EU Panics as Chinese Imports Hit Quota

Clothing retailers in the European Union face a worrying time after imports of Chinese-made blouses into the EU reached their agreed quota for this year with other categories of textiles likely to meet their limits soon too, according to a spokesperson for the EU's executive commission on Friday.

"This morning the quota for category seven, blouses, was filled. Member states custom authorities will no longer issue import licenses for this product," spokesman Rupert Krietemeyer told AFP, reading a statement. According to the EU imports database, data shows that 100 percent of a 2005 quota of nearly 24.8 million Chinese blouses had been cleared for entry into the EU as of Thursday evening.

The Commission spokesperson had further bad news for retailers: "It is likely that a number of other quotas will also be filled in the very near future," he added. Specifically, quotas for bras, T-shirts and flax yarn were close to being met.

The quotas for men's trousers and pullovers were also already reached earlier this month, leaving millions of garments stranded at EU customs and outraging some big EU retailers awaiting deliveries.

EU, China still locked in quota talks

EU and Chinese officials have been holding talks on the quotas and Brussels has said it is willing to be flexible. EU Trade Commissioner Peter Mandelson (photo) has made it clear that he wants to negotiate with China to allow more clothing imports into the bloc, possibly by using some of 2006 quotas in 2005.

After EU textile producers urged that the quotas be implemented, EU officials are coming under fierce pressure from retailers who warn that store shelves could be bare during the key back-to-school period because they have not received some shipments.

On Thursday, government ministers from the Netherlands, Denmark, Sweden and Finland wrote an article in the Financial Times saying there was a risk of job losses and bankruptcies unless the EU eases the curbs on the imports. This followed a letter sent to Mandelson by Germany's Economy Minister Wolfgang Clement which called for a relaxation of the import restrictions.

Textile producers fear massive influx from China

Not all EU countries want the import restrictions to be relaxed. Countries with big textile industries of their own, like France, Italy and Spain, are worried they will suffer if Chinese clothing enters the EU on a massive scale.

The EU and China agreed to a broad textile trade agreement in June setting annual restrictions on 10 categories of Chinese imports, which had been surging since the beginning of the year following the end of an international quota system.

After protracted negotiations between Chinese Commerce Minister Bo Xilai and Mandelson in Shanghai in June, China said that it would limit growth in exports of 10 textile and clothing products to the EU from between 8 to 12.5 percent a year in a bid to defuse the trade row.

Agreement in June rubber-stamped growth rate

"China and the European Union have agreed that, in the period from June 11, 2005 to the end of 2007, with an agreed base quantity, we will determine China's amount of exports to Europe by a growth rate of between 8 to 12.5 percent per year," the ministry of commerce said in a statement on its Web site after the end of negotiations.

The EU response was to issue a statement that said that in 2008, the EU will only apply "with restraint" paragraph 242 of China's World Trade Organization accession protocol on textiles, which requires China to limit exports of textile products. There was no further explanation.