Related Event: Textile Quota Elimination

The Ministry of Commerce said in a statement that China has agreed to limit textiles exports on 10 items including T-shirts, flax-yarn and bras, to the 25-nation bloc from June 11 to the end of 2007.

This is according to a memorandum of understanding signed shortly after midnight in Shanghai.

China and the European Union reached an accord after more than 10 hours of talks in Shanghai Friday between EU Trade Commissioner Peter Mandelson and China Commerce Minister Bo Xilai. The agreement will help China avert the imposition of quotas by the EU which would hurt relations.

China's trading partners can limit growth in their imports of Chinese textiles to 7.5 percent to prevent disruption to their markets after global quotas ended on Jan. 1. China, the EU's second-largest trading partner after the U.S., agreed to the restrictions in 2001 as part of its World Trade Organization accession accord.

Last month, Mandelson gave China until June 11 to slow exports of T-shirts and flax yarn on its own or face possible EU restrictions.

In a similar ongoing dispute, the U.S., facing a record trade deficit, has already imposed quotas on more than $2 billion of Chinese clothing exports as it presses China to change the yuan's peg to the dollar.

(Source: Bloomberg)