China's Ministry of Commerce declared on Wednesday that the country's growth rate for export of pullovers, trousers and blouses to the European Union will be limited to within 10 percent in 2006 and 2007, while that for sheets and table cloth will be restricted to 12.5 percent annually.

The announcement was based on the memorandum of understanding reached by Chinese Commerce Minister Bo Xilai and visiting EU Trade Commissioner Peter Mandelson last Saturday after the 10-hourclosed-door talks in Shanghai.

The European Union has agreed to stop investigations on 10 categories of textile products from China, including cotton cloth, T-shirts, pullovers, trousers, blouses, sheets, dresses, brassieres, table cloth and flax yarn.

All the agreed maximum growth rates announced by the ministry are higher than the 7.5 percent, previously proposed by the EU.

The EU claimed this year that textile imports from China had substantially increased after the elimination of global quotas on Jan. 1. In April, it published a guiding booklet on restrictive measures on textile products from China based on Article 242, setting concerned conditions and procedures for the restriction.

Afterwards, the EU launched a probe into a dozen of China-made textile products and decided on May 27 to propose a request for official consultation with China on T-shirts and flax yarn.

According to the memorandum, for flax yarn, China's exports to the EU from March 2004 to February 2005 are the agreed baseline quantity, while for the other nine categories, the baseline period is from April 2004 to March 2005.

The growth rate for China's export of pullovers, trousers and blouses from June 11 to December 31 2005 will be limited to 8 percent, the lowest among all limited rates announced by the government.

"The agreed plan is quite reasonable to both sides," said Mei Xinyu, a researcher with the Ministry of Commerce. The baseline quantity includes China's booming exports to the EU after elimination of the global quota, he said.

Although the EU has not fully opened its market, uncertainties for the exports will decrease greatly and the trade environment will become stable again, said Huang Junxiang, general manager of the Shanghai Longtou Company.

The Ministry of Commerce is working on detailed plans to distribute export permit to various areas and enterprises.

"The agreed growth rate is only a win-win result in narrow sense," said Zhang Yansheng, director of the Foreign Economic Institute of the State Development and Reform Commission.

The agreed growth rate limitation is a blow to most Chinese textile enterprises, which have huge production capacity, he said.

It's a great challenge for the government to build a fair and transparent distribution mechanism and avoid corruption, he said.

Even for the most competitive textile enterprises in developed coastal areas, the new export quotas are deficient.

The textile exports of eastern China's Zhejiang and Jiangsu provinces, which ranked as the first and third largest textile exporters in China last year, have soared since beginning of this year.

In January 2005, Zhejiang's textile exports to the European Union rose 70.7 percent. Jiangsu's textile exports to the European Union jumped 80.6 percent last February.

The limitation of a growth rate between 8 and 12.5 percent definitely means extremely fierce competition among all enterprises for these permits, insiders said.

(Xinhua News Agency June 16, 2005)