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EU and the Chinese Textile Quotas


Code : ITF0023

Year :

Industry :Textails

Region : :Europe

Teaching Note:Not Available

Structured Assignment :Not Available

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EU-China Textile Trade In 2005, the trade problemswith respect to textiles and garments crept up between the EuropeanUnion andChina, due to the phasing out of the MultiFibre Agreement (MFA). Before the introduction of the MFA, the first ever global textile agreement, called the Short TermCotton TextileArrangement (STA) came into effect in the year 1961. InOctober 1962, the Long TermArrangement Regarding International Trade in Cotton Textiles (LTA) replaced the STA. For nearly a decade, LTAallowed the developed countries like the US and the EU to negotiate textile quotas with other developing countries...

Affects of Increasing Textile Imports TheChinese goods that exceeded the export limitswere prohibited fromentering the European boundaries. By the end of August 2005,more than 75million sweaters, trousers, T-shirts and other garments were stopped at the EU ports. Even after the quotaswere imposed,China continued to export its low-cost textiles to theEuropean countries, and soon it filled the quota levels. The European retailerswho had placed purchase orders and whose stocks now lay stuck at the ports started pressurizing the European trade authorities to make changes in the new agreement and allow the goods to enter the boundaries...

Negotiations Underway As the European textilemanufacturers and retailers have been in dispute over theChinese quotas, the Chinese textile industry groups requested the EU to ease the limits on their products. “The backlog shows the quotas are unrealistic and don’t reflect the fundamental demand forChinese garments. If the quotas can’t be fully lifted, the next best solution is to raise them”, said Sun Huaibin, a spokesman for the China National Textile andApparel Council...

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