China Riled; France Demands EU Curbs

[HenryTo]

No opinion here but like I said in our weekend commentary: It looks like the current phase of globalization is slowing down for now.
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China Riled; France Demands EU Curbs
April 26, 2005 11:16:00 AM ET

By John Chalmers

BRUSSELS (Reuters) - France called on Tuesday for emergency action to curb a surge in imports of cheap Chinese textiles and clothing into the European Union, provoking a frosty response from Beijing.

French President Jacques Chirac, battling to reverse opinion polls that point to a rejection of the EU constitution in next month's referendum, seized on anxieties about potential huge job losses in Europe's textile industry.

``We cannot accept that these textiles, the prices of which have fallen significantly recently, can invade our markets without regulation,'' he told a joint news conference in Paris with German Chancellor Gerhard Schroeder.

His government formally asked the European Commission, the EU's executive arm, to accelerate a process that could lead to restrictions on Chinese shipments to Europe within 150 days.

``These emergency measures could be taken in a fortnight,'' Industry Minister Patrick Devedjian told reporters. ``We are asking for the fast track because this is ... serious.''

Figures released by the European Commission last weekend showed that China sold more than 150 million T-shirts to the 25-nation EU in the first quarter of this year, a rise of 164 percent from the same period of 2004. Pullover imports leapt by 534 percent and those of men's trousers by 413 percent.

The industry group EURATEX says such rises are the result of unfair competition, and could lead to the loss of some 600,000 jobs from a European workforce of 2.5 million this year alone.

WARNING FROM CHINA

In Beijing, a spokesman for China's Commerce Ministry said the EU's action ran counter to the spirit of free trade and could damage Sino-European trade.

``China hopes Europe is able to recognize the negative effects that limits on textile products would have on bilateral economic and trade relations,'' Chong Quan said in a statement.

China signed orders worth about $3.2 billion for 30 European Airbus aircraft last week during a visit by France's prime minister. The Chinese say a single plane costs the equivalent of 20 million Chinese shirts exported to Europe.

After joining the World Trade Organization in 2001, China agreed to let member states restrict imports of clothing and textiles if a sudden surge in shipments threatened to disrupt their markets.

The so-called ``safeguards'' provision allows countries to limit the rise in Chinese imports to 7.5 percent above the previous year.

The United States has already launched an investigation which is expected to lead to emergency curbs after data showed a year-on-year rise of 62.4 percent in U.S. imports of apparel and textile products in the first two months of this year.

A European Commission probe into 9 categories of mostly clothing products is expected to start on Friday.

The textile dispute adds to existing friction between the EU and China, which is pressing the bloc to end an arms embargo imposed after Beijing's bloody suppression of the Tiananmen Square pro-democracy demonstrations in 1989.

HUMAN RIGHTS

France and its allies are keen to end the ban but other EU states, heeding pressure from Washington, say Beijing must do more to improve human rights and lower tensions with Taiwan.

The EU Commission's investigation into Chinese textiles will last a maximum of 60 days, though European Trade Commissioner Peter Mandelson has said it should be completed by mid-June.

If the Commission determines that serious market disruption has occurred, it can launch formal consultations to ask China to limit exports to levels agreed under the WTO ``safeguard'' clause.

These consultations should last 90 days but if China has not taken any action after 15 days to curb its exports voluntarily, the EU can act immediately to impose the limits itself.

France's request for an ``emergency procedure'' could short-circuit the process by moving it directly to formal consultations with China.

But Mandelson said on Tuesday he would not be rushed into over-hasty action, and the Commission said it would need more data to justify such a step, which would have to be approved by a qualified majority of EU member states.

The bloc is evenly divided on fast-tracking action against China, with a north European bloc including Germany and the Netherlands opposed to emergency measures.