BEIJING, Aug. 26-- China and the European Union failed to reach an agreement yesterday at talks in Beijing aimed at solving the current textile impasse.

A Chinese shopper checks out cloth at a

textile shop in Beijing yesterday.[newsphoto] The two sides conducted serious talks towards an effective solution to the thorny issue, China's Ministry of Commerce(MOFCOM) said in a statement.

The Chinese side expressed great concern over the Chinese textile stockpile at EU customs, while the EU admitted the policy did not meet the interests of its domestic traders and consumers, MOFCOM said.

The EU delegation was headed by Fritz-Harald Wenig, the trade director of the European Commission. Chinese negotiators were led by the director of MOFCOM's foreign trade department, Lu Jianhua.

According to statistics published by EU customs on Wednesday, eight of 10 categories of Chinese textiles have already reached their quota limit, set in June.

The June agreement restricts annual growth of EU textile imports from China to 8- 12.5 per cent over the coming three years.

Forty-eight million sweaters, 17 million pairs of trousers and hundreds of tons of other textile products are piling up at EU borders, unable to access the market, statistics from EU show.

Chinese textile dealers are also keeping an eye on the issue, Cao Xinyu, vice-chairman of the China Chamber of Commerce for the Import and Export of Textiles told China Daily yesterday.

"We hope the EU will at least accept shipments for orders agreed before the textile disputes began," he said.

Cao explained that when a quota-free era began in January, importers and exporters had not even considered the possibility of caps being introduced after just a few months.

An urgent meeting was held on Wednesday morning in Brussels among representatives of the European Commission and EU members in a bid to pave the way for talks in Beijing.

EU Trade Commissioner Peter Mandelson, who did not attend the meeting on Wednesday, said in a statement that China and the EU"need a pragmatic solution that deals with the immediate overshoot and with good will on all sides, we can do this."

The two sides have to consider how many categories will be covered by the new amendment; and whether to increase the quotas for this year or to start eating into the quotas for next year, said Mei Xinyu, a trade analyzer form the Chinese Academy of International Trade and Economic Co-operation, the think tank of MOFCOM.

If they decide to use the quotas from next year, the two sides have to take into account whether this will result in additional troubles in 2006, he added.

In another development, China and the United States are expected to reach an agreement on their textile disputes in the near future as the US Government nears a decision on whether to impose new safeguard measures against additional Chinese textile and garment products at the end of this month.

(Source: China Daily)