By  on May 26, 2005

GENEVA — The European Union is set to request formal consultations with China by the end of the week on two textiles and apparel categories — flax yarn and T-shirts — triggering safeguard quotas after two days of talks in Brussels failed to resolve differences, senior EU diplomatic sources said Wednesday.

A spokeswoman for EU Trade Commissioner Peter Mandelson confirmed, "In the next few days, and certainly before May 31, the Chinese side understands that we will request formal consultations." But the spokeswoman said talks will continue and that the goal of Brussels remains "to reach a negotiated settlement."

The EU has been under pressure from French President Jacques Chirac and other political leaders from textiles and apparel-producing countries to act to stem the surge in imports from China that has resulted from the end of the global quota regime on Jan. 1.

A senior EU official familiar with the talks between Mandelson and China's Vice Minister of Commerce, Gao Hucheng, said, "The Chinese did not offer anything, they were noncommitted. They are deliberately playing for time. They did not even come forward with figures."

China considers the safeguard moves by the EU and the U.S. as protectionist and a deviation from the spirit of the market-opening package deal it brokered when it joined the WTO. According to Chinese media reports, Beijing also has threatened to scrap the recent decision to hike export taxes on 74 textiles and apparel categories by as much as 400 percent if Brussels and Washington put into action the special safeguards.

Under the terms brokered when China joined the World Trade Organization in 2001, after a safeguard is imposed, China must limit the growth levels in the categories in question to 7.5 percent above the amount entered during the previous 12 months.

On May 15, the EU reported that, in the first quarter, imports of Chinese T-shirts increased 187 percent and flax yarn gained 56 percent.

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