Textiles. Knickers in a twist

Chinese clothing imports pile up at Europe's borders

EUROPE'S retailers were hoping this week for a relaxation of import quotas that have left millions of Chinese-made garments, ranging from pullovers to underwear, piling up at ports and borders. The clothing was impounded because volumes have already exceeded annual import limits that the European Union (EU) agreed with China only in June. The retailers, however, had ordered their autumn stock months earlier and have been complaining loudly to the European Commission, the EU's executive, that unless the blockade is lifted many shelves will be empty and small retailers may go bust.

“Goods worth hundreds of millions of euros are being held, and much of it has already been paid for,” said Ralph Kamphoner, international-trade adviser to EuroCommerce, a Brussels-based trade group that represents retailers and wholesalers. The commission has to be flexible in allowing these goods through or retailers will face serious financial consequences, he added.

Indeed, thanks to such lobbying, the commission is now expected to juggle the quotas in various ways to let in some of the Chinese clothing. A team of European trade negotiators flew to Beijing this week to discuss with the Chinese what action could be taken. But Peter Mandelson, the EU's trade commissioner, is under pressure not to be too lenient, especially from those European countries - notably France, Spain and Italy - that are anxious to protect what is left of their own textile industries.

The retailers argue that while they had only a few months in which to make arrangements for the new quotas, Europe's textile producers had a decade to prepare for the expiry last January of the Multi-Fibre Arrangement, which had long imposed limits on the export of textiles from developing countries.

Faced with lobbying by Europe's domestic producers, the EU agreed voluntary quotas with China on certain textile imports until 2008, thus delaying full liberalisation. But the new quotas, the retailers argue, are unfair because they are retroactive. While some of Europe's big retail chains - such as Hennes & Mauritz and Metro - admit to having some problems, most have been able to find alternatives to Chinese-made garments. Smaller companies, however, have less flexibility and are feeling the pain more.

How the issue is settled will be watched closely in America, which also imposed curbs on Chinese textile imports after they surged there this year. American trade officials are now involved in their own set of talks in Beijing over limiting China's textile exports to America until 2008. Reports from China suggest that a deal may be signed when Hu Jintao, China's president, meets President George Bush, on September 7th - just in time for the autumn sales.