The European Commission and China have agreed to scrap the current quota restrictions on Chinese textiles next year in favour of a monitoring system, the EU's executive arm said Tuesday.
News of the accord was announced as Beijing came under European pressure elsewhere to allow its currency to trade more freely on foreign exchange markets, amid growing concern that the Asian giant is destablising the global economy.
The textiles quota agreement with Beijing, which expires at the end of this year, was imposed on fears that Chinese imports were swamping the European market.
The quotas will be replaced by a textile import "double checking system" that will track both the issuing of export licences in China and the import of goods into the EU, the EU's executive arm said.
"I welcome this further step in the cooperation between the EU and China in ensuring a smooth transition to free trade in textiles," in 2009, EU Trade Commissioner Peter Mandelson said in a statement.
"A system of joint monitoring means predictability for EU producers and traders as well as a clear picture of future developments as we make the final step to free global trade in textiles and clothing," he added.
The arrangement covers eight sensitive product categories: T-shirts, pullovers, trousers, bras, blouses, dresses, bed linen and flax yarn.
The two other items covered by the existing quotas agreement -- cotton fabrics and table and kitchen linen -- were deemed not to require such a monitoring system as the export volumes are smaller.
The new system, agreed with the Chinese Ministry of Foreign Trade, will be formally adopted by the European Commission in the coming days, the Commission said, and administered by EU Member States.
Following the final stage of global liberalisation on January 1 2005, the amount of textile and clothing exports to Europe from China surged, while unit prices dropped.
The EU and China then negotiated a memorandum of understanding in June 2005 capping imports of the 10 key textile products from China at agreed levels until 2008.
France recently called for the quota system to be extended beyond next year. But the new agreement signals an end to China textile quotas.
Despite the disappearance of the quota system "there is still the possibility that somebody somewhere would ask for activation of safeguard measures," Mandelson spokesman Peter Power told reporters.
He added that without agreement from China, the biggest textiles exporter with 20 percent of the market, the quota system could not be renewed.
Total Chinese textile imports to the EU rose by 42 percent in volume in 2006 over 2004, with the figure much higher for products liberalised in 2005.
Europe's trade policy with China remains ambivalent, switching between firmness and conciliation, with differences of opinion among EU member states.
On the exchange rate, the 13 eurozone nations adopted a firm tone, following Washington in its crusade against the weak yuan.
Finance ministers from the 13 nations agreed during a meeting in Luxembourg late Monday to dispatch a delegation of powerbrokers to China to raise their concerns about exchange rates face-to-face with Chinese authorities.
ECB president Jean-Claude Trichet, EU Economic Affairs Commissioner Joaquin Almunia and chairman of the Eurogroup of finance ministers Jean-Claude Juncker would make the trip "by the end of this year," Juncker said.
"In emerging countries with large and growing current account surpluses, and this is the case with China, it is desirable that their effective exchange rates move so that necessary adjustments will occur," Trichet told European Parliamentarians in Brussels on Tuesday.
Beijing de-linked the yuan from the US dollar in 2005 and has since allowed it to gradually rise against the greenback, but at a pace many consider too slow.
China has rebuffed the European pressure to adjust the value of its currency, responding that it had already allowed the yuan to strengthen more than nine percent since 2005.
