The EU and China held a second day of talks Friday on a dispute over textile exports that has left stranded in customs millions of items of Chinese-made clothes bound for the European market.
There was no public indication of progress in the talks, being held just two months after the EU and China signed a quota deal to avert a trade war, but a European Union official said they were continuing.
"Talks are ongoing and they will likely continue this evening," the official told AFP.
Other sources close to the talks hinted that they may continue on Saturday.
Chinese exports, surging since a global system on textile quotas was abolished at the beginning of the year, quickly reached the annual EU limits agreed in June, leaving millions of products blocked by European customs officials.
"The Chinese side expressed its concern over the textile products blocked at customs in EU countries," a Chinese commerce ministry spokeswoman told AFP, describing Thursday's negotiations.
European Union negotiators said the backlog of products was "not in the interests of EU traders and consumers," she said.
According to the French trade ministry earlier this week, 48 million sweaters, 17 million pairs of trousers, some 500,000 blouses, 1.6 million T-shirts, 3.4 million bras and 1,470 tonnes of flax yarn are being held up.
"The atmosphere of the discussions with our Chinese colleagues is, as could be expected, constructive and friendly, given that of course it's in the interest of the two sides to resolve this problem as quickly as possible," EU commission spokeswoman Amelia Torres told journalists in Brussels Thursday.
EU officials in Beijing refused to comment on the talks other than to say that negotiations had resumed in earnest Friday.
Lu Jianhua, director of the Ministry of Commerce's foreign trade administration department, headed up the Chinese side, while Fritz-Harald Wenig, a trade director with the European Commission, represented the EU.
China's textile exports to Europe surged to 2.1 billion dollars in June, up 85 percent over the same month last year, as rush orders for Chinese goods soared while negotiators hammered out the new quotas, China's trade ministry said.
A senior Chinese trade official said part of the problem was that the EU and China agreed that the period between June 11 and July 20 was needed to set up mechanisms to monitor the textile trade and the implementation of the agreement.
"During this period, 10 categories of Chinese products could be freely imported to EU without any application for licenses, and traders in both China and EU rushed (orders) in order to avoid the quantity controls," the unnamed official said in a comment posted on the commerce ministry website.
"The irrational activities of enterprises in China and EU brought on the furious increase of the ... products."
Mei Xinyu, a senior analyst at the ministry, told AFP that the negotiators had three choices: use up the 2006 quotas this year, increase the 2005 quotas or do away with the system altogether.
"China will not agree to using next year's quotas and the EU is not willing to abolish the quotas, so the best scenario is to increase this year's quotas," he said.
In accordance with normal trade practices, buyers before the shipping would have already issued credit guarantees.
European retailers could thus be facing hundreds of millions of dollars in losses not only for the goods, but additional shipping and storage costs, industry sources said.
China has protested the re-implementation of US and EU textiles quotas following the end of the long-standing global quota system as counter to free trade and ongoing World Trade Organization trade liberalization talks.
The United States has invoked WTO "safeguards" that limit Chinese textile imports in at least six categories to 7.5 percent annual growth and is currently negotiating with China to implement similar limits on nearly 20 categories.
US negotiators are expected in Beijing next week to restart talks on the issue.