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EU and China on transition to textiles free trade

(From EU website) Following from their 2005 Memorandum of Understanding on cooperation in managing the transition to free trade in textiles, the European Commission and the Chinese Ministry of Foreign Trade have decided on a system of joint import surveillance that will operate for one year in 2008 following the end of the import growth caps on ten categories of textiles and clothing from China. The 'double checking SYSTEM' will track the issuing of licences for export in China and the importation of goods into the EU. This monitoring system provides a clear picture of the likely development of trade patterns and ensures predictability for EU businesses. The arrangement covers the eight most sensitive of the ten product categories covered by the levels agreed in 2005 and that will expire at the end of the year. Although imports of these goods will be closely monitored their level of import will not be restricted by this arrangement.

EU Trade Commissioner Peter Mandelson said: "I welcome this further step in the cooperation between the EU and China in ensuring a smooth transition to free trade in textiles. A system of joint monitoring means predictability for EU producers and traders as well as a clear picture of future developments as we make the final step to free global trade in textiles and clothing".

The product categories subject to double-checking will be categories 4 (T-shirts), 5 (pullovers), 6 (trousers), 7 (blouses), 26 (dresses), 31 (bras), 20 (bed linen) and 115 (flax yarn). The system will be formally adopted by the European Commission in the days ahead. It will be administered by EU Member State licensing offices.


Following the final stage of global liberalisation on January 1 2005, textile and clothing exports to Europe from China experienced a very rapid surge accompanied by very rapid drops in unit prices. This surge caused serious damage to many EU producers and precluded any realistic possibility of EU producers adapting to new levels of competition. The EU and China negotiated a Memorandum of Understanding that would cap imports from China at agreed levels each year until 2008. The Memorandum also committed both sides to working for a smooth transition to free trade in textiles in 2008.

The 2005 agreement has allowed textile and clothing exports from China to continue to grow, but at a rate that has allowed EU producers to adjust to new levels of competition. This breathing space created with China in 2005 until the end of 2007 has provided a further opportunity for EU textile producers to adapt to new levels of competition, invest in technological change and innovation and focus on high value added products. Through its Global Europe strategy the European Commission has focused new efforts and new resources on opening new markets for EU textile exports and reducing the level of counterfeiting of European textile goods. Europe is the world's second largest exporter of textiles and clothing.