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(File Photo of Peter Mandelson)
Restoring import quotas that were abolished at the start of the year isn't
the solution to the European Union's efforts to quell surging textile exports
from China, European Trade Commissioner Peter Mandelson said.
Bowing to pressure from more than a half-dozen EU governments, Mandelson on
May 17 gave China a final chance to limit exports of T-shirts and flax yarn to
the bloc before the EU imposes quotas. The U.S. has also tried to protect
domestic industry from Chinese garment exports that have grown since 40-
year-old quotas were lifted on Jan. 1.
The transition to open markets ``has to be managed,'' Mandelson said today at
the World Economic Forum in Jordan. ``We have to make it smooth. It is not a
question of restoring quotas. In the short term, we have to take steps,
hopefully by negotiation, to ensure that we move more slowly from one period to
another. And that's what I am engaged in now.''
China yesterday agreed to raise export tariffs on 74 products starting June
1. While the increases are five times higher than previous taxes for most of the
items, U.S. and European businesses said the duties won't curtail the growth in
exports. Today, China threatened to drop export taxes on textiles should other
governments impose caps through quotas.
Under China's 2001 World Trade Organization accession accord, WTO members are
permitted to impose a 7.5 percent cap on growth in exports of Chinese textile
and apparel products in cases of market disruption. The provision lapses at the
end of 2008.
Currency, Labor
China is the world's largest clothing exporter, shipping about $97.4 billion
of apparel worldwide last year, according to the China National Textile &
Apparel Council in Beijing. Prices for Chinese apparel in 2004 were 58 percent
below those offered by suppliers in countries including Bangladesh and India,
the U.S. textile industry estimates.
Given China's currency advantage and its low labor costs, Mandelson said, the
impact of Chinese exports in the textile industry will be ``considerable'' in
the short term.
His comments were made in a press release issued by the World Economic Forum.
