EU set to agree deal to end 'bra wars'

EU government officials from all 25 member states met today to consider a deal with China to unblock some 77 million garments held up at European borders after Chinese textile imports broke through 2005 quota limits.

They will meet again tomorrow to approve the deal, but the final word to release the goods will not come until early next week.

EU Trade Commissioner Peter Mandelson and Chinese Commerce Minister Bo Xilai agreed on Monday to allow half of the excess garments into the market outside quota rules, and half to be counted against limits for this year and next year.

The EU’s 25 members need to back the deal before the clothing can go on sale in European stores.

“The first signals that we have received from member states appear to be positive,” said European Commission spokeswoman Pia Ahrenkilde Hansen.

The agreement effectively raises import limits for this year, amid growing concern that a flood of cheap Chinese goods undercuts European producers.

Earlier this year, major textile producers France, Spain and Italy pushed for restrictions to stem the rapid growth of Chinese trade. Initially, they were reluctant to bend the quota rules set in June.

However, European retailers have lobbied hard for the garments to be released, claiming stores would not be able to stock fall and winter clothing lines ordered from China.

The clothing row has forced Europe to look at issues surrounding free trade versus protectionism as the trade bloc sources more goods from rapidly developing economies such as China and India.

The EU’s trade chief told a Beijing audience today that feelings were running high in Europe about the impact of globalisation.

“Let’s use what happened this summer to have a much clearer, better informed debate about globalisation, the impact of China and India and how we should respond,” Mandelson said in a speech at the Central Party School of the ruling Communist Party.

“Europe should pursue a policy of openness to the world,” he said. “The truth is Europe can compete in the new world, but it involves a process of restructuring and adjustment in which there will inevitably be losers as well as winners within the EU itself.”

Chinese shipments of sweaters, trousers and other low-cost clothing soared after a worldwide quota system expired on January 1.

The EU negotiated new and higher limits with China in June, but the month-long delay before the restrictions came into effect meant many importers placed huge orders in an attempt to get quota-free goods into Europe before the deadline.

Imports of sweaters, men’s trousers, bras, blouses, T-shirts and linen cloth overshot the new limits barely weeks after the deal was signed.

China promised on Monday not to issue any more export licences for sweaters, trousers or bras this year, and has agreed to subtract 24 million sweaters, nine million trousers and six million bras from the 2006 quota. This will cut planned export growth from 10% to between 5 and 7.5%.

The European Commission has placed 10 categories of Chinese textile products, including T-shirts, sweaters and bed linen, on a watchlist and recently opened an investigation into claims that Chinese imports of CDs and DVDs were unfairly undercutting European producers.

It has also started an investigation into claims that Beijing and India are dumping shoes on European markets, and has threatened punitive customs duties on the imports to raise shoe prices.