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TRADE: EU Steps Up Pressure on China over Textiles

Stefania Bianchi

BRUSSELS, Apr 25 2005 (IPS) - The European Union has stepped up pressure on China to curb what it calls a “ruinous” surge in textile exports, urging it to take action or face possible sanctions to protect the bloc’s clothing industry.

Peter Mandelson, European Union (EU) commissioner for trade, called on China Sunday (Apr. 24) to consider stricter measures to curb the rise in its textile exports since the end of an international quota system earlier this year.

During an informal meeting of European trade ministers in Luxembourg Sunday, Mandelson confirmed that Brussels would launch a probe into nine categories of clothing affected by Chinese competitors.

“Europe cannot stand by and simply watch these developments unfold. The time has come to take further action,” Mandelson told ministers.

Mandelson confirmed he will recommend this week that the European Commission, the executive arm of the EU, launch formal probes into the surge in textile imports with a view to possible safeguard measures.

“If justified by the facts I will use the safeguards,” he said, referring to measures which allow the 25-member bloc to take action if imports threaten European producers.

“I urge China to take a fresh look at the measures they have put in place already, and explore whether they cannot do more,” he added.

The European Commission will now launch an investigation to justify possible safeguard measures, which could be introduced within 150 days.

The EU study will look at the sharp increases in exports of Chinese T-shirts, pullovers, men’s trousers, blouses, stockings and socks, women’s overcoats, brassieres, flax or ramie yarn, and woven fabrics flax.

Mandelson says he expects to get the results of the probe about 60 days after its launch. The EU could decide to impose ceilings on Chinese textile imports shortly after that.

Under the old Multi Fibre Agreement clothing and textiles quota system, which started in 1974, each country was set export limits.

Exports of certain Chinese clothing items to Europe have surged since the quota system came to an end Jan. 1, as China continues to take advantage of its cheaper labour and manufacturing costs.

According to figures from the World Trade Organisation (WTO), China currently has a 20 percent share of global textile exports. The EU predicts that this could rise to 50 percent over the next five years. This is likely to hurt producers in developing countries such as Bangladesh and Sri Lanka, which have traditionally benefited from the quota system.

Under WTO rules, the EU could limit textile and clothing imports if they rise anywhere between ten and 100 percent of 2004 levels.

Beijing has warned that its ties with the EU could suffer if Brussels presses ahead with limits.

“We invite our European partner to be very careful in the use of the safeguard clauses. Don’t hurt our bilateral Chinese-European relations with a unilateral action,” Youhou Liu, commercial advisor at the Chinese embassy to the EU told a hearing on the future of the textile industry at the European Parliament last Tuesday (Apr. 19).

Liu also offered a more conciliatory tone, saying “we are ready to listen to you, to step up our dialogue with the European Commission.”

But the EU’s textile trade, which claims the jump in imports is costing tens of thousands of jobs, has been lobbying hard for immediate action.

Euratex, the European textile association, cautiously welcomed the EU decision to open investigations into textile imports from China.

“The announcement by the Commission is to be viewed as a first clear signal that the European authorities do not intend to remain inactive in face of the unprecedented growth in volume up to plus 543 percent in certain Chinese product exports to the European Union at prices which have fallen by up to minus 47 percent,” Filiep Libeert, Euratex president, said in a statement Monday (Apr. 25).

“It is clear that the contributory factors to this exceptionally damaging result have taken place under social, environmental and abnormal trading conditions which simply cannot exist in the European Union. Safeguards are a legal instrument intended for just such exceptional events,” he added.

EU member states remain divided over the issue with some producers such as Italy and France urging Brussels to take immediate action, while others – such as the Scandinavian countries – opposing the protectionist measures.

Some development groups say the European Commission measures could threaten China’s progress in poverty reduction.

“European industry had more than a decade to prepare for the end of quotas,” Phil Bloomer, head of Oxfam’s Make Trade Fair Campaign said earlier this month. “They decided not to. China should not be penalised because Europe maintained most of the quotas until the last minute instead of having a managed phase-out.”

Mandelson insisted Sunday that any EU action would be “proportionate”.

“Chinese exports should of course be allowed to grow at a normal speed following the removal of quotas. But we must also extend protection to European industry as it is faced with a ruinous surge of unprecedented proportion,” he said. “Europe cannot stand by and watch its industry disappear.”