EU and China in 'bra wars' deal

The EU and China finally brokered a deal over the so-called "bra wars" dispute yesterday which should allow around 80m items of Chinese-made clothes blocked at European ports to be released from the middle of next week.

The agreement, brokered by Peter Mandelson, the EU trade commissioner, and his Chinese counterpart, Bo Xilai, during more than 24 hours of tense negotiations in Beijing, is due to be approved by the EU's 25 member states today despite lingering misgivings among protectionist-minded countries.

Under the terms of the deal, China has agreed that it will not export any more pullovers, trousers and bras this year and to count around half the blocked items against its 2006 quota. Yesterday 48m pullovers, more than 11m bras and 18m pairs of trousers, along with 8m T-shirts and other items, were held in warehouses at EU ports.

After another round of intense negotiations which coincided with Tony Blair's arrival for the 8th EU-China summit, Mr Mandelson and Bo Xilai held a late night press conference to explain what both men insisted was a "fair and equitable" compromise for producers and consumers on both sides.

"Textile wars have been blown out of all proportion this summer," said Mr Mandelson, insisting that, far from being at war, China and Europe are building stronger ties as each other's first or second trading partner.

But Mr Mandelson plans to make a speech in Beijing today which is expected to amount to a critique of the role of Spain and, especially, France in fuelling protectionist demands. With enough allies, they could still block yesterday's deal in Brussels.

The prime minister and his Chinese counterpart, Wen Jiabao, also dismissed the textile row as a "minor issue"compared with their latest agreements on trade, science and climate change.

Last night the summit ended with a banquet which confirmed that the EU is to provide China with a clean coal power plant to help it develop greener energy sources at a time when it is growing at close to 10% a year and opens a power station every fortnight.

Mr Blair told reporters: "There are bound to be disagreements over trade, partly because of the strength of the Chinese economic performance, and where there are disagreements we have got to resolve them as we have fortunately been able to do in respect of textiles. But the big picture is one of increasing trade between China and the EU.

Mr Wen added: "We both have adopted a positive attitude in seeking a solution to share the burden instead of letting the commodities pile up in these ports."

Mr Bo called yesterday's deal a "win-win situation" and denied it amounted to a lapse into protectionism rather than a "transitional" step towards freer trade.

José Manuel Barroso, the EU commission president, also in Beijing for the summit, supported the compromise and joined the signing ceremonies for such schemes as the EU's €500m (about £340m) investment in the expansion of Biejing airport.

Mr Blair will spend today on purely Sino-British affairs before taking British business leaders on to India for a repeat performance. He will launch the first independent foreign university in China, an offshoot of Nottingham University, and watch such diverse talents as Richard Curtis, Darcy Bussell, Lord Foster and Sir Bobby Robson give "masterclass" advice to aspirants in their fields.

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