The Hindu : Business : EU call for `textile quota truce'

Online edition of India's National Newspaper
Tuesday, Aug 30, 2005

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EU call for `textile quota truce'

Batuk Gathani

Chinese insist that the existing and future quota system should not be disturbed

LONDON: European Union Trade Commissioner (Minister) Peter Mandelson on Sunday called for a `textile quota truce' with China to resolve the problem of some 75 million garments lying in customs warehouses in Northern Europe. He sought to force a resolution for this acrimonious trade dispute with China. Chinese and EU officials began sixth day of talks on Monday in China. According to observers, the signs are that China is driving a "hard bargain.''

European officials are trying to convince their Chinese counterparts that a "portion of the consignment'' should be released in the market on the basis of either previous quota or future quota allocations. The Chinese negotiators are opposing this option on the premise that the existing and future quota system should not be disturbed.

Mr. Mandelson has been severely criticised in the media for not being vigilant enough and taking a personal holiday at a luxury resort at this crucial time.

Despite much rhetoric about "consensus'' the EU and Chinese officials are grid locked on the issue of textile imports and according to an EU official "the politics of this issue are as intense now as they were in June'' — when the European Union governments imposed a "fresh'' quota system on Chinese textile imports fearing a "massive influx'' as the quota system was abandoned on January 1.

The European textile lobby is wary about the current setback, which they attribute to Chinese "hard stance bargaining position.''

The U.S. officials are also holding talks in China this week to create a comprehensive agreement limiting Chinese clothing shipments in the U.S. The Europeans are obviously in a deep quandary and the importers and retailers of Chinese textile are oppressive about trading losses if an immediate solution is not found in the near future.

How will the Chinese respond to the current European crises remains to be seen as the European officials are pleading for "more flexibility" on the part of the Chinese.

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