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Financial Times (London, England)
August 30, 2005 Tuesday
London Edition 1
SECTION: WORLD NEWS; Pg. 5
LENGTH: 702 words
HEADLINE: Mandelson calls on China to help solve Europe's textile crisis
BYLINE: By RICHARD MCGREGOR and GEORGE PARKER
DATELINE: BRUSSELS and BEIJING
BODY:
Peter Mandelson, Europe's trade commissioner, yesterday told China it had a "moral and political obligation" to help solve the textiles dispute with Europe, amid fears the dispute could escalate.
Four days of negotiations between the EU and China have ended in stalemate, with Beijing giving little ground to help Mr Mandelson end the crisis, which has left up to 80m items of Chinese clothing blocked in European ports.
Yesterday an exasperated Mr Mandelson attempted to deflect the blame for the fiasco, which has denied retailers access to clothing ordered for the autumn season. He said he resisted imposing new quotas on Chinese clothes in the first place - a deal he negotiated with Beijing under pressure from France, Italy and other EU textile producers.
"I have never disguised the inherent difficulties in introducing restrictions to trade," he said. "My caution was well known."
He said the European Commission, EU members and China should all take their share of the blame for the botched implementation of the June 10 deal, which restricted exports of 10 categories of Chinese clothing.
Nevertheless the failure of talks in Beijing and the growing anger of retailers has left Mr Mandelson exposed to criticism.
This week he will urge EU states to unblock all Chinese garments stacked in Europe's customs warehouses, ordered by retailers before the new quotas came into force. "I cannot accept that EU retail businesses should be penalised unfairly by the introduction of the agreement we made in China," he said.
Germany insisted yesterday textile imports blocked at ports should be released as soon as possible, as many were ordered in good faith before the June agreement. German officials indicated that any solution to the crisis which involved reducing next year's quota for textile imports would not be desirable.
"We haven't seen any proposals yet, but if we can find a solution that is good for our firms then there is a possibility for a truce," said Thomas Ostros, minister of industry of Sweden, which along with Denmark voted against the June 10 agreement.
"There are small and medium-sized companies that are under great pressure, and we need a quick solution that is non-bureaucratic. Secondly, any solution must not create further difficulties next year. There's an important discussion right now about borrowing from next year's quotas and that is not wise," Mr Ostros said. But Mr Mandelson admitted it was "possible" some EU members would oppose unblocking the clothing backlog, without an agreement with China on how they should be counted in relation to the agreed quotas.
Poland is standing fast by its coalition partners such as France and Spain which are reluctant to let in the Chinese clothing, said Marcin Kaszuba, Poland's deputy economy minister.
Beijing has rejected EU requests that some blocked goods should be transferred to next year's quota. One Chinese official said that would be like "eating the Year of the Tiger's food in the Year of the Rabbit".
Without any such agreement, Mr Mandelson fears textile producers such as France, Italy and Spain could insist on unilateral new restrictions on Chinese imports next year.
That would be a disaster for Mr Mandelson's policy of constructive engagement with Beijing, and could provoke a round of tit-for-tat trade battles between the EU and China.
Mr Mandelson hopes he can persuade China to accept a deal before the end of the week through telephone negotiations, easing tensions ahead of next week's EU-China summit in Beijing.
Meanwhile some textile companies cannot afford to wait for the EU to stitch together a solution to the current textile crisis.
Henrik Holbech, who owns a lingerie company in the Danish town of Skanderborg, caught the first flight to Asia when the bra quotas ran out last week.
"We have moved production to Hong Kong and Macao. It wasn't easy to find an alternative manufacturer because we weren't the only ones looking," Mr Holbech said. "It cost us about DKr1m, (Pounds 90,000, Dollars 165,000, Euros 135,000) but we couldn't wait for the EU to react or not to react." Additional reporting by Hugh Williamson in Berlin, Clare MacCarthy in Copenhagen, Jan Cienski in Warsaw and Rupini Bergstrom in Stockholm
LOAD-DATE: August 29, 2005
August 30, 2005 Tuesday
London Edition 1
SECTION: WORLD NEWS; Pg. 5
LENGTH: 702 words
HEADLINE: Mandelson calls on China to help solve Europe's textile crisis
BYLINE: By RICHARD MCGREGOR and GEORGE PARKER
DATELINE: BRUSSELS and BEIJING
BODY:
Peter Mandelson, Europe's trade commissioner, yesterday told China it had a "moral and political obligation" to help solve the textiles dispute with Europe, amid fears the dispute could escalate.
Four days of negotiations between the EU and China have ended in stalemate, with Beijing giving little ground to help Mr Mandelson end the crisis, which has left up to 80m items of Chinese clothing blocked in European ports.
Yesterday an exasperated Mr Mandelson attempted to deflect the blame for the fiasco, which has denied retailers access to clothing ordered for the autumn season. He said he resisted imposing new quotas on Chinese clothes in the first place - a deal he negotiated with Beijing under pressure from France, Italy and other EU textile producers.
"I have never disguised the inherent difficulties in introducing restrictions to trade," he said. "My caution was well known."
He said the European Commission, EU members and China should all take their share of the blame for the botched implementation of the June 10 deal, which restricted exports of 10 categories of Chinese clothing.
Nevertheless the failure of talks in Beijing and the growing anger of retailers has left Mr Mandelson exposed to criticism.
This week he will urge EU states to unblock all Chinese garments stacked in Europe's customs warehouses, ordered by retailers before the new quotas came into force. "I cannot accept that EU retail businesses should be penalised unfairly by the introduction of the agreement we made in China," he said.
Germany insisted yesterday textile imports blocked at ports should be released as soon as possible, as many were ordered in good faith before the June agreement. German officials indicated that any solution to the crisis which involved reducing next year's quota for textile imports would not be desirable.
"We haven't seen any proposals yet, but if we can find a solution that is good for our firms then there is a possibility for a truce," said Thomas Ostros, minister of industry of Sweden, which along with Denmark voted against the June 10 agreement.
"There are small and medium-sized companies that are under great pressure, and we need a quick solution that is non-bureaucratic. Secondly, any solution must not create further difficulties next year. There's an important discussion right now about borrowing from next year's quotas and that is not wise," Mr Ostros said. But Mr Mandelson admitted it was "possible" some EU members would oppose unblocking the clothing backlog, without an agreement with China on how they should be counted in relation to the agreed quotas.
Poland is standing fast by its coalition partners such as France and Spain which are reluctant to let in the Chinese clothing, said Marcin Kaszuba, Poland's deputy economy minister.
Beijing has rejected EU requests that some blocked goods should be transferred to next year's quota. One Chinese official said that would be like "eating the Year of the Tiger's food in the Year of the Rabbit".
Without any such agreement, Mr Mandelson fears textile producers such as France, Italy and Spain could insist on unilateral new restrictions on Chinese imports next year.
That would be a disaster for Mr Mandelson's policy of constructive engagement with Beijing, and could provoke a round of tit-for-tat trade battles between the EU and China.
Mr Mandelson hopes he can persuade China to accept a deal before the end of the week through telephone negotiations, easing tensions ahead of next week's EU-China summit in Beijing.
Meanwhile some textile companies cannot afford to wait for the EU to stitch together a solution to the current textile crisis.
Henrik Holbech, who owns a lingerie company in the Danish town of Skanderborg, caught the first flight to Asia when the bra quotas ran out last week.
"We have moved production to Hong Kong and Macao. It wasn't easy to find an alternative manufacturer because we weren't the only ones looking," Mr Holbech said. "It cost us about DKr1m, (Pounds 90,000, Dollars 165,000, Euros 135,000) but we couldn't wait for the EU to react or not to react." Additional reporting by Hugh Williamson in Berlin, Clare MacCarthy in Copenhagen, Jan Cienski in Warsaw and Rupini Bergstrom in Stockholm
LOAD-DATE: August 29, 2005
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