Capping off a series of talks that began in May over surging Chinese textile exports following the end of global quotas on Jan. 1, EU Trade Commissioner Peter Mandelson brokered the deal with Chinese Commerce Minister Bo Xilai on June 10. The allowed incremental growth for products including T-shirts, flax yarn, bed and kitchen linens and other textiles European markets exceeds the 7.5% annual cap that the EU can unilaterally impose under China's WTO agreement. After the EU requested formal talks with China on its surging textile exports in early June, it appeared close to imposing restrictions on certain categories of textile products.
Bo praised the EU for its "dialogue and consultation" approach in the dispute, which he compared to "certain countries' one-sided action," a thinly veiled reference to the US which earlier dispatched to China its top trade chief, Rob Portman, and US Commerce Secretary Carlos Gutierrez in his first trip to Beijing since taking office earlier this year. Their meetings with Vice-Premier Wu Yi and Bo, however, failed to yield any concessions. Gutierrez later said China does not have a "full appreciation" of the political pressure it faces back home, referring to a US Congress that is growing impatient with the rising US trade deficit with China. Some have blamed it on China's fixed currency peg that is said to give Chinese goods an unfair advantage in global markets.
As it stands, China ended export tariffs on 81 categories of garments and textiles after the US imposed quotas on Chinese-made trousers, underwear, shirts and other textile products.
Chinese textile makers, who last year reportedly spent US$14.3bn to build more factories, put on a brave face, saying that local demand would offset any decline in overseas orders, while the China Textile Industry Council called on producers to "make sacrifices" for a "new world textile trade order."