Braced for end of textile quotas, EU urges fair trade with China

(STRASBOURG) - EU lawmakers and officials demanded on Thursday a level playing field in trade relations with China as Europe braces for the end of quotas on imports of Chinese-made clothes.

"I see the textiles problems as emblematic of the broader problems we face in China," EU Trade Commissioner Peter Mandelson told lawmakers at the European Parliament.

"We expect the same sort of equal opportunity and fair treatment in China's market that Chinese producers receive in ours," he said.

The textile issue risks fraying already strained trade relations with China, which Europeans accuse of artificially keeping down the value of its currency, blocking market access to EU goods and flaunting copyright rules.

The current quotas on Chinese clothing were agreed by the European Commission and China in 2005 after Europe was swamped by a wave of cheap imports following the end of limits on the international trade in textiles.

With those safeguard quotas due to expire at the end of the year, Brussels and Beijing agreed in October not to renew them and instead set up a monitoring system designed to alert authorities in case of a new flood of Chinese goods.

Spanish Liberal Democrat lawmaker Ignasi Guardans Cambo urged the European Commission to be on its guard against an upsurge in clothing products from China.

"The Commission cannot just watch from the sidelines as if it's just a change in the weather," he said, calling on the Commission to "make sure the rules are the same for everyone and not hesitate to use our trade defence instruments."

Likewise, Spanish Socialist MEP Joan Calabuig Rull stressed: "We need to see that Europe can compete on a level playing field."

While Europe was counting on China to help ensure a "smooth transition" away from the clothing safeguard quotas, Mandelson insisted that the Commission would take action if necessary.

"In face of a sudden upsurge in Chinese textiles, the Commission stands ready to use all of (the) instruments at its disposal," he said.

With the European Union's trade deficit with China fast widening, EU officials are stepping up their rhetoric against what they see as China's failure to open its market to European goods.

"Instead of a level playing field, it is seriously tilted against us," Mandelson said. "We face trade and investment restrictions, rampant counterfeiting; regulatory barriers in virtually every sector.

"China's WTO obligations, six years after it became a member, are still too often unmet," he added, referring to the World Trade Organisation.

In addition to struggling to crack the Chinese market, European rival companies in emerging countries like China enjoyed other favourable conditions, conservative Portuguese lawmaker Vasco Graca Moura said.

"European producers have to compete with countries that devalue their currency artificially and that don't respect labour rules," he said.

The European Union ran a trade deficit of 128 billion euros (175 billion dollars) with China last year -- which is likely to balloon to 170 billion euros in 2007, according to EU statistics.

About 55 percent of Europeans feel threatened by China's emergence as a major economic power, according to a recent survey conducted for US think-tank the German Marshall Fund.