China, EU agree to end textile row

BEIJING—A deal was struck Monday to end an impasse that has left millions of Chinese-made textiles blocked at European ports and strained relations between the two sides, a source close to the talks said.
“A deal has been reached today after long negotiations that lasted into the night and this morning,” a European official who attended the talks told newsmen.
“It needs to be approved by EU member states so we are not in a position to give immediate details but it is a good balanced deal, a compromise both sides are happy with”.
The European official, who asked not to be named, said an official announcement by EU Trade Commissioner Peter Mandelson and Chinese Trade Minister Bo Xilai is expected to be made later Monday. Any deal between the EU and China must be acceptable to all 25 EU member states. There was no immediate comment from the Chinese commerce ministry, which said any information would be released via its website.
Negotiations between Mandelson and Bo started in Beijing on Sunday, a day ahead of the EU-China summit here, and continued through the night into Monday. The source attributed the reaching of a compromise to “the good relations between Bo Xilai and Peter Mandelson and the conducive atmosphere on both sides”. British Prime Minister Tony Blair, at the EU-China summit as head of the rotating EU presidency, had earlier expressed optimism that a solution would be found.
Millions of Chinese textile items including sweaters (pullovers), trousers, blouses, T-shirts, bras, and tonnes of flax yarn are impounded in European ports because they exceed import quotas agreed to by both sides in June. That deal, in which the two sides agreed to curb growth of imports of 10 Chinese textiles and clothing products to between eight and 12.5 percent per year until the end of 2008, narrowly avoided a trade war.
The backlog now stems from goods that were already in transit when the accord was struck and also from a surge in orders immediately after the deal was announced. The agreement on the 10 categories came into effect on July 12.
Italy, Spain, France, Greece and Portugal were earlier reportedly opposing a proposal by Mandelson to let products ordered before July 12 enter the EU. The standoff has left shops in the EU short of seasonal clothes to sell and European Commission President Jose Manuel Barroso, in Beijing for the summit, made clear on Sunday the row must be resolved.
“It is important for the world to understand that the European Union and China are able to solve the problem in a constructive and positive way,” he said. Releasing the blocked products could save European importers hundreds of millions of dollars in orders and other costly shipping and storage fees.
China shipped more than 300 million pullovers to Europe so far this year, compared to about 40 million last year. Much of the surge of textiles came after a global multi-fiber textile quota system was abolished in line with World Trade Organization guidelines to liberalize the garment trade on January 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. While a resolution has been reached with Europe, China remains locked in dispute with the US. A fourth round of talks between them broke up last week without a comprehensive agreement.—Agencies