EU warns of new China textile 'disaster'
(AFP)
Updated: 2005-09-12 08:47

European retailers are looking forward to the end of a logjam of Chinese clothing imports this week but warn that a new "disaster" could already be looming, threatening further EU-China strains, AFP reported.

The European Union hopes that by the middle of the week it can start releasing millions of bras, trousers and other cheap Chinese-made clothes blocked at European ports for weeks in a row over import quotas.

EU trade chief Peter Mandelson secured a deal in Beijing last week to end the huge blockage, which built up after an initial June quota accord with Beijing led to a rush of orders from European retailers.

But the Foreign Trade Association, a Brussels-based group representing European retailers, warns that import strategies for next year "have to be planned carefully to avoid a new disaster in 2006."

Mandelson "is claiming that there won't be a problem next year .. but we think there could definitely be a problem," FTA spokesman Stuart Newman told AFP. "It all depends on how quickly our importers can react to the new quotas."

The EU, along with the United States, has pressed China to limit its clothes exports since the end of a global textiles quota system in January, arguing that the cheap goods are a threat to domestic producers.

In June the EU, pressed by European manufacturers, struck a deal in Beijing to limit the imports into Europe. But retailers, anticipating a shortage, had already placed huge orders for the cheap goods.

As a result millions of Chinese items, including sweaters (pullovers), trousers, blouses, T-shirts, bras and tonnes of flax yarn, have been impounded for weeks on European docksides.

Last week's Beijing accord, struck just in time to avoid clouding an EU-China summit at which British Prime Tony Blair led the EU presidency, finally ended the deadlock, and was approved by by EU states a few days later.

But some Chinese textile manufacturers have already started worrying about their future exports, according to the Xinhua News Agency.

"The export quotas for the second half of the year have almost been used up and if we start using next year's quotas, we will face greater pressure next year," said Zhu Hongjun, a senior manager with Peiluocheng Group in Zhejiang. The question of how to deal with the logjam divided EU members, roughly between southern European countries whose manufacturers fear the flood of cheap imports and northern countries where retailers want fresh stocks.

British finance minister Gordon Brown entered the debate Friday, slamming the "new protectionism" shown by the standoff, as well as the "old European social model" behind it -- a clear reference to states like France and Germany.

The dispute was a "wake-up call" for those within the EU who preferred to ignore the rapid growth of China and other Asian economies, Brown said in an article for Friday's Financial Times newspaper.

"The new protectionism that we are seeing, however well intentioned, is a wake-up call because it is the last stand from those who believe we can stop the clock, postpone or prevent inevitable change," he wrote.

The EU's Mandelson -- who has been criticized for his handling of a number of key dossiers since he took office in the Brussels post last November -- won plaudits from many for last week's Beijing accord.

But for EU retailers, everything depends on how things pan out in the months to come.

"He's got himself rather nicely out of a mess, but the agreement which he has managed to negotiate with the Chinese now is not by any perfect for EU retailers and importers," said the FTA's Newman.