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The textile agreement reached on Monday by China and the EU is a bilateral effort worthy of commendation.
By shouldering the issue almost equally between the two sides, the deal serves as a suitable resolution to prevent the hold-up of Chinese textile exports at EU borders from escalating into a disaster for European importers and retailers.
Once approved by EU member states, tens of millions of Chinese textile products will be allowed to enter the European market, easing worries over empty shelves for their autumn season.
However, while we can relax for now, the textile issue, in retrospect, sheds some light on the need for rich nations to act seriously against domestic protectionism.
Only when the long-term textile trade dispute between developed and developing countries is set in line with the spirit of free trade, can temporary problems like the ongoing hold-up fiasco be avoided once and for all.
The decade-old global quotas for textile trade came to an end early this year.
Instead of admitting the reality and weaning related domestic industries from government protection, some rich nations chose to yield to domestic pressure.
Had the governments of these countries demonstrated their commitment to free trade, their domestic industries would have taken the inevitable trade liberalization more seriously and better adapted themselves to the competitive challenge.
Unfortunately, the outcry made by European textile producers in face of the surge of imports from China, the world's largest textile and garment exporter, displayed how unprepared they were.
In the labor-intensive textile industry, China, the most populous country in the world, enjoys great comparative advantage. Under such circumstances, to protect increasingly less competitive domestic producers at the cost of domestic consumers' welfare, is not only unwise for those developed countries themselves but also unfair for Chinese textile producers.
However, as a responsible participant in the global trade system, China has signed a textile agreement with the EU in June out of consideration for some EU countries' difficulties to undergo necessary industrial restructuring.
Apparently, the current hold-up from Chinese textile imports exceeding the reimposed import quota was only a technical failure of miscalculating European demand.
The underlying reason though was nevertheless the disruptive impact the reimposed quotas exerted on both ends of the supply chain. The back-pedaling of the EU on free textile trade has caught both Chinese producers and European importers unprepared.
Monday's agreement to allow in half of the stockpiled garments despite exceeding EU quota rules, and half to be counted against limits for this year and next year, was indeed a rational solution for both sides at this time. Any further delay would only worsen bilateral relations.
Nonetheless, the new deal should not be interpreted as a compromise in favor of protectionists in some European countries.
If the reimposed quota system is really meant to ensure a smooth end for protectionist measures three years on, the EU should start to warn local textile producers that protection will not be provided for much longer. It is time for them to face the coming change in free global textile trade.
(China Daily September 7, 2005)
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