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TRADE: European Group Backs Chinese Textiles

Stefania Bianchi

BRUSSELS, Jun 10 2005 (IPS) - As European Union commissioner for trade Peter Mandelson started talks in China Friday to defuse a growing row over textiles, some European textiles companies are accusing the bloc of protectionism.

Mandelson opened talks with Bo Xilai, China’s commerce minister Friday (Jun. 10) in a bid to reach an agreement to restrict surging Chinese textile imports into the European Union (EU).

The row stems from EU fears that China could overwhelm Europe’s textile producers after a global quota regime ended in January.

Until the start of this year, the global textile trade was governed by the 30-year-old Multi-Fibre Agreement which set import quotas for each country. But since the lifting of the quota regime China’s exports to the EU have increased dramatically, and many European producers say they are unable to compete.

According to the European Commission, the EU executive, EU import of T-shirts rose by 157 percent to more than 150 million in the first quarter of 2005, and import of pullovers and men’s trousers rose more than 400 percent..

The EU brought a case before the World Trade Organisation (WTO) in May to restrict imports, citing figures showing a big jump in import of T-shirts and flax yarn from China.

An agreement must be reached by Saturday (Jun. 11), or the next procedural steps will be taken which could entitle the EU to impose restrictions on import.

Speaking as he arrived in Shanghai Friday, Mandelson said he wanted to reach "an enduring agreement" with Beijing, but insisted that he would not shrink from taking action.

"We hope to achieve an agreement… about what we are going to do about the textiles explosion which is affecting Europe and so many developing countries," he said.

"If we don’t make an agreement, we will have to take other measures. This question has been dragged on over many days. We have a limited opportunity," he added.

But the Foreign Trade Association (FTA) which represents foreign trade interests in European commerce says the EU measures are "politically motivated" and are a result of "intense pressure exerted by some EU member states in conjunction with the European textile and clothing industry."

The group says that the rise in imports from China in the first three months of 2005 compared to last year is not directly due to a rise in Chinese exports.

"There has a been a shift in where companies have been sourcing from, for example they may have been sourcing in Hong Kong during the quota era but now are sourcing from China. So there hasn’t been such a big increase of imports into Europe in total, it’s just that the sources are different," Maria Linder, legal adviser to the FTA told IPS Friday (Jun. 11).

The FTA warns that instead of bringing "greater certainty in planning and a possible return from the economic rock bottom" as a result of the liberalisation, imposition of restrictions would be a major drawback for all involved.

"We believe that even if restrictions are introduced, the safeguard measures would not help anybody, especially our member countries as they risk not getting their orders in. The worst case scenario would be an import stop. This would be particularly serious for companies if they have outstanding orders as they would have with either their suppliers in China or with their consumers in Europe," Linder added.

The FTA hopes that Mandelson will be able to reach a compromise in Shanghai, but is doubtful that a favourable agreement for everyone will be reached.

"The impression that we’ve been given is that so far there hasn’t been a compromise. Ultimately we hope that the talks will be constructive and will not lead to a stop of imports."