EU braces for end of Chinese clothing quotas

(BRUSSELS) - The European Union is bracing for the expiry of import quotas on Chinese textiles at the end of the year amid fears of a new wave of T-shirts and trousers bearing "Made in China" labels flooding in.

The quotas, which the EU and China agreed to put in place in 2005, are to be replaced with a joint monitoring system that will be on the lookout for new signs of an upsurge in Chinese imports over the ensuing year.

Under the system, eight of the 10 clothing categories covered by the quotas will be tracked on the Chinese side through export licences and will be monitored when they enter Europe.

"The advantage is that we'll at least know what to expect through the licences," said Franceco Marchi at Euratex, a trade association for European textile makers.

"Officials will not be able to say, like they did in 2005, that they don't know about the risks of an upsurge," he added.

After international textile quotas expired in the January 2005, Europe was swamped by a wave of cheap clothing imports from China, which led Chinese and EU authorities to negotiate new temporary limits.

Under terms of China's accession to the World Trade Organisation, the European Union can apply such safeguards against Chinese imports if it judges them to be necessary.

European officials have not ruled out that a new wave of Chinese clothing could flood in after the temporary quotas expire, although any increase is likely to be less dramatic than three years ago.

EU lawmakers urged the European Commission earlier this month to watch for a possible upsurge in imports, urging the executive arm of the 27-nation bloc not to hesitate to take action if necessary.

In response, EU Trade Commissioner Peter Mandelson told the European Parliament: "In face of a sudden upsurge in Chinese textiles, the Commission stands ready to use all of (the) instruments at its disposal."

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.

"I see the textiles problems as emblematic of the broader problems we face in China," Mandelson said.

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

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

"What we really want is the Chinese market to be opened to European textiles," said Patrick Itschert, secretary general of the European Trade Union Federation for Textiles, Clothing and Leather.

The European Union ran a trade deficit of 128 billion euros (184 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 the German Marshall Fund, a US think tank.