Several developments have recently taken place with regard to exports of Chinese textile and apparel articles in both the U.S. and the European Union. The following, is a brief description of the latest developments:

U.S. negotiators held last week a second round of negotiations with China, in an effort to reach a bilateral agreement regarding the significant increase of exports of Chinese textile and apparel articles. All indications are that the talks failed to produce an agreement, with some on the U.S. negotiating team stating that no agreement is better than an agreement detriment to U.S. interests.

The domestic industry has now vowed to file safeguard petitions covering many more textile and apparel categories, should an agreement fail to be sealed with China.

Effective August 31, 2005, the U.S. Committee for the Implementation of Textile Agreements (CITA) announced that it is reimposing quota on Chinese cotton and man-made fiber brassieres and other supporting garments (category 349/649), and synthetic filament fabric (category 620). The new quota will be effective through 2005 at a pro-rated level of 7.5% above the first 12 months of the previous 14-month period.

Hoping for a successful outcome to the recent negotiations with China, CITA had postponed until August 31, 2005 its decision on several special safeguard petitions it received from the domestic textile industry. In an effort to keep up the pressure on China, CITA announced that it is again postponing any decision on safeguards covering sweaters, dressing gowns and robes, knit fabric, and wool trousers, until October 1, 2005.

The European Union recently held its own negotiations with China, in an effort to resolve the embargo of Chinese textile and apparel merchandise. By now, goods numbering in excess of 75 million pieces have been embargoed at EU ports as they have unexpectedly exceeded the import caps announced only in June. With much fanfare, the EU and China announced in June a bilateral agreement allowing imports of certain Chinese textiles and apparel to grow between 8%-12.5%, year over year. However, in anticipation of those caps, EU retailers rushed their shipments, resulting in the current embargo. After tough negotiations, the EU and China agreed that half the excess garments will be allowed into the EU outside the new quota rules while the other half will be deducted from China's 2006 quota allotment. China also agreed not to issue this year any new export licenses for the affected merchandise destined for the EU market.