The Confederation of the German Textile and Fashion Industry welcomed the Memorandum of Understanding (MoU) on textile trade between China and the European Union (EU), said chief of the confederation on Thursday.  

In a written interview with Xinhua, Silvia Jungbauer said that by the Memorandum of Understanding, the situation could be managed in an amicable way and the move toward a trade conflict could be avoided.

She said: "our organization has been appealing since long to both the Chinese and EU side (and also to the German government) to engage with voluntary export self-restraints via corresponding bilateral negotiations, as we have always deemed this for a better way than the application of safeguards."

China and the European Union reached consensus on Saturday in Shanghai following 10 hours of talks, ending their months-long row in textile trade. Under the agreement, the annual growth of textile exports to Europe for the 10 lines of Chinese products is set to rise between 8 percent and 12.5 percent from June 11, 2005 through 2007.

Jungbauer noted that it was a win-win result, saying it rebuilt predictability for all parties involved, allowing reasonable growth as regards some "sensitive" categories. Since the deal covered a longer period than safeguards would do, it prevented seesaw changes and permanent uncertainty.

Under WTO rules, the parties could be assured that any questions that may arise in the future concerning further categories would be also resolved by the way of negotiations, and not by unilateral action.

In reply to a question if the deal provided a stable trade environment for the two partners in textile trade, Jungbauer said, "I hope that the MoU is a sound basis for further trade development between the two partners. And, of course, I hope as well that a similar deal can be achieved between the US and China."

She said that the MoU is a good signal before the background of the DDA (the Doha Development Agenda) where the EU and China definitely share many joint interests in terms of reaching better international market access, also as far as textiles and clothing is concerned. Hence, avoiding a trade conflict was particularly important also with respect to the ongoing world trade round.

Jungbauer agreed that the settlement was a good model, saying finding solutions via "peaceful" bilateral negotiations was in most cases the more beneficial way with less unpleasant aftereffects. She said carrying a case to the WTO was a last resort if one or both parties had the feeling that otherwise a fair solution on an equal footing could not be reached.

On the influence of the agreement to the German textile trade, Jungbauer said, "By and large, German companies are comfortable with the agreement."

She pointed out that compared to their European neighbors, the structural adjustment and adaptation of German companies "to the liberalized trade environment is more advanced through internationalization and relocation measures in the past as well as through massive quality up-grading and the movement to new branch segments like technical textiles."

"Nevertheless, since many German companies have investment and partners in the Central and Eastern European countries -- which are quite hard hit by liberalization -- the room of three years that was created for further adjustment is very favorable," she added.

Many German companies also had serious export and investment interest in the huge and continuously growing Chinese market, she said, "For them, it is of outmost importance that an amicable agreement could be reached."

As for the prospect of China-EU or China-Germany textile trade, the confederation director said that the deepening of trade relations and industry co-operation led to mutual benefits. "In order to ensure a win-win development, it is however very important that WTO rules are respected by all partners, particularly as regards priced formation mechanisms and the protection of intellectual property rights," she said, "Many German companies are interested in enhancing the partnership with Chinese counterparts."

Jungbauer said "the world market for textiles and clothing is still growing, and we should partake jointly in this growth."

She added that at the level of trade policy, "we think that the development of joint strategies for international market opening would be to the benefit of both sides," as China and Europe certainly share common interests regarding certain promising, but still "closed" markets.

(Xinhua News Agency June 17, 2005)