Asia-Pacific, Development & Aid, Economy & Trade, Europe, Headlines

TRADE: EU Hems In Chinese Textile Exports

Stefania Bianchi

BRUSSELS, Apr 6 2005 (IPS) - The European Union unveiled an "early warning system" Wednesday to monitor import of China’s surging textiles and clothing, and to impose safeguards if it reaches "danger zones".

"China, and its dramatic potential to increase exports following the lifting of quotas from 1 January this year, has become a key concern for a number of European Union member states and European textiles producers," EU trade commissioner Peter Mandelson told media representatives.

"My aim is to ensure a smooth transition to a post quota world without incurring avoidable damage to our industry and vulnerable developing countries. The guidelines recognise the legitimate concerns of member state governments and textiles sector, while allowing China to benefit from the lifting of quotas. They equip us to make a swift and effective response," he added.

Under the guidelines the Commission could limit textile and clothing imports if they rise anywhere between ten and 100 percent of 2004 levels.

Under World Trade Organisation (WTO) rules, China’s trade partners can limit imports until 2008 if they can prove that the imports are disrupting the market.

"If these danger zones are reached the commission will launch an investigation and hold informal consultations with the Chinese," Mandelson said. "On the basis of the consultations, we will be able to decide whether to go further to impose formal safeguard measures."

China currently has a 20 percent share of global textile exports. Mandelson 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.

"The time has now come to limit the seemingly voracious appetite of Chinese exporters for the European market," Bill Lakin, director-general of the European textile association Euratex said last month.

But Mandelson stressed that no immediate action is planned. "We only have two full months of data," he said. "It is too early therefore to judge what sort of difference in trade flows and what likely market disruption is going to arise." He said the safeguards should be a last resort.

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 Wednesday"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."

Oxfam says that although the Chinese economy has grown quickly over the last 20 years, average income is still only four percent that of France, and there are more than 100 million people living in absolute poverty. "The EU says it is committed to ensuring that the current WTO trade negotiations benefit development but any increase now in European protectionism against China and other poor countries’ exports will give the lie to this claim, and risk paralysing the talks," added Bloomer.

Oxfam says it is concerned about the poor working conditions in Chinese factories. "But this is no justification for blocking Chinese clothing exports, which would hurt poor workers, particularly the millions of women employed in this sector," said Bloomer.