EU-China Trade Deal Falters as Retailers Unprepared for Quotas
8-24: In June, the European Union and China settled on a deal for quotas on ten categories of textile goods, limiting growth between 8% and 12.5% per year. The agreement aimed to provide textile manufacturers with the opportunity to adjust to market changes until 2007.
In spite of the agreement, European retailers had already placed their fall orders for Chinese textile products. As a result, China has already exceeded its quotas for five categories of quotas. Warehouses and customs checkpoints are brimming with the surplus of Chinese goods.
Northern countries such as the Netherlands, Denmark, Sweden and Finland have argued to release the quotas given the looming threat of job losses and bankruptcies among retailers, which could result unless the EU eases the quotas. Some German retailers have suggested that they may take legal action on the matter, but countries with big national textile industries, such as France, Italy and Spain, are pushing back with equal force, demanding that the quotas be held in place.
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