EU, China at Loggerheads Over Textiles

The European Commission expects EU member states to call on it to launch emergency measures leading to a fast-track application of limits on booming Chinese textiles imports, a spokeswoman said Monday.

The emergency measures, which 13 mainly textile-producing EU states want, would allow Brussels to bypass months of investigations and consultations otherwise needed to take action. But they also risk raising the ire of Beijing and opening a painful trade dispute with the Asian giant.

"At this stage we are expecting a formal request for emergency measures," EU trade spokeswoman Claude Veron-Reville said.

Chinese textile imports into the European Union have surged by as much as 534 percent for some garments since the end of a global quota system on January 1, 2005.

Accusations of "too little, too late"

The European Commission, which European textile makers accuse of doing "too little and too late", is poised to launch investigations into Chinese textile imports -- the first step towards slapping on limits -- after Brussels received data showing that they are surging well beyond levels it considers tolerable.

But at an informal meeting Sunday in Luxembourg, EU trade ministers from 13 textile-producing states argued that the EU's executive commission should go further than investigations, and apply special clauses in WTO rules that allow for emergency safeguards.

French Industry Minister Patrick Devedjian said in Paris on Monday that the European Union could take measures to halt the flood of Chinese textile imports "within 15 days" once formal negotiations on the subject had been opened.

The growing calls for the European textile industry to be shielded against Chinese imports come as many EU companies and governments try to establish warm relations with Beijing in hope of doing business with the emerging economic giant.

But with billions of dollars of trade on the line, China reiterated its opposition to any moves to impose barriers on its textiles. "China is firmly opposed to limitations imposed by other countries," Trade Minister Bo Xilai said Monday while in Jakarta, according to the China News Service.

China warns of deteriorating ties

"China does not bear the main responsibility for the phenomenon of steep rises in the exports of Chinese textiles in certain markets," he was quoted as saying. Beijing warned that its ties with the EU could suffer if Brussels goes ahead with imposing limits.

France, Italy and Portugal, all big EU textile producers, have been pressuring Brussels to take action to halt the flood of Chinese textiles. On Monday, French clothing association UFIH welcomed the EU's decision to press ahead with investigations.

Mandelson under fire and on the offensive

It called on EU Trade Commissioner Peter Mandelson, who has been accused of reacting too slowly, "not to drift back asleep nor be happy with demi-measures and to go to the end of the investigation procedure after this 'late awakening'".

On Monday, as Mandelson traveled to Hong Kong, his officials launched an investigation into nine categories of Chinese textile or clothing products. These include T-shirts, pullovers, mens' trousers, blouses, stockings and socks, women's overcoats, bras and flax yarn.

Mandelson stepped up pressure on China to curb what he called a "ruinous" surge in textile exports, when he urged the EU's main trading partner on Sunday to take action or face possible action.

"If justified by the facts I will use the safeguards," he said, referring to measures which allow the 25-member bloc to take action if imports threaten European producers. "I urge China to take a fresh look at the measures they have put in place already, and explore whether they cannot do more," he said.

Some Europeans warn of protectionism

Despite the growing pressure within the EU for measures to hold back Chinese textile imports, some member countries have warned against protectionist moves.

Swedish State Secretary for Trade Lars-Olof Lindgren said Sunday in Luxembourg: "We in Sweden think we should concentrate on getting the European economy and industry competitive instead of trying to protect it."

"This is no way of getting Europe to be the most competitive industry in the world," he added.

WTO advises caution and delays

The director general of the World Trade Organization, Supachai Panitchpakdi, counseled caution to countries struggling against the surge in Chinese textile exports, advising them to wait at least a year before taking any protectionist steps.

In an interview with the Wall Street Journal at WTO headquarters in Geneva, Supachai said that after only a few months of evidence following the lifting of textile quotas, the final impact of the trade rules remained unclear. "We should be a little bit more judicious in looking at the figures," he said.