GENEVA — European Union Trade Commissioner Peter Mandelson launched crisis talks Monday with member states in a bid to craft a political fix to unblock tens of millions of euros worth of Chinese apparel imports held in customs warehouses.
Mandelson said in Brussels that he had “set in motion procedures to unblock the goods that have been caught.” The goods were blocked because they exceeded quota levels agreed to between the EU and China in June.
“I cannot accept that EU retail businesses should be penalized unfairly by the introduction of the agreement we made with China,” he said.
At the same time, the EU trade chief stressed that “scare stories about clothing shortages comparable to those experienced in the last world war are not remotely justified. I hope that the hyperbole can be put aside.”
Senior EU sources, speaking on the condition of anonymity, said the talks aimed to prepare the ground for a proposal likely to be put to member states for approval by Thursday.
Pressure on Mandelson escalated from all sides — importers, retailers and domestic textile and apparel producers — after five days of talks between EU and Chinese officials in Beijing failed to reach an agreement to resolve the crisis.
“It’s necessary that our goods, which are in storage, become free,” said Stefan Wengler, managing director with the Foreign Trade Association of German Retailers. “That would be the best solution.”
Wengler added that, if that were not possible, carrying forward to 2006 quantities used in 2005 would be the next best option.
Reflecting the mood of retailers across the 25-member bloc, he said in a phone interview from Cologne that “all goods for contracts made before July 12 should become free and not be counted against the quota,” referring to the day before the EU-China quota deal limiting a swath of goods to 8 to 12.5 percent annual growth rates became effective.
However, quota levels were quickly utilized in some categories — particularly sweaters and trousers — resulting in goods being stranded in customs warehouses.
The sheer volume of goods already in transit prior to the EU-China agreement, noted Mandelson, and the large amounts subsequently licensed “overwhelmed the arrangements made,” Mandelson said.
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However, industry sources familiar with the talks in Beijing said China has been “pretty negative” in the talks on allowing quota to be transferred from one year to the next.
Another idea floated by retailers as a way out of the conundrum is to have some of the embargoed categories borrow quota from underutilized products. EU sources said all of these options “are still on the table.”
It remains to be seen whether Mandelson, with a reputation as a savvy political dealmaker, can come up with a formula that balances the interests of all EU factions, while not escalating trade tensions with China.
In the stalemate, the U.K., Germany and the Nordic countries favor early release of the blocked shipments, while countries with major textile and apparel sectors, including Italy, France, Portugal and Spain, are apprehensive in signing off on a formula that could further weaken their troubled industries.
“For us, the agreement and the quotas agreed for 2005, 2006, 2007, should be respected,” said Francesco Marchi, director of economic affairs at the European Apparel & Textiles Association. “We do not want to pay an extra bonus.”
Feeling the heat, Mandelson tried to spread the blame for the trade fiasco.
“The Commission, the member states and the Chinese all bear some responsibility for this situation,” he said.