Commission and China patch together textile quota deal

mandelson2.jpg

The EU and China have sewn up a deal on the textile quotas row. The consumer organisation BEUC says it does not address the underlying problem that restrictions were imposed on Chinese imports to the detriment of consumers.

The so-called ‘bra wars’ between EU and China appear to have come to a close following a deal reached between the two parties on 5 September. According to Reuters, the essence of the deal is that China will count around 50% of the blocked merchandise as part of its 2006 EU export quota. For their part, EU countries will then allow the other 50% onto EU territory. Under the deal, all items currently blocked in warehouses will be released. However, the deal is subject to member states’ giving their approval.

During the EU-China summit, agreements were reached on:

  • a memorandum of understanding on labour, employment and social affairs 
  • a joint statement on cooperation in space exploitation, science and technology development 
  • a memorandum of understanding on China-EU dialogue on energy and transport strategies 
  • a maritime protocol extending the existing maritime agreement to new member states and 
  • two major financing agreements for the China-EU bio-diversity and river basin management programmes 

Among a large number of points that can be found in the joint EU-China statement, the two sides agreed to launch high-level dialogues to address outstanding issues with a view to achieving positive progress on the issue of market economy status. The EU also reiterated its support for achieving a nuclear-weapon-free Korean Peninsula and maintaining peace and stability there. It expressed its appreciation for China’s active role in this and stood ready to provide necessary help when appropriate. 

Commission President José Manuel Barroso called the deal "an amicable way to share the burden". Speaking at the EU-China Summit, he pointed to the climate change partnership between the two parties, the Commission's financing of important programmes on biodiversity and river basin management plus the 500m euro loan from the European Investment Bank for the expansion of Beijing airport.

"I can assure you the result is fair and equitable," the Chinese prime minister, Wen Jiabao, said. "It is acceptable to both sides and conducive to both the business communities and the consumers."

EU Trade Commissioner Peter Mandelson said that the deal was "satisfactory" and "equitable". He added that the 'textile wars' had been blown up out of all proportion this summer. Pointing out that "the laws of comparative advantage persist" and that ""Europe has great assets: enterprisecreativityscience and human skills", he stressed that "any successful economy needs open markets and free trade".

Earlier, Mr. Mandelson had told the BBC that "if they [member states] cooperate I believe we will be able to unblock all the goods currently held at customs by the middle of next month".

According to the BBC, he is "confident" that member states will approve the deal.

Ideally, European consumers organisation BEUC wants the Commission to repeal its regulation imposing textile quotas on China.

"If the deal is confirmed, it is good that a compromise has been reached but it does not address the underlying problem of imposing restrictions on Chinese imports to the detriment of consumers," said BEUC economic advisor Dominique Forrest to EURACTIV. "The phasing out of the Multi-Fibre Agreement was going to have an impact on trade flows but this has not been fully thought through by the Commission. There was no need for quotas as the growth in the amount of imports from China had been decreasing anyway - without the restrictions."

"There does not seem to be any proof of the direct link between the growth in Chinese imports and the problems of the industry, including competitiveness," wrote Mr Forrest in a memo to the Commission.

Representing European retail, wholesale and international trade sectors, EuroCommerce’s senior advisor for international trade matters, Ralph Kamphoener, told EURACTIV: "Assuming a deal where the EU would increase its textile quota for 2005 by 50% and China would bring forward 50% of its 2006 quota into 2005, I see the ball as being in the court of the rather protectionist countries such as France, Italy, Portugal, Spain, Greece." 

"China has made a concession on the June Memorandum of Understanding with the EU. It did not have to do so. For the future, the Commission needs to find a better balance between producers’ and traders’ interests, with shoe imports set to be the next European challenge. At a time of rising oil prices, EU consumers are also paying a heavy price for protectionism, with the WTO indicating that a four-person household is paying an extra 270 euro per year because of EU textile protectionism."

An own initiative European Parliament trade committee report is due to be debated in plenary on 6 September.

MEPs in the committee are calling for the introduction of measures in accordance with WTO TRIPS agreement on combating counterfeiting and pirating, and for the Commission to ensure such measures are implemented by the Chinese government. They also call on the Commission to enforce the terms of trade agreements where exporters to the EU are supposed to comply with international norms on workers' rights and environmental standards. 

To address the slow-down in the European textile industry and safeguard its future and competitiveness, the committee wants to see a Euro-Mediterranean production area established. 

Around eighty to ninety million items, most of which have been bought by retailers to hit the stores in the profitable pre-Christmas season, have been blocked in warehouses when quotas negotiated with China earlier this year were filled for six out of ten textile categories. Under the agreement, which was concluded as a reaction to the end of global textile quotas at the beginning of 2005, Chinese textile exports to the EU are allowed to grow by 8 to 12.5% per year for the period 2005-07. 

EU countries with strong textile producing industries such as Spain and France backed a rigid adherence to the agreement's terms. Others, like Britain and the Nordic countries, speak in the interest of retailers, who want to put the cheap garments, many of which were ordered before the agreement's conclusion and have already been paid for, into the shelves while they are still fashionable. 

An EU negotiating team headed for Beijing on 24 August 2005 to try to resolve the impasse.

Subscribe to our newsletters

Subscribe

Want to know what's going on in the EU Capitals daily? Subscribe now to our new 9am newsletter.