EU textile industry: the choice amid the reality of global textile trade integration

Following the State Council's decision on May 20 to quadruple export tariffs for 74 categories of textile products as of June 1, 2005, a Chinese delegation of Ministry of Commerce headed to Brussels on May 23 for talks with EU Commissioner for Trade Peter Mandelson.

However, this did not slow down EU's pace of imposing restrictions on Chinese textile products. The EU Commission announced on May 27 it would ask for formal consultation with China on two types of textile products, T-shirts and flax yarn within the framework of the WTO. The emergency safeguard proceedings were activated accordingly.

The huge potentials of Chinese textile export have become a focus of EU members since the quota for textiles was revoked on Jan 1st 2005. The EU Commission issued guidelines for activating protective rules for textile on April 6 and put up a security zone aimed at growth of Chinese textile products import.

On May 17, Mandelson proposed the EU Commission to start formal consultation with China on T-shirts and flax yarn, for what he thought were serious injuries to EU textile industry.

The EU textile committee gave green light for his proposal on May 23. Under the WTO rules, China must rein in its export growth within 7.5% within 15 days of the start of formal talks, otherwise the EU will be able to impose restrictions on import.

After months' debates, the EU has made the decision under pressure from the textile committee and related member states. The "shortsighted" move is regrettable. As the Swedish Trade Minister Thomas Ostros once pointed out, the over-reaction towards Chinese textile export reveals worry-inspiring trade protectionism and is betrayal to the free trade principle EU has been advocating. Excessive trade protection will hamper EU's long-term development instead of boosting growth of related industries.

Labor-intensive industries like textile have become sunset industries in developed countries within the EU, because the high productive cost has resulted in low competitiveness of products. Over the past 40 years, the US and Europe's efforts to protect the textile industry by quota system have appeared increasingly ineffective. The EU is not ignorant of this fact. In the seven measures it launched at the beginning of 2005 to improve competitiveness of textile industry, opening market, removing non-tariff barriers and stimulating research and reform in textile industry are included in as important contents.

Decision makers in the EU should realize that export of Chinese textile product benefits not only China, but also importing countries. Chinese textile factories can only take 10% of profit, while 90 % go to brand owners, wholesalers, distributors and retailers. Moreover China imports large quantity of textile products at the same time. Imposing limits on Chinese textile products not only harms the free trade principle but also interests of EU enterprises and consumers.

Revoking textile quota globally means shrinkage of profit margin and fiercer competition in the textile and clothing field. Facing the market rules, textile industry in certain countries should gain their foothold in international market by quickening structural adjustment and products upgrading, rather than maintain high profits from unfair trade by pinning hope on trade protection and restricting the competitors.

By People's Daily Online