China, EU clinch deal to avert textile showdown

The agreement, thrashed out in Shanghai by Mandelson and Chinese Commerce Minister Bo Xilai, came after months of tension over an explosive rise in shipments of cheap exports from China.

Resorting to terms agreed when China joined WTO in 2001, the US has already slapped temporary restrictions on seven garment and textile products, provoking an angry reaction from Beijing.

The EU had been due to follow suit by early next week, limiting shipments of T-shirts and flax yarn to 7.5 per cent over the previous year had China not taken voluntary steps to curb exports of these products to this level.

‘‘The agreement provides for agreed transitional growth rates between now and 2007, followed by a further year during which both sides will work together closely in the hope that trade is conducted without further interference in this sector,’’ Mandelson said in Bo’s presence. — Reuters