EU foreign ministers failed to agree on a proposed new system of preferential trade duties for developing nations because of a row prompted by fears of surging Asian textile and clothing imports.

"Textiles was the main blockage," European Trade Commissioner Peter Mandelson told reporters after inconclusive talks on reforming the Generalised System of Preferences (GSP).

Diplomats said Italy, which once boasted a thriving apparel industry, led a handful of states demanding that the threshold for countries to qualify for low tariffs be lowered to 10% of total EU imports in the sector.

That would exclude India, which accounts for 11%.

They were opposed by an equal number of states that want to set the threshold at 15% - the proposed new level for all other products - which would keep India in.

If there is no agreement on a new GSP system, proposed last year to ensure that the world's poorest nations benefit most, the old regime would remain in force.

That would include China, which is any case expected to benefit most from the Jan. 1 abolition of an international quota system for trade in textiles and clothing.

"It is ironic that those member states principally concerned about the growth of Chinese textile exports and their impact on domestic industry are blocking an important measure that would address precisely this concern. Not acting today is detrimental to EU textile industries and I regret this," Mandelson said.

April 1 deadline

Luxembourg Foreign Minister Jean Asselborn said his country, which holds the EU presidency, was determined to introduce the new system on April 1 as scheduled.

"The presidency is, and remains, committed to respect the deadline of April 1 for entry into force of the new regime, and will resume examination of this issue next week in COREPER (at ambassador level)," he told a news conference.

He said Luxembourg was working with the European Commission, the EU's executive, to clear the last hurdles, which included whether El Salvador should qualify with the world's 50 poorest nations for duty-free and quota-free for all goods except arms.

The Commission has proposed a compromise threshold of 12.5% for trading partners to qualify for preferential tariffs on textile and clothing imports.

The European clothing and textiles industry group EURATEX has called for formal curbs to be slapped on imports of cheap Chinese clothing and textiles, and its concerns have been echoed in Brussels by both the Italian and French governments.

The new GSP had originally been due to come into force on July 1 this year, but it was brought forward to April 1 in a bid to help tsunami-hit states in the Indian Ocean.

"I regret that the EU Council has declined to agree a proposal that would give this promised assistance to the tsunami hit countries," Mandelson added. (Reuters)