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U.S.-China closer to textile agreement?

U.S.-China closer to textile agreement?
By Donna Borak
UPI Business Correspondent
Published August 30, 2005

WASHINGTON -- European Trade Commissioner Peter Mandelson has spent the last several weeks calming retailers' fears and rebutting criticism from the United Kingdom's government due to the millions of sweaters, trousers and other textile goods locked up in warehouses at the European border.

With mounting concern among individual member states like Germany, Denmark and Sweden to unblock millions of Chinese garments piled at European ports, Mandelson has had to dance a fine line between appeasing EU concerns and ensuring that any action taken by the European Union to release clothing products will not provoke an on-going trade battle between the two regions.

The EU took action earlier this year to impose quotas on 10 categories of Chinese textiles after European textile producers argued that surging Chinese textile exports were causing severe market disruption.

The pressure on Mandelson to resolve the issue has become paramount to both trade and political relations with Beijing with the upcoming EU-China summit.

However little progress was made between the two trading partners. After four days of talks, Mandelson left Beijing Monday defeated after talks resulted in stalemate, with both parties unable to achieve a conclusive agreement on blocked imports.

The trade commissioner attempted to avert blame Monday calling on EU member states, the European Commission and China to accept responsibility for the flaws in the June 10 textile agreement, which restricted exports on 10 categories of Chinese clothing products. Already six categories of clothing have already reached the set limit.

Mandelson has vowed to find a solution with Chinese counterparts this week and has signaled that a move has already begun to unblock millions of exports stranded. The trade commissioner's proposal to have released goods be transferred to next year's quota has been rejected by Beijing due to fears that it would cause a negative impact on manufacturing in 2006.

"The commission had no alternative than to let the textiles through the ports," said Glyn Ford, member of the International Trade Committee. "As the commissioner said - who would pay for the mountains of trousers and pullovers if we sent them back to China? But this situation should have been anticipated and avoided."

But as the European Union seeks to find an agreement by the end of this week with its Chinese counterparts, the United States appears set to gain their own victory this week with a comprehensive textile agreement.

With only hours between the EU delegation's departure to Brussels, the U.S. delegation headed by David Spooner, chief textile negotiator for the U.S. Trade Representative office arrived in Beijing for a fourth round of talks on devising a comprehensive textile agreement.

Talks between the two trading partners are scheduled to last two days building on progress made earlier this month in San Francisco. The close gap between the two rounds of talks and the upcoming visit by Chinese President Hu Jintao to Washington suggests that substantial progress has been made to secure a deal before Hu arrives in Washington to meet President George W. Bush next week.

However, the U.S. Trade Representative office refuted claims that textile negotiations with the Chinese were tied to the upcoming presidential visit by Hu.

"While it is convenient to speculate whether or not the talks this week are driven by the visit is not the case at all," said John Stubbs, spokesman for the U.S. Trade Representative office.

According to Stubbs, the U.S. delegation in Beijing left talks Tuesday unclear with how things would proceed on Wednesday.

"There are a number of issues that we are at odds that we are trying to work through. We're not going to sign a bad deal just to sign a deal. We have the safeguard process and other mechanisms available to us," said Stubbs.

Both China and the United States have been quick to side with optimism and its willingness to secure a comprehensive deal that would create market certainty through 2008.

Prior to talks, the Chinese government sent a positive signal that talks with the United States would be successful, saying it would "adopt an active attitude to find a solution and create a stable environment for China-U.S. textile trade."

Last week industry executive, Li Lingmin, vice-president of the China National Textiles Import and Export Corp., suggested that a deal would likely be resolved in time for the Chinese president's visit.

"Barring the unexpected, a final agreement is very likely to be signed in September during the meeting of the two leaders," said Li.

The United States imposed curbs on several categories of Chinese clothing after exports soared following the expiration of the 30-year old quota system. It has already placed several safeguard measures on Chinese textile products.

The United States is able to impose sanctions on China until 2008 under the terms of China's accession to the World Trade Organization.


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