EU Threatens China With WTO Over Textiles

EU trade commissioner Peter Mandelson called on China to act quickly to rein in its booming textile exports to the European Union or face legal action before the World Trade Organisation.

"I think it is imperative that China explains in detail and quickly the types of additional measures that they intend to adopt and what consequences those will have on future trade flows," he told the European Parliament on Thursday. "I'm looking forward to receiving such information as a matter of great urgency."

"And failing to receive such concrete information quickly would narrow the options available to the EU to resolve this issue and could leave me with no other alternative than to act under the WTO," he added.

Mandelson's comments come after Chinese Premier Wen Jiabao had promised on Wednesday more measures to curb rampant growth in textile exports to the EU.

China makes concillatory noises

In response to European concerns about surging textile exports from China, Wen said that Beijing would "take further effective measures to strengthen our guidance and control on textile enterprises, to adopt economic measures to control the rapid growth of some textile products and clothing exports."

With a delegation of ranking EU diplomats on a two-day visit to Beijing, EU External Affairs Commissioner Benita Ferrero-Waldner welcomed Wen's pledge, but added: "This is a signal but this has to be implemented ... as soon as possible."

EU commission launches investigation

The EU's executive commission launched an investigation into select textile and garment categories from China last month after compiling evidence that exports surged by as much as 534 percent after a 31-year-old global quota system had ended in January.

Normally, the investigation is supposed to last a maximum of 60 days during which informal consultations are to be held between Brussels and Beijing to try to find a solution. But some EU textile producers have been urging the EU to adopt emergency procedures, which would fast-forward the process to a much more serious formal consultation period.

However, Mandelson said that some of the EU countries leading calls for emergency action have not sent him facts to base action on although he was they would be "forthcoming."

Mandelson's balancing act

Mandelson is facing strong pressure from EU textile producers who are worried that thousands of jobs could be lost if urgent action is not taken to hold back a flood of Chinese clothing that was unleashed by the end quota system.

He is playing a difficult balancing act between trying to ease EU textile producers concerns and building up a strong trade relationship with the growing Asian economic giant that will bear fruit for European businesses.

"We need to see China as an opportunity as well as a potential threat," he said, adding, "Containers heading toward Europe with all those goods, textiles and others, need to be then sent back to China filled with European goods and products, also a huge expanding market for European services as well."