Mandelson threatens 'other measures' over Chinese textiles

Europe’s trade chief arrived in China’s business capital of Shanghai today for make-or-break talks on settling a dispute over surging Chinese textile exports before the EU decides whether to resort to quotas.

Trade Commissioner Peter Mandelson was to meet with Chinese Commerce Minister Bo Xilai.

“We’ll have a negotiation and hopefully an agreement, but if we don’t make an agreement we will have to take other measures,” Mandelson said ahead of the meeting.

The EU is to decide by tomorrow whether to impose emergency quotas on imports of Chinese T-shirts and flax yarn if the talks make no progress.

Mandelson said he wanted a deal on “what we are going to do about the textiles explosion which is affecting Europe and so many developing countries”.

Europe’s textile industry says China’s cheap products are threatening some 2.5 million jobs. The EU has blamed China for a drop of up to 50% in Portugal’s production of T-shirts. Flax yarn imports from China have surged 56% in the first three months of this year compared to the same period in 2004.

The EU took the dispute to the World Trade Organisation two weeks ago. The move allows the EU to restrict imports of flax yarn and T-shirts to an annual rate of 7.5% if Chinese efforts to restrict shipments don’t satisfy EU members.

Chinese and EU experts have been in talks for weeks trying to resolve their trade standoff.

Beijing last week decided to scrap export tariffs on textile goods, escalating the dispute.

The dispute has threatened to spread to the shoe trade, after the EU released data Wednesday showing Chinese shoe imports had surged since the end of quotas at the start of the year.