LexisNexis(TM) Academic - Document
Financial Times (London, England)
August 24, 2005 Wednesday
London Edition 3
SECTION: INTERNATIONAL ECONOMY; Pg. 5
LENGTH: 878 words
HEADLINE: How EU textile quotas became a Chinese puzzle: With imported clothing stuck in warehouses and retailers crying out for stock, the trade restrictions have been
BYLINE: By TOBIAS BUCK
BODY:
As sweaters, bras and shirts imported from China continue to pile up in warehouses across the European Union, there is one question on the minds of trade officials and diplomats, retailers and consumers: where did it all go wrong?
It is a question that is perhaps asked most strongly in a glass-fronted building in the heart of Brussels' European quarter.
Known as the Charlemagne building, this is where the European Commission's top trade officials spent the early days of June carefully preparing a deal which they thought at the time would solve once and for all a growing political crisis.
For months, the EU's executive body had been besieged by textiles and clothing manufacturers and politicians from countries such as Italy, with big textile industries.
Since the end of decades-old import restrictions at the beginning of the year, European groups were seeing their market share shrinking in the face of an onslaught by cheaper rivals from China.
The Commission was facing intense pressure, as data poured in suggesting that the rise in Chinese textiles and clothings imports had exceeded European producers' worst fears.
Shipments of shoes alone, Commission figures showed, had risen by almost 700 per cent since the quota regime was abolished in January.
Peter Mandelson, the EU trade commissioner, found himself in a bind. He knew that European producers had been given more than enough time to prepare for the end of the quota regime.
He also knew that - no matter how many obstacles politicians would put in the way of Chinese imports - the country's unrivalled manufacturing prowess would in the long run be impossible to beat.
But there were political forces to consider, too. The EU's draft constitution had just been rejected by voters in the Netherlands and France, plunging the Union into turmoil.
Much of the hostility faced by the EU institutions appeared to feed on the perception that the Union had allowed foreign competition to undermine national labour and social standards and caused job losses.
And finally, Mr Mandelson had his political masters to consider. Big EU member states were telling him to take action and curb the influx of Chinese goods. The Commission, they demanded, had to act fast or Europe's once-proud textiles industry would face annihilation.
Mr Mandelson favoured a voluntary deal with the Chinese rather than imposing trade defence measures unilaterally, and on June 10 he pulled off such a deal.
Ten categories of textiles would now be subject to voluntary import restrictions, which were expressed in quotas. As soon as the agreed level of imports had been reached, no further product could be shipped to Europe.
At the time, it all sounded simple enough, and speaking in Shanghai the commissioner hailed it as a "once and for all, overall agreement".
He also heaped praise on his Chinese interlocutors: "This is a significant demonstration of China's entry into the global economy as a responsible and valued partner," he said.
Back in Brussels, the deal met an overwhelmingly positive response. Only Sweden and Denmark - traditionally the Union's staunchest defenders of free trade - voted against it. Yet hopes that Mr Mandelson had brokered a lasting peace faded quickly. On July 21, less than two weeks after the agreement took effect, the first category was filled.
Any importer who had not yet secured a licence to import sweaters from China would from now on be unable to sell the goods he ordered on to the European market.
By yesterday, the number of pullovers which are blocked either on ships, at customs points in Europe or back in China exceeded 48m.
Five further categories have since been filled and retailers are warning that the shortfalls will be felt on store shelves across the EU. Shirts, trousers, bras, blouses and flax yarn have all been affected. Retailers and importers, meanwhile, are angry that their long- placed orders cannot be delivered.
Commission officials stress that it is neither surprising nor undesirable for the quotas to fill up. They point out that if quotas simply reflected European demand, there would be no reason for their existence.
However, in some categories at least, it appears that the Commission miscalculated.
With more than four months to go until the end of the year, Brussels has already been asked for licences to import pullovers enough to fill the quota twice. But in cotton fabrics, for example, the quota is nowhere close to being filled.
Brussels will this week try to address such mismatches, and is expected to propose that quotas be juggled to allow those goods on to the market that are currently being kept in warehouses in the EU.
However, officials insist that the Commission is unlikely to go beyond short-term fixes.
While the retail lobby is flexing its muscles and is receiving support from a growing number of governments, diplomats say that positions have not shifted much.
There would, Brussels officials and diplomats say, be no majority among EU member states for abandoning the June 10 agreement.
Any move in that direction, they add, would simply restart the fierce lobbying campaign that led to the deal in the first place.
As the Commission has found out so often in the past, when jobs and politics are at stake, there is rarely a majority for free trade.
LOAD-DATE: August 23, 2005
August 24, 2005 Wednesday
London Edition 3
SECTION: INTERNATIONAL ECONOMY; Pg. 5
LENGTH: 878 words
HEADLINE: How EU textile quotas became a Chinese puzzle: With imported clothing stuck in warehouses and retailers crying out for stock, the trade restrictions have been
BYLINE: By TOBIAS BUCK
BODY:
As sweaters, bras and shirts imported from China continue to pile up in warehouses across the European Union, there is one question on the minds of trade officials and diplomats, retailers and consumers: where did it all go wrong?
It is a question that is perhaps asked most strongly in a glass-fronted building in the heart of Brussels' European quarter.
Known as the Charlemagne building, this is where the European Commission's top trade officials spent the early days of June carefully preparing a deal which they thought at the time would solve once and for all a growing political crisis.
For months, the EU's executive body had been besieged by textiles and clothing manufacturers and politicians from countries such as Italy, with big textile industries.
Since the end of decades-old import restrictions at the beginning of the year, European groups were seeing their market share shrinking in the face of an onslaught by cheaper rivals from China.
The Commission was facing intense pressure, as data poured in suggesting that the rise in Chinese textiles and clothings imports had exceeded European producers' worst fears.
Shipments of shoes alone, Commission figures showed, had risen by almost 700 per cent since the quota regime was abolished in January.
Peter Mandelson, the EU trade commissioner, found himself in a bind. He knew that European producers had been given more than enough time to prepare for the end of the quota regime.
He also knew that - no matter how many obstacles politicians would put in the way of Chinese imports - the country's unrivalled manufacturing prowess would in the long run be impossible to beat.
But there were political forces to consider, too. The EU's draft constitution had just been rejected by voters in the Netherlands and France, plunging the Union into turmoil.
Much of the hostility faced by the EU institutions appeared to feed on the perception that the Union had allowed foreign competition to undermine national labour and social standards and caused job losses.
And finally, Mr Mandelson had his political masters to consider. Big EU member states were telling him to take action and curb the influx of Chinese goods. The Commission, they demanded, had to act fast or Europe's once-proud textiles industry would face annihilation.
Mr Mandelson favoured a voluntary deal with the Chinese rather than imposing trade defence measures unilaterally, and on June 10 he pulled off such a deal.
Ten categories of textiles would now be subject to voluntary import restrictions, which were expressed in quotas. As soon as the agreed level of imports had been reached, no further product could be shipped to Europe.
At the time, it all sounded simple enough, and speaking in Shanghai the commissioner hailed it as a "once and for all, overall agreement".
He also heaped praise on his Chinese interlocutors: "This is a significant demonstration of China's entry into the global economy as a responsible and valued partner," he said.
Back in Brussels, the deal met an overwhelmingly positive response. Only Sweden and Denmark - traditionally the Union's staunchest defenders of free trade - voted against it. Yet hopes that Mr Mandelson had brokered a lasting peace faded quickly. On July 21, less than two weeks after the agreement took effect, the first category was filled.
Any importer who had not yet secured a licence to import sweaters from China would from now on be unable to sell the goods he ordered on to the European market.
By yesterday, the number of pullovers which are blocked either on ships, at customs points in Europe or back in China exceeded 48m.
Five further categories have since been filled and retailers are warning that the shortfalls will be felt on store shelves across the EU. Shirts, trousers, bras, blouses and flax yarn have all been affected. Retailers and importers, meanwhile, are angry that their long- placed orders cannot be delivered.
Commission officials stress that it is neither surprising nor undesirable for the quotas to fill up. They point out that if quotas simply reflected European demand, there would be no reason for their existence.
However, in some categories at least, it appears that the Commission miscalculated.
With more than four months to go until the end of the year, Brussels has already been asked for licences to import pullovers enough to fill the quota twice. But in cotton fabrics, for example, the quota is nowhere close to being filled.
Brussels will this week try to address such mismatches, and is expected to propose that quotas be juggled to allow those goods on to the market that are currently being kept in warehouses in the EU.
However, officials insist that the Commission is unlikely to go beyond short-term fixes.
While the retail lobby is flexing its muscles and is receiving support from a growing number of governments, diplomats say that positions have not shifted much.
There would, Brussels officials and diplomats say, be no majority among EU member states for abandoning the June 10 agreement.
Any move in that direction, they add, would simply restart the fierce lobbying campaign that led to the deal in the first place.
As the Commission has found out so often in the past, when jobs and politics are at stake, there is rarely a majority for free trade.
LOAD-DATE: August 23, 2005
posted by Eastlaw at 12:01 AM
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