Two miscalculations fed into the debacle over Chinese textile imports to the European Union, which has now been resolved by an opportunist compromise in Beijing.
Under an agreement on lifting worldwide textile trade quotas from January last, Chinese imports to the EU market were freed up; but when they increased by a huge 84 per cent in the first four months of this year furious objections from textile producer interests in France, Spain, Italy and other member states forced a rethink.
The second miscalculation saw new quotas imposed in June which offended quite a different set of interests. These failed to take account of the lead time required on items such as pullovers, trousers and bras from China according to the fashion cycle by which they are ordered and paid for nine months or a year ahead of being in the shops. As a result 77 million of the garments were impounded at EU ports. According to this deal half of them will be released, with the rest deducted from next year's textile quota or transferred to other categories.
It is a messy compromise reflecting the changing balance of interests between textile manufacturers, retailers and consumers in Europe and the colossal power of China's industry to produce for export markets. The latter factor has been systematically underestimated by EU negotiators throughout this episode, notably by the trade commissioner Peter Mandelson.
Wearing his EU presidency hat in Beijing this week, British prime minister Tony Blair put it in a wider context of China's overall economic development. The EU-China agreement contrasts with the failure to reach a similar deal between China and the United States last week. From the Chinese point of view, closer relations with Europe counterbalance those with the US. EU-China mutual trade is now greater than between the US and China. Meanwhile it is still expected that the EU arms embargo on China imposed after the Tiananmen massacre in 1989 will be lifted. This would not please Washington, which makes the case that such weapons could be deployed against US ones defending Taiwan.
Thus high politics complicates China's economic relations with the US more than those with Europe. As China develops further this will change for all concerned, since the emergence of a new political and economic power transforms the existing pattern of international relations. The row about sweaters, trousers and bras has brought these realities home to a greater range of people in EU member states as they shop this autumn. The agreement to release them shows just how vulnerable trade talks are to political pressures from special interests.