Europe's top trade official is in China seeking a last-minute deal on a textile trade dispute that is threatening to expand into the shoe industry. Both sides say they hope to avoid having Brussels place temporary quotas on surging Chinese textile imports, but that they will do what is necessary to protect their manufacturers.
European Union Trade Commissioner Peter Mandelson arrived in Shanghai hours before the European Union is to decide whether to slap quotas on surging Chinese textile imports. The European Union has said it would decide by Saturday whether to join the United States in imposing temporary quotas that will limit the growth of certain textile imports from China to 7.5 percent a year.
A European Union official said late Friday that Mr. Mandelson's talks with Chinese officials would continue into the night.
Before he met with Chinese Commerce Minister Bo Xilai on Friday, Mr. Mandelson repeated the European Union's threat to impose quotas if China does not voluntarily reduce exports. "We have a negotiation and I hope for an agreement. But if we don't make an agreement, then we will have to take other measures," he said.
China's textile exports have risen sharply since the global quotas expired on January first. Last week, China eliminated export taxes on most textile goods after the United States imposed emergency quotas.
The dispute may spread into the shoe trade. The European Union announced on Wednesday that shoe imports from China also increased dramatically.
China agreed to allow restrictions on its exports, if they disrupted foreign markets, when it joined the World Trade Organization in 2001.
However, China says the European Union and the United States are not acting within the principles of fair trade and that restricting imports from China could affect the jobs of its 19 million textile workers.
Sherman Katz is an expert on international business at the Center for Strategic and International Studies in Washington. He said China knew what it was getting into when it agreed to allow the emergency quotas. "Clearly when China joined the WTO it was prepared to pay a very high price. And, this is part of the price it paid," he said.
China argues that textile companies in the United States and Europe had years to prepare for the rise in Chinese competition and the end of quotas. However, both the U.S. and EU governments say they want to give their textile industries more time to adjust.