Textiles deal a sensible compromise

PUBLISHED : Wednesday, 07 September, 2005, 12:00am
UPDATED : Wednesday, 07 September, 2005, 12:00am

It was a question of when, not if, negotiations would succeed in freeing up about 85 million items of mainland clothing and textiles impounded on Europe's docks. The quota restrictions that created the logjam have backfired badly on the European Union and it needed a face-saving deal. The agreement in Beijing on Monday that gets them moving into shops was a sensible outcome in which both sides gave ground.

European importers and retailers placed orders for the items after global quotas on textile exports were lifted on January 1. In June the European Union negotiated an agreement with China to reimpose quotas until 2007 to protect the jobs of European textile workers from a flood of cheap mainland imports. But most of the quotas were quickly filled to overflowing by goods already ordered.

As a result, exports piled up in European ports and consumers faced empty shop shelves in the run-up to Christmas. The EU was forced to renegotiate the deal. After tough talks over nearly two weeks the two sides agreed to raise the quotas and top them up by 'borrowing' from next year's allowance and the few categories that remain unfilled this year.

Described as a '50-50 deal' by EU Trade Commissioner Peter Mandelson and 'reasonable and rational' by Commerce Minister Bo Xilai , it is a compromise that extricates the Europeans from a mess of their own making and keeps faith with importers and retailers who had placed orders - and paid for them - before the new quotas were imposed.

The surge in imports from China since the beginning of the year is misleading. Previously, a lot of the clothes made on the mainland were exported through other centres such as Hong Kong to get round the old quotas. Recently they have been shipped directly. In fact there is no evidence that total European or American clothing imports have risen significantly.

There are signs EU members will ratify the deal - possibly today - despite opposition by the inefficient, high-cost textile-producing nations of southern Europe. They should endorse it. Their producers had plenty of notice of unrestricted competition from China and they cannot make up the shortfall at competitive prices. In the longer term they should be persuaded to retrain their workers. Their textile producers should follow the example of their northern European counterparts and find new markets or transform themselves into logistics or distribution operations.

This was implicit in the message delivered by British Prime Minister Tony Blair, in Beijing for a Sino-EU business summit the same day as the textile deal was announced. Calling on Britain and Europe to manage change rather than resist it, he said the textile row underlined the need to adapt to competition from low-cost producers such as China and India. Mr Blair rightly said the trade challenge from China should be seen as an opportunity to compete using innovation, science and technology, not as a threat to be met with protectionism.

His advocacy of free trade and flexible markets has often caused friction with France and other EU nations. His latest remarks also contrast pointedly in tone with what we often hear from the United States, where Chinese textile imports are a more politically charged issue.

Last week the Bush administration announced more restrictions on imports of Chinese-made bras and some fabrics 'to level the playing field for US industries'. A fourth round of Sino-US trade talks has ended without agreement and the two countries are yet to fix a date and place for the next round.

Quotas on mainland textile imports punish low-income consumers to protect jobs in industries that must restructure to be competitive or die. There is a lesson in Europe's experience - that protectionist barriers to free trade can rebound on governments and consumers. The US should abide by the free-trade principles it advocates in international forums.