EU moves closer to trade war with China

Europe could broaden its investigation into Chinese textile exports, EU trade commissioner Peter Mandelson indicated yesterday as pressure mounted on Brussels to prevent Chinese clothing from flooding the EU market.

Mr Mandelson said the European Commission was closely monitoring trade in a further 11 categories of Chinese textile imports, in addition to nine categories that it is already placing under investigation.

He said during a visit to Asia that imports in the 11 categories were approaching the "alert levels" set by Brussels to determine whether Chinese imports could present a threat to European producers.

Mr Mandelson's comments coincided with the toughest call yet for action against China from Jacques Chirac, France's president. "We cannot accept that these textiles, the prices of which have recently dropped significantly, can invade our markets without regulation," he said.

Mr Chirac, at a joint press conference with Gerhard Schroder, the German chancellor, said the issue provided additional evidence of the need for Europe to adopt a united front in the face of globalisation.

The Commission yesterday received a formal request from France to introduce emergency measures to accelerate the imposition of curbs on Chinese textiles, rather than just proceed with its planned investigation and consultation procedure, which could last 150 days.

China's textiles exports have emerged as a key issue in the run-up to next month's French referendum on the EU constitution. It is being presented by Mr Chirac, who is trying to persuade voters to support the constitution, as a test case of whether Brussels will stand up for French interests or has been captured by free-trade "neo-liberalists".

The French textiles industry estimates that it may be forced to shed a tenth of its 150,000 workforce this year as a result of increased Chinese competition. Euratex, the European textiles organisation, has separately forecast one million job losses in the EU this year should Europe fail to take action against Chinese imports.

Rising Chinese imports since the lifting of global quotas on January 1st has sparked a protectionist response on both sides of the Atlantic. The US is poised to re-impose quotas on up to 17 categories of textile imports from China. The US backlash could spill over into other manufacturing sectors.

However, Mr Mandelson has warned against sparking a trade war with China and has repeatedly urged Beijing to restrain exports voluntarily rather than face sanctions.

His spokeswoman said yesterday that emergency measures could be applied only if the EU demonstrated that Chinese imports had caused "irretrievable damage" to the European textiles sector.