Retailers mark victory in EU-China ‘bra wars’

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Trade Commissioner Peter Mandelson is likely to come under attack from textiles manufacturers and to be praised by store owners and consumer advocates over an initiative to free blocked Chinese textiles. 

According to press reports, Commissioner Mandelson will make an attempt at breaking the stalemate by proposing to allow all garments ordered before the conclusion of the agreement on 12 June 2005 to be imported into the EU and to start counting the quota only for garments ordered from June 13 onwards. This would allow all presently blocked garments to be released to stores around Europe. 

While countries with strong textiles manufacturing industries like Spain, Italy and France are likely to oppose this deal, retail-oriented countries like Britain, Germany and the Nordic countries will most likely be in favour of it. 

On 29 August 2005, Commissioner Mandelson said:  "I do not think that the scare stories about clothing shortages comparable to those experienced in the last world war are remotely justified. I hope that the hyperbole can now be put aside." One day later he argued: [Holding on to the quotas] "could mean some shortages during the autumn but, even more likely, higher consumer prices for many of our citizens who cannot afford to pay more for them. [...] The price of rejecting my proposals is harm to the consumer. The gain is keeping the agreement alive and the overall restrictions in place over the next three years," 

Parliament rapporteur Caroline Lucas (Greens, UK) warned the trade conflict could soon spread to shoes, bikes and cars. "Those who believe that Chinese competition presents no threat to Europe, since we can give up what’s left of our older manufacturing base and concentrate instead on knowledge-intensive industries, appear to be in denial. [...] Almost 20 per cent of China’s exports are already classified as high-tech, and with two million graduates a year there’s every reason to believe that this percentage will grow. The traditional assumption that the EU and US will keep leading in knowledge-intensive industries while developing countries focus on low-skill sectors is now being seriously contested." 

In a comment, the government-owned China Daily newspaper wrote: "[...] protectionism is a loss-loss deal for both sides in international trade while undermining the global effort to build a free and fair trade order. Trade protectionism has incurred huge costs for Chinese textile producers. Rising uncertainty in the global market has seriously disrupted their production. The consequences hit numerous low-wage Chinese textile workers harder than the current hold-up is affecting European retailers."

Around eighty million garments made in China are blocked from entering the EU after trade quotas negotiated in June 2005 were exceeded. 

Retailers argue that they have ordered and paid for most of the textiles, worth hundreds of millions of euros, in good faith before the deal was concluded. A significant number of the textiles were ordered, however, in a surge shortly after the agreement's conclusion. 

While an EU delegation was in its fifth day of negotiations in Beijing on 30 August 2005, in order to break the impasse, Commissioner Mandelson addressed the EU Parliament's International Trade Committee, advocating that the garments were to be unblocked. 

Mr. Mandelson now needs to convince the Permanent Representatives of the 25 member states that the agreement is to the EU's best. If he succeeds, the garments could be released by mid-September 2005. 

At the same time, the United States are starting similar trade talks on textiles with China. 

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