Beijing Agrees to Limit Exports of Textiles to European Union
Trade tensions between China and the European Union eased Friday as the two giants agreed to limit the Asian nation’s surging textile exports.
The accord, however, came amid new signs of growth in China’s booming export juggernaut, which has sparked protectionist sentiments in Washington. China’s trade surplus nearly doubled to $8.99 billion in May from $4.59 billion in April as exports outgrew imports, the Beijing government reported Friday.
Growing shipments of goods from China were cited as a factor in Friday’s Commerce Department report that the U.S. trade deficit widened to $57 billion in April from $53.6 billion in March.
The textile agreement, reached after negotiations in Shanghai, lets the EU and China avoid a potentially fractious confrontation before the World Trade Organization, where the EU took the dispute two weeks ago. Under the accord, Beijing will stagger increases in its textile exports to the EU over the next three years, with all limits abandoned in 2008.
Ten categories are covered, including T-shirts and flax yarn, with growth rates in exports of about 10% a year until 2008, the EU trade office said.
Gary Hufbauer, a trade expert with the Institute for International Economics in Washington, said the Europeans might be overplaying the textile deal, which was described as comprehensive but contained few specifics.
He said the agreement increased pressures on the Bush administration, and other governments, to follow suit. U.S. textile interests and the Commerce Department said Friday that they were reviewing the accord.
“If this turns out to be a good deal, there’s no doubt that we’ll be pushing the U.S. government to do the same thing,” Lloyd Wood, a spokesman for the American Manufacturing Trade Action Coalition in Washington, told Bloomberg News.
But further adoption of deals that restrain growth across a broad range of textile products would represent “very big backsliding” on global trade liberalization, Hufbauer said.
“That’s exactly what the U.S. apparel and textile producers want in this country,” he said. “They want something that would limit China to 2004 levels plus 10%.”
The pact avoids a “combustible situation in a number of our member states,” said EU Trade Commissioner Peter Mandelson, adding that it gave European producers breathing room to adjust. He said details would be published later.
China’s low-cost exports, which surged after the expiration of global textile quotas Jan. 1, are threatening some 2.5 million jobs in the EU, Europe’s textile industry has said.
Mandelson said the pact would allow the EU and China “to focus on trade relations in a more positive way.”
Chinese Commerce Minister Bo Xilai said the deal “creates a long-term and stable production environment for Chinese enterprises and a stable import environment for the EU countries’ enterprises.”
Bo added that the EU, “unlike some countries, did not take unilateral actions,” a possible reference to the United States, which recently imposed a 7.5% cap on growth of certain Chinese textile imports this year.
Reporting on China’s trade surplus, the Beijing-based customs bureau said exports increased 30% from a year earlier to $58.4 billion in May, while imports rose 15% to $49.4 billion.
*
Times staff writer Evelyn Iritani contributed to this report. Associated Press, Reuters and Bloomberg News were used in compiling it.
