China and the European Union failed to reach an agreement yesterday during talks in Beijing aimed at solving the current textiles impasse.

The two sides conducted serious talks to find 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 stranded at EU ports, while the EU admitted the policy was not in 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 the 10 categories of Chinese textiles have already reached their quota limits that were set in June.

The June agreement restricts annual growth of EU textile imports from China to 8 - 12.5 percent over a three-year period.

Forty-eight million sweaters, 17 million pairs of trousers and tons of other textile products are piling up at EU ports, according to EU statistics.

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 (CCCT) told China Daily yesterday.

"We hope the EU will at least accept shipments for orders agreed before the time that this textile dispute began," Cao said.

Cao explained that when a quota-free system was initiated 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 Thursday's 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 problem 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, if any; 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 Cooperation, 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, Mei 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.

(China Daily August 26, 2005)