Date:07/09/2005 URL: http://www.thehindu.com/2005/09/07/stories/2005090700851700.htm

Business

Mixed reaction to China, EU textile accord

Batuk Gathani

The deal will benefit consumers and businesses, remarks Tony Blair

LONDON: The textile quota deal negotiated with China, has been greeted with mixed feelings on both sides of the China and European Union. The deal has been negotiated and finalised by Peter Mandelson, European Union's Trade Commissioner (Minister), but the 25 member states of the EU have yet to give their formal approval. After a series of negotiations the EU authorities have formally agreed to release as soon as possible some 75 to 80 million pieces of garments, languishing in the European warehouses.

The merchandise will be released under "both current and future'' quota allocations, according to European officials.

The 25 EU trade officials will consider on Tuesday if the deal goes far enough. Some south European governments, led by Italy have consistently resisted the so-called "current European quota strategy'' on the premise that free access to Chinese merchandise may cripple the European textile industry and flood the textile garment market. They have now reluctantly agreed to support Mr. Mendelssohn's quota strategy. China has emerged as the European Union's second largest two-way trading partner after the U.S. And hence the Europeans are seen adopting a soft and pragmatic approach to the Chinese imports.

The European Commission will allow Chinese garments into European Union on basis of identifying such imports with the Chinese import quota in 2006. The bottom line is that after much acrimony a "ceasefire" has been negotiated by China and the European Union. Jose Manual Barroso, current President of the EU, and Tony Blair, Prime Minister of U.K., have called the agreement fair and acceptable to both sides and added it would benefit both consumers and businesses. Observers point out that the current EU/China textile quota setbacks may even point to streamlining of Chinese textile industry as Chinese manufacturers consolidate and modernise their production base.

The Chinese garment and textile industry is already rated as the largest in Asia and according to some analysts may soon emerge as the largest in the world. China's current exports to the European Union are six times bigger than Indian exports.