Chinese textiles to flood EU in new deal

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But while the "bra wars" row may have ended, it threatens renewed tensions between Britain and France over EU protectionism. Tony Blair, in a call for free trade in Europe, yesterday warned the EU member states that they could not stop change by throwing up barriers to trade.

Mr Mandelson intends to return to the theme today in a speech in Beijing which will be seen as a thinly veiled attack on the French, who have led the resistance to Mr Blair's calls for modernisation of the EU economy by more free trade. Mr Mandelson will repeat Mr Blair's warning that the EU must face up to the challenge presented by China.

The "bra wars" have been a running sore this summer, and threatened to sour Mr Blair's trade mission to Beijing. It also raised questions about Britain's trade commissioner, who was under fire over the debacle which saw Chinese goods locked up because they breached trade quotas aimed at keeping out cheap textiles.

Mr Mandelson has yet to secure the backing of the four EU countries who objected to Chinese imports - France, Italy, Portugal and Spain - and if they fail to agree, it could plunge the EU into a fresh round of infighting over its direction. It would also plunge Mr Mandelson's career into a fresh bout of criticism.

At a joint press conference to herald the deal with Bo Xilai, the Chinese commerce minister, Mr Mandelson said he hoped the textiles could be released quickly once the deal had been confirmed by the European council members in the next few days. Downing Street officials said initial soundings suggested it would be agreed.

Under the deal, China will allow half of its quota for next year to be taken up with the textiles now awaiting release from ports in the EU. The EU will accept that half of the quota will be added to the imports for this year.

Rejecting calls by some within Europe for a continuation of quotas to protect European jobs in the textile industries, Mr Mandelson said it would "not mean a return to quotas".

The EU imposed quotas in June to stem a huge surge in Chinese imports, after a worldwide, decades-old textile tariff ended in January. Because of these restrictions, about 48 million sweaters, 11 million bras and 18 million pairs of trousers ordered by European retailers and shipped from China were impounded. European textile producers said they were "disappointed" by the deal, saying that, as a result, nearly 160 million pullovers would come into the EU this year instead of the agreed 69 million. Speaking in Beijing, Mr Blair said he was confident European governments would back the agreement.

China's premier, Wen Jiabao, said the deal was "fair and acceptable to both sides".