China, EU in talks to resolve trade deadlock over quota |
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Thu, 25 Aug 2005 19:05
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BEIJING: Chinese and European Union officials are set to begin a round to talks to resolve a deadlock in the two-month-old trade pact, which resulted in EU customs officials blocking entry of China-made trousers, sweaters and other textile products.
The deal, concluded on 10 June, provided for a cap in the growth of 10 lines of Chinese textile exports at 8-12 per cent a year. This was touted as a solution to the low-cost clothes from China flooding the EU markets after the quota system ended on 1 January. The deadlock arises from a situation where the export ceilings set have already been reached, and vast quantities of garments are lying uncleared in EU ports and attached warehouses. Retailers, who have placed orders well enough in time to meet the festival demand, are not able to take delivery of the ordered items and they are a harried lot.
EU's trade commissioner Peter Mandelson admitted that there is a serious glitch in the agreement, which required rectification. He hoped the current talks will yield a pragmatic solution.
The technical negotiators from both the sides are scheduled to deliberate on issues such as transferring quotas that have not been filled, like from cotton fabrics to more popular lines, making use of next year's quotas and allowing importers to take delivery of goods ordered before the current agreement.
Analysts say Beijing agreed to the new deal as it felt the EU would have been able under world trade rules to cap its textile exports growth to 7.5 per cent a year until the end of 2008. However, the country has been able to demonstrate that its super cheap items are a boon to shoppers as indicated by the retailers resisting the EU textile producers, who want the cap to prevail.
Heads of trade bodies representing retailers said the quota system was mishandled from the start. The retailers also say the European Commission sided with manufacturers over merchants.
Mandelson has denied these charges saying the EU has given retailers ample warning that imports would be capped in the summer after European trade limits were breached in six textile categories.
An almost identical scenario exists in the U.S. which is also keen to have a negotiated settlement over the quotas the government had imposed to contain the increasing imports of textile items from China.
At the Beijing talks, the Chinese side is being led by Lu Jianhua, director of ministry of commerce's foreign trade administration department, while the European Commission team is led by Fritz-Harald Wenig, a trade director with the Commission.
The June agreement had fixed annual limits for 10 categories of Chinese exports of clothing to Europe from July this year until 2007. Seven of the categories have already been filled up for 2005 with over 70 million dresses, trousers, bras and jumpers lying in European ports.
Retailers fear the uncertainty could lead to job losses in China and also in Europe and price increases due to short supply.
A possible agreement in Beijing will have to be ratified by the 25 member-states of the EU. Italy, France, Spain and Portugal are siding their countries' manufacturers who are opposed to the Chinese goods flooding the market. Germany, the Netherlands, Denmark, Sweden and Finland support the retailers.
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