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The Marketplace Report: EU-China Textile Deal

ALEX CHADWICK, host:

Back now with DAY TO DAY. I'm Alex Chadwick.

Peace appears to have broken out in the so-called bra war between China and the European Union. The Europeans and the Chinese seem to have settled a trade dispute which led to millions of items of clothing, like bras and sweaters and pants, piling up in European ports. The US has also been wrangling with Beijing over the issue of cheap Chinese textiles. Joining us from London is "Marketplace's" European editor Stephen Beard.

Stephen, welcome back. And how has this dispute with the EU worked out?

STEPHEN BEARD reporting:

Well, Alex, the agreement that's just been struck in Beijing deals with the problem of these 80 million items of clothing from China that are currently stranded in European warehouses. Now remember what happened here. Global textile quotas were lifted in January. There was a great wave of Chinese imports into the EU and the US. In the summer, the Europeans did a deal with the Chinese to reimpose quotas, but those new quotas were quickly filled, and millions of items already in transit were impounded in European ports. Now the deal agreed today will release all those items into European shops, but half of them will count against next year's quota, so reducing the amount that China can export to the EU next year.

CHADWICK: Wow, so kind of the basic underlying argument remains to be worked out, it sounds like.

BEARD: That's right. But the big question is: Will the 25 member states of the EU agree with this? And perhaps not all of them will. British Prime Minister Tony Blair, who's in Beijing at the moment, leading and EU trade delegation, pointed out that there is an obvious conflict in Europe over this issue between different interest groups.

Prime Minister TONY BLAIR (Great Britain): You've got the retailers and consumers in Europe that want the cheaper goods that China can produce, but you've also got European producers in some of the countries like Italy and Spain and France and so on that are worried about the impact on their own industry.

BEARD: But it does look in the end as if everyone in Europe is going to go along with this. After all, they want to keep the Chinese happy. This EU trade delegation in Beijing is hoping to sell about $4 billion worth of European products to China.

CHADWICK: Stephen, does anyone say this agreement is going to be the model for the US-China dispute?

BEARD: No. This actually leaves the US somewhat at odds acrimoniously with China. Talks between the US and China on this issue broke down last week, and the US has unilaterally imposed its own textile quotas, so the Chinese are unhappy about that. And, in fact, this is interesting. The Chinese are very adept at playing the EU off against the US, and their readiness to do this deal with the Europeans today may very well be a part of that game plan.

Anyway, we'll be taking a look at that story later today in "Marketplace" along with the latest development from New Orleans.

CHADWICK: Stephen Beard of public radio's daily business show "Marketplace," joining us from London.

Thank you, Stephen.

And we'll note "Marketplace" is produced by American Public Media. Transcript provided by NPR, Copyright NPR.

Alex Chadwick
For more than 30 years, Alex Chadwick has been bringing the world to NPR listeners as an NPR News producer, program host and currently senior correspondent. He's reported from every continent except Antarctica.