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EU officials are returning to China to talk about textile trade just two months after signing an agreement on the matter.
They will meet Chinese counterparts to discuss how to handle the millions of items of imported Chinese textiles blocked by EU customs. This merchandise was prevented from reaching consumers because quotas stipulated in the June 10 agreement had already been used up.
Observers have been speculating on possible ways to resolve the impasse. Options include allowing the importers to clear goods ordered before the June agreement was signed, using 2006 quotas or extending this year's.
Whatever the solution, the trading partners will find it. The fact is that what has happened so far this year in the textiles sector has resulted in a capricious environment for those engaged in the business.
First the multilateral agreement to liberalize the textile trade was brushed aside, and then a hard-won bilateral agreement was found to be flawed.
Negotiators should be aware of their mission in the new round of talks to restore a stable environment for textile trade.
The current problem the EU faces is a lesson in how job protection negatively affects other groups in society.
The EU experience is also useful for the US, where protectionism is even more rampant, particularly in the textiles sector.
The June 10 Sino-EU agreement, which stipulates quotas for Chinese textile exports to the EU, was originally lauded because it addressed the concerns of both sides. China wanted reasonable growth space for its exports while the EU wanted limits on growth to protect its textile jobs.
But it turns out the agreement will lead to a supply shortage and considerable losses for European importers and retailers.
In fact, importers and retailers, and other free trade advocates, raised this possibility during negotiations in May and June. But their calls were drowned out by European manufacturers' cries about job losses.
Now the public and media have finally realized the pain that is being suffered by importers, retailers and, possibly, shoppers.
A key reason those promoting strict limits on Chinese textiles won was they made a very compelling case, which actually prevented their negotiators from pursuing a more rational deal.
The problems that arose later proved this. In today's world it is very tricky to buck the trend of free trade.
Protectionist steps may sometimes seem to be politically correct moves in the short term. But they will discourage the upgrading of uncompetitive companies. They will also damage the interests of consumers and other groups of companies.
The negative impact will become increasingly obvious in the long run.
(China Daily August 25, 2005)
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