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Bidding Solution to EU Textile Quota Conundrum

The Ministry of Commerce plans to employ a bidding system to allocate quotas for Europe-bound textiles next year, according to sources with the China Chamber of Commerce for Import and Export of Textiles.

The chamber convened a closed-door conference on Tuesday morning to solicit opinions from major domestic textile exporters.

The bidding proposal was put forward following requests by Chinese textile manufacturers. It would also help better manage exporters' performance, industry insiders said. Sources said the ministry is expected to release the detailed regulation in a few days' time.

Under the current quota allocation system, quotas for exports to the European Union (EU) were based on textile dealers' volume of shipments the preceding year.

As a result, several textile companies were allocated very low quotas, some as low as a few kilograms of goods, and were not able to export anything at all. This resulted in much dissatisfaction.

"We hope all the quotas for the next year will be allocated through a bidding process, because it is fair and scientific," said an executive with a Beijing-based textile producer, who declined to give her name.

"The government might accept the bidding method, but it is not clear whether the quotas will be allowed to circulate in the market," she said.

She added that enterprises hoped the final government decision would be published as soon as possible so as to rule out the uncertainties for exporters, and enable them to sign contracts for next year with foreign buyers in October.

However, a source from the chamber said the government was likely to adopt this method on part of the quotas and leave the rest to be allocated in the usual way.

"Thirty to 40 percent might be used for bidding," the source said adding that the proposal needs to be first approved by the ministry.

Official information on the bidding method is not available.

The current quota allocation is governed by provisional management measures implemented on July 20.

During the "vacuum period" before the measures took effect on July 20, most textile manufacturers worked hard to export as much as possible.

It was largely this export glut that led to the recent debacle where Chinese textiles were stockpiled at EU ports because quotas had been exceeded.

(China Daily September 14, 2005)

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