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EU takes textiles dispute with China to WTO
(Reuters)
Updated: 2005-05-28 14:11

The European Union has taken its dispute with Chinese textile imports to the World Trade Organization, forcing Beijing to immediately curb shipments of two sensitive trade categories — T-shirts and flax yarn.

The EU said Friday it did not mean to preclude any negotiations outside the WTO framework if that could lead to a deal.

"The Chinese government perfectly understands this procedural step does not preclude or displace the intensive discussions between China and the EU," said EU spokeswoman Claude Veron-Reville.

By taking the dispute to the WTO, the EU gave China 15 days to react but said "a mutually satisfactory agreement" could be reached in negotiation during that period.

Chinese workers sew T-shirts in a garment factory at Dongguan in South China's Guangdong Province May 27, 2005. The European Union started a 15-day clock ticking on possible Chinese textile import curbs on Friday but held out hope for a "mutually satisfactory" agreement with Beijing despite advancing the May 31 deadline for action. The EU Executive Commission, in charge of trade policy in the 25-nation bloc, said intensive talks would take place starting on Monday at all levels with China over its surging textile exports. [Reuters]

The action meant China faces immediate restrictions on exports of flax yarn and T-shirts: Imports of these products can be "no greater than 7.5 percent above the amount that entered the EU market during the period from March 2004 to February 2005."

The EU said it put the issue before the WTO "after a thorough and fruitful telephone discussion" between EU Trade Commissioner Peter Mandelson and Chinese Trade Minister Bo Xilai.

"This will be followed by further contacts ... in the coming week, when discussions can be expected to intensify at technical and political levels," said Veron-Reville.

Under the terms of China's World Trade Organization membership, if another member state can establish that Chinese textiles are disrupting the market, it may request bilateral consultations at the WTO.

The EU action had been widely expected given European concern about fast-rising imports of Chinese textiles since they were freed from quotas on Jan. 1. The EU had set a June 1 deadline but acted five days earlier.

Last week, China announced new tariffs on its surging textile exports in a concession aimed at easing a clash with the United States and Europe over the textile trade. The United States already has imposed limits on Chinese exports.

Beijing criticized that action as unfair and said the United States and Europe were partly to blame for the surge because they failed to keep promises to open their markets earlier.

The United States imposed import quotas on Chinese-made cotton trousers, underwear, man-made fiber shirts and other goods to restrain their double-digit imports.

The EU claims its textile industry has been seriously hurt by the lifting of the quotas, losing production and employment.

Chinese imports of T-shirt in the first four months of 2005 rose by 187 percent over the first four months of 2004. Flax yarn imports rose by 56 percent during that period, according to EU figures.

The EU has said Chinese imports are not only hurting European producers but those in Africa as well.

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