China and the European Commission yesterday struck an eleventh-hour agreement to end their dispute about imports of cheap Chinese textiles, but EU member-states have yet to approve it.
After marathon talks in Beijing stretching into the early hours of Monday morning, Peter Mandelson, EU trade commissioner, and Bo Xilai, his Chinese counterpart, agreed to release Chinese garments impounded at Europe's ports "as soon as possible".
Mr Mandelson said the two sides had agreed to "sensible, reasonable, burden-sharing" regarding the fate of 77 million Chinese sweaters, trousers and bras impounded at EU borders.
The commission proposes to wave through half of the impounded garments. China accepted that the rest would be deducted either from its 2006 textile quota, or switched to other unfilled-quota categories. The decision marked a softening of China's stance.
Trade officials from the EU's 25 member-states will today consider whether it goes far enough.
Irish clothing firms and retailers criticised elements of the deal yesterday and warned that the compromise may not please either EU-based manufacturers or European retailers.
Mr Eddie Shanahan, marketing manager of Arnotts, said consumers would still suffer in their pockets due to the quota regime.
"I think the deal was negotiated without a clear understanding of the fashion cycle," he said. "We really need to take stock of the whole competitiveness issue in Europe. It is a good place to design clothes but too expensive for manufacturing."
The Irish Clothing and Textile Alliance (ICTA), which represents clothing firms employing about 5,000 Irish people, welcomed the move to unblock the textile goods held up in ports.
But Mr Michael Hannon, director of ICTA said the deal didn't go far enough as it wouldn't allow some clothing and textiles already ordered by Irish firms from China to be brought into the EU this year.
"There is little reassurance for smaller clothing companies that had signed up suppliers from China and now will have to look elsewhere," he said. "The quota regime may also favour larger firms if licences are given out on a first-come-first-serve basis."
The Irish clothing industry undertakes very little manufacturing at home, but instead designs garments in the Republic and has them made in low-cost countries such as China or India.
However, countries such as France, Spain and Italy continue to have large textile manufacturing industries and favour the maintenance of import quotas.
Mr Mandelson hopes the agreement will be approved by the EU textile producing countries, even though it means allowing into the shops 38 million unlicensed Chinese garments, ordered by retailers "in good faith" but which fell foul of a new quota regime agreed on June 10th.
The EU has already allowed in 135 million Chinese pullovers given import licences in a frenetic period between June 10th and July 12th. The agreed pullover quota for 2005 was 69 million. - (Additional reporting by Financial Times Service)
