importation of goods into the EU.'

'We have taken the best possible decision,' he said.

The agreement will cover the eight most sensitive textile and clothing categories of the 10 product categories included in the previous 2005 agreed quotas - T-shirts, pullovers, men's trousers, blouses, dresses, bras, bed linen and flax yarn - and the system will be in place for one year.

The European Trade Commissioner, Peter Mandelson, said he welcomes this strengthened cooperation between the EU and China in ensuring a smooth transition to free trade in textiles.

'A system of joint monitoring means predictability for EU producers and traders as well as a clear picture of future developments as we make the final step to free global trade in textiles and clothing,' he said.

However, according to the EU ambassador, Mandelson is less than impressed with China's latest global trade surplus figures, which for the nine months to September stood at 185.65 bln usd.

'Mandelson is very disappointed, strongly disappointed with China's growing trade surplus,' Abou said.

'It is politically significant because Mandelson is China's best friend in the European Union,' he said.

Abou noted that the EU-China trade deficit continues to grow at 20 pct per annum, hitting 130 bln eur in 2006, but China has done little to slow this trade imbalance.

'We asked for some correction, for some policy change, but we still have not received an answer,' he said.

'We have always said part of the deficit in understandable and acceptable, but there are parts which are due to unfair policies, either in exports or imports.'

Abou pointed to state intervention in China's export trade in the guise of heavy subsidies and tax rebates, while many obstacles continue to be reported by EU companies trying to gain market access, to the cost of 20 bln eur per annum of blocked trade.

Further to trade restrictions, the EU is also feeling pressure from the yuan's valuation.

Abou highlighted recent progress of the yuan's valuation to the dollar, but not against the euro.

'China has not made any effort with the euro,' Abou said. 'We are their first trade partner; there is something wrong here.'

'We all realize that one solution is to generate an increase in domestic demand, and imports, but we do not see a lot of results from this.' he said.

Such issues are raising a lot of concern in Brussels.

'These facts are considered with some bitterness by our leaders,' Abou said. 'We would like a real debate on this currency issue.'

'We would like to make a gentle observation that we are China's first trading partner, but this is not reflected by the yuan's appreciation versus the euro,' he said, adding that talks could be scheduled after the current sitting of China's 17th Party Congress.

An EU-China Business Summit will be held in the Great Hall of the People next month, where several issues, including trade policy and monetary policy, will be discussed between senior European and Chinese officials.

(1 usd = 7.51 yuan)

fergus.naughton@xinhuafinance.com

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