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EU Opens Way for Curbs on Chinese Textile Surge
Reuters
4/23/2005



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BRUSSELS, - The EU's trade chief, decided on Friday to trigger a probe into the surge in Chinese textiles and clothing imports, following the end of global quotas, opening the way for possible curbs to protect European industry.

The move came after weeks of fierce lobbying by Europe's textile industry, whose alarm at the prospect of massive job losses has crept into France's public debate on the European Union constitution, ahead of a crucial referendum next month.

Trade Commissioner Peter Mandelson will next week recommend to the EU's executive that it open an investigation, the first stage of a formal process that could lead to the application of so-called "safeguards" by the 25-nation bloc within 150 days.

"At this stage we have sufficient data to consider recommending measures," EU trade spokeswoman Claude Veron-Reville said. "We need to look at the sizeable increase in imports and see if this has distorted trade in a major way."

Any curbs decided by the EU executive would probably only take effect in September, but they would apply retroactively to the launch of the investigation, she told Reuters.

Under the terms of its entry into the World Trade Organisation (WTO) in 2001, Beijing agreed that members could cap imports of Chinese clothing and textiles at 7.5 percent above the level of shipments the previous year until 2008 -- providing they demonstrate that their own firms are suffering.

China made 17 percent of the world's textiles and clothing in 2003, but the WTO sees that market share rising above 50 percent within the coming three years following the end of a decades-old international quota system on Jan. 1.

"BRUTAL AND UNACCEPTABLE INVASION"

Both the United States and Europe, whose textile producers were long protected by the quota regime, have pressed Beijing to cool its exports.

But Mandelson has resisted calls from the European textiles industry group EURATEX -- and countries such as France and Italy which fear damage to their businesses -- for immediate "safeguards" to be imposed without hard statistical evidence.

EURATEX, which says it represents businesses generating 4 percent of Europe's gross domestic product and 7 percent of its jobs, argues that China's cheap labour, state subsidies and copyright infringements make it impossible to compete.

It says up to 1 million jobs could be lost this year alone.
French President Jacques Chirac -- battling to reverse opinion polls that point to a rejection of the EU constitution amid discontent with his country's economic stagnation -- spoke forcefully on the issue in a televised debate last week.

"There has clearly been a brutal and unacceptable invasion of European and American markets by Chinese textiles," he said.

The European Commission's guidelines require import rises of between 10 and 100 percent -- depending on the textile or clothing product -- before the launch of a probe and informal consultations with China, which last up to 60 days.

If at the end of its investigation the Commission concludes there is a genuine threat to European industry -- and if Beijing takes no action to brake its exports voluntarily -- the EU would start a three-month process leading to the imposition of safeguards.





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