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Washington Outlook Archive

European Union And China Agree To Limit Textile Imports

James A. Morrissey, Washington Correspondent

In order to short circuit what could have been a contentious, ongoing controversy over textile and apparel imports, the European Union (EU) and China have reached an agreement that will limit imports through 2008. The action came after the EU was threatening to follow the US governments actions and impose unilateral quotas on textiles and apparel using the safeguard mechanism contained in China's World Trade Organization accession agreement. The new agreement covers 10 product categories and will limit annual growth to between 8 and 12.5 percent between now and the end of 2007. The final year will be subject to a somewhat vague phase-out plan. Products covered by the agreement are pullovers, mens trousers, blouses, T-shirts, dresses, brassieres, flax yarn, cotton fabrics, bed linen and table/kitchen linen.

In announcing the agreement, the EU Commission said the removal of textile quotas last January was an important prize for progressive trade liberalization, adding that free trade in textiles will provide global competitive disciplines that will improve productivity and lower consumer prices. It said the competitive prices are being driven by China, whose formidable production and export capacity will quickly reinforce its status as one of the worlds largest producers and exporters of textile and clothing products.

Managing this transition presents a challenge both for China and its trading partners, many of whom have textile industries of their own, the Commission reported. European textile producers face tough competition from China. European industry has a huge capacity for innovation and adjustment, but a sudden, steep and sustained surge in Chinese textile exports could be highly damaging.The Commission said the agreement allows importers and retailers to plan and purchase in China under conditions of maximum predictability and minimum market disruption, factors that appeal to US importers of textiles and clothing who have strongly opposed to this country's use of the safeguard mechanism to impose new quotas on Chinese imports. The commission also said the agreement provides a window for adaptation for producers in developing countries whose textile exports to the EU were being displaced by a surge in imports.

Shortly after the announcement was made, Chinese Vice-Premier Wu Ti praised the EU for reaching the agreement and criticized the US government for placing unilateral quotas on imports before a voluntary agreement could be reached.Cass Johnson, president of the National Council of Textile Organizations, said the EU-China agreement could pave the way for a comprehensive agreement with the US government along similar lines.

June 2005