ARCHIVES HISTORIQUES 
DE LA COMMISSION 
 
 
 
COLLECTION RELIEE DES 
DOCUMENTS "COM" 
 
 
 
 
COM (83) 668 
 
 
 
Vol. 1983/0 244 
  
 
Disclaimer  
Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the opening to the public of the historical archives of the European Econom ic 
Communit y and the European Atom ic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), t his file is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februa r 1983 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
(ABI. L 243 v om 27.9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit  
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5  
der genannten Verordnung freigegeben.  
COMMISSION  
OF THE
EUROPEAN COMMUNITIES
General SecretariatC0M(83) 668 final  
Brussels, 16 November 1983
FOR O F F IC IA L  USE O N LY
REPORT FROM THE COMMISSION TO THE COUNCIL '  ;
concerning the preparations for negotiations with China  
on the bilateral textile agreement
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C0M(83) 668 final ;  ^ ^ ~

' 1 .  CONFIDENTIAL
Commission report to the Council concerning the preparations for negotiations 
with China on the bilateral textile agreement
1. The bilateral Agreement between the EEC and China on trade in textiles
runs until 31 December this year· The Agreement itself contains a 
provision to the effect that it will be renewed >  tacitly for a
further five years unless one of the parties gives six months’ notice of 
denunciation. So far, neither has done so. The quantitative ca^^ngements 
under the Agreement, on the other hand, were only fixed /until the end of 
this year. The Limitation Levels for the years 1984-88 need to be defined.
2. The Commission and Chinese delegations have had informal exploratory
talks in preparation for negotiations on the future textile trade 
arrangements. They discussed certain clauses of the Agreement, its 
economic content, and the administrative modalities for its
management.
The first round of exploratory talks took place in Beijing in May, and 
were the occasion for a thorough review of the operation of the present 
Agreement and the situation of the industry in both China and the
Community. The second round of talks was held in Brussels at the
.respectivebeginning of July, when the parties stated their 'intentions regarding 
future textile trade arrangements. A third series of exploratory talks 
which took place from 28 September to 7 October was designed to examine 
possible areas of compromise and narrow the gap between the two sides’  
positions before the opening of formal negotiations.
Two new factors which came into play before the last informal meeting 
with China could affect the negotiations.
a) The US-China bilateral agreement
The USA and China concluded a bilateral agreement at the beginning 
of August. The Chinese claim that they secured a very favourable 
deal, and would like concessions from the Community.as well.
b) Chinese membership of the MFA -
China has confirmed its application to join the MFA, and wrote to 
the Directory-General of GATT on this subject at the beginning of 
October. In its letter, China describes itself as a developing 
country, and entitled, to the special treatment accorded to such 
countries. '

' f c -  ,t · .  ‘  * ■  —·.··».'
Chinese membership of the MPA raises the issue of how far 
certain provisions ^pf^ t^h e^b^lateral Agreement are compatible with 
the Arrangement . / the Chinese delegation has stressed the MFA 
aspects in support of itB claim for equality of treatment with the 
other exporting countries which have concluded agreements with the 
Community. ^
4. In its dealings with China the Commission has based itself upon the
Council directives for the renegotiation of the bilateral agreements. It has 
ir fo ‘i,11; 1 Cuina that the Community wishes anti-surge and anti-fraud 
.ciuses included in the bilateral agreement. As regards quantities, 
the figures the Commission has indicated to the Chinese take account
p g g g  p CJS
both of the Council directives, in particular as/the global ceilings, 
and of the export levels contained in agreements with other supplying 
countries.
5® lb a Chinese delegation made it clear that it regarded the quantitative 
aspect as the main one. It proposed large quota increases, while 
however maintaining that its demands were reasonable and took account »  v 
of the difficulties of the Community’s textile and clothing industry.
China also feels that certain provisions of the agreement are discriminatory, 
and will therefore be negotiating not only for improved access but also 
for a more favourably-worded text. It justifies its claims in terms both ) ;  ‘  
of political considerations, stressing the good EEC-China relations, and 
of its need to export more so that it can increase its importe of goods 
essential for the modernization of the Chinese economy. i  ;  , < r  <
6. A number of possibilities for future textile trade arrangements werR 
examined. One approach might be to extend the agreement by mecr s of »a 
complementary protocol, which, in return for inclusion of the surge ixi 
fraud clauses, would modify the basket extractor clause to bring it into 
line with the other MPA agreements. Another possibility would be to 7.enew 
the agreement -  texttas it stands. ■
7® In either case it Would be necessary to strike a new quantitative balu.j<n.}  
offsetting any increase in access levels for existing limits by an incre...vfc 
in the number of categories subject to Community or regional limits.
gf 8. At this stage the Chinese delegation could not contemplate the first of 
these two approaches since it refuses to accept the anti-fraud clause, 
and could only consider thé second if the Community were to agree to its
.  ..../3

quantitative demands in full· China considers that renewal of the 
existing agreement as it stands would he to the advantage of the 
Communityt which would keep the provision^ which are in its own interest 
(priority for industryf raw material supplies, textile trade balance) 
while still maintaining the hlauses which are discriminatory· Only if 
its quantitative demands were accepted in full does China feel it could 
justify, within the framework of the MPA, the continued existence of 
special provisions in its bilateral agreement with the Community·
a need to examine I
There is also /the possibility that the negotiations might not be
completed by the end of the year· In that event the provisions of the
agreement would remain in force and the quantitative limits negotiated
in 1979 would be extended, increased by .  ·  the growth rates
stipulated in the agreement· But it would not be possible to continue
with the limits based on the basket extractor mechanism, which were
agreed for 1979-83 only.
The Chinese delegation has indicated that in this situation China would 
have no option but to denounce the bilateral agreement and renegotiate 
it on more favourable terms.
While keeping the link between the -text of the agreement and its : i: 
e c o n o m ic content, the Commission has done its best to examine all the 
possible quantitative solutions, and has put forward suggestions which 
go some way to meet the Chinese demands· It has done so on the basis 
of the quantities Btill available under the Community global ceilings 
and of the indications emerging from informal consultations with Member 
States·
The suggestions the Commission has put to the Chinese delegation come 
under four headings, forming a total package·
a) Existing Community limits
China has presented detailed requests for these categories (Annex I)· 
In some cases these requests are not excessive in real value terms, 
but they do represent large percentage increases over existing quotas 
The Chinese demands also focus on a handful of Member States, Germany 
in particular, and therefore pose a problem for the Community as 
regards the internal burden sharing arrangements and compliance with 
the regional levels within the glob&l import ceilings on the most 
sensitive categories. ->*' ·'>%' ,
So far, the Commission delegation has confined its response to the 
Community levels.

For three categories some movement towards the Chinese position 
seems possible (9, 32 and 37). For category 2 (woven cotton fabrics) 
a special solution could be envisaged; the creation of a separate 
limit for bandages (CCT nos· 55*09 and 30«04) outside category 2, 
which would imply an increase in access for export of cotton fabrics 
by around 1,500 tonnes.
As regards the reservation of 26 % of Germany's quota-shares for the 
Berlin Fair, a certain amount of additional flexibility to improve 
the take-up rate sfould be considered. China washes this reserve 
within the German quotas to be removed.
The Commission has indicated that there is scope for some increases 
in the case of all categories subject to Community limitation, 
depending on the sensitivity of the product and the amounts available 
within the global ceilings (Bee separate paper).
b) New Community limits
The Commission delegation has proposed a further ten Community limits, 
for categories which have hitherto only been subject to regional 
limits. The ten categories were selected on indications
given by Member States. The Commission has indicated figures for the 
new limits both at Community level and for those regions not at present 
covered by regional limits, on the basis either of 1982 imports or of 
basket exit thresholds (see separate paper).
, i\
c) Regional limits
•V
The Commission delegation has emphasized the need to retain the 
existing regional limits, and has proposed certain new ones based on 
indications emerging from contacts with Member States. For these 
categories, indicative levels for the 1984 limits were mentioned by 
both sides (see separate paper).
d) Handloom products
The Commission indicated that the existing limits on these products 
should be retained, and that if necessary other categories ( 20/39 in 
particular) might also be made subject to specific limitations.
11. Throughout its talks with the Commission the Chinese delegation has stressed 
that its quantitative demands should be.accepted in total. However, it has 
already accepted that a number of regional limits, either included in the 
agreement or resulting from application of the basket extractor provisions 
might be maintained, and hds also agreed' to examine the possibility of 
including new Community or regional limits in the agreement.

12· As regards administrative modalities fyr the management of the bilateral ' 1;  ;  
agreement, the changes introduced when the MPA agreements were negotiated ? 
have been proposed to Chind as well· Some of them have already been 
accepted, since China considers they would improve administration of the .  
agreement· However, it took a very negative view of proposals which 
would tighten up administrative constraints and in particular of the 
references to the anti-fraud provisions·
' V '
13· At the end of the exploratory talks, both parties felt they had gone as
far as they could in explaining their respective positions and looking 4
at possible solutions. They agreed to report back to their authorities•  !  ’  ,
and open the formal negotiations without delay, in order to decide on , ^ *  ;  
the various options and find possible compromise formulae*
14· In presenting this report to the Council, the Commission would emphasize
that the negotiations are likely to be difficult· The two sides' w
positions are widely separated, and both will need to make concessions
.  ’.t -  :  ■  ■ ■  . - s ■  vY ■if a successful conclusion is to be reaohed· j'■; i
The Commission will be entering the negotiations on the basis of the
Council's directives of 25 February 1932 for the bilateral negotiations, and will
conduct them in close consultation with the Article 113 (Textiles) Committee·

TEXTILE QU OTAS OF 1984 REQUESTED B Y  THE PEOPLE'S REPUBLIC OF CHINA 
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“ .3 T450 3M 0 350 2 ,2£ 0 100 40
A w f e  t90 60 70 3 C0 30 60 20 ' 40
“ .4 00CP “ 2,000 1  ,700 1  ,000 oc0 900 30 150 25
« t.5 C90P c » 2,000 1  ,000 050 5 C0 1,500 40 120 30
‘t.6 C O O  P c.5,000 1,200 650 1,1c0 350 43 600 28
« t.7 Q00p« 7 900 300 350 1 10 250 25 60 21
“ .8 0 0 0 P e» -  4,500 700 750 6:0 1,050 50 600 25
•‘.9 » 6  t1  ,000 300 360 1(0 530 2 0 3 0 0 10
“ .12 1 ' )00P»ir·1,500 5,000 500 1,2c0 1,100 30 500 43
“ .19/89 / 0 0 0 P e · 20,400 4,260 10,040 U,ii 0 ____ 7,_23_0_
46
0320 ·'.»  2,480  
104750
“ .32 B f e  T600 440 340 If0 - 36 57
“.37 t1  ,000 1  ,000 750 6 C0 050
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f t. 39/20 w f c  t1,304 606 640 4 <1 38 128 504
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5,091
4,27''  
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