Behind the ‘bra wars’
Making sense of the EU-China spat over textiles.
European Union (EU) sanctions against China seem to suggest a coming trade war. But why?
Chinese-made bras have been impounded. Seventy-five million items of Chinese textile goods are currently sitting in warehouses and ports around Europe waiting to be let in. Will supermarket shelves be empty? EU Commissioner Peter Mandelson admits a ‘serious glitch’ in textile trade regulations between the two regions.
Under bilateral trade agreements, China agreed to cap exports to the EU of 10 different kinds of clothing. But when actual imports shot ahead of the agreed volume, the European Commission acted to impound the goods. About 48million sweaters, 17million pairs of pants as well as other items of clothing imported from China have been held up at European customs warehouses.
In 2004, EU imports from China were worth 126billion Euros; imports grew by around 20 per cent between 2003 and 2004. Meanwhile, EU exports to China are worth just 48billion Euros. It certainly seems as if cheap cotton goods from the former Communist country are flooding European markets. The accusation is that European workers simply cannot compete with unethical sweated Chinese labour.
We should put things into perspective, though. Chinese exports to the EU are a fraction of the EU’s annual output, around 10,266,471million Euros. Moreover, European exports to China grew at 16 per cent between 2003 and 2004.
The protectionist seizure of Chinese goods is an object lesson in Europe’s pragmatic attitude to free trade. Having demanded the liberalisation of Chinese society all through the Cold War era, China’s dash to capitalism has provoked hypocritical cries about ‘unfair’ trade. The relative underdevelopment of Chinese society and its low wages are taken as signs that there is no level playing field.
Reflecting on the Chinese challenge earlier this year, UK prime minister Tony Blair boasted that the best economic strategy was to try to move ‘further up the value chain’ – a confused metaphor about the food chain and input-output analysis, but the meaning is clear: we will do the hi-tech stuff, and leave all the labour-intensive industry to the Far East.
But impounding Chinese-made bras in EU warehouses sends the message that Europe does not want to give up the schmutter trade. This is further confused by the fact that the EU has already recognised that China is not willing to accept the role of low-value producer, but is pushing hard to compete in hi-tech industries. The USA tried to ‘keep China behind the high technology curve’ by preventing technology transfer with the excuse that these might have military application. But all the policy achieved was that, as the New York Times reported, ‘the country is fast catching up with US ability to make advanced semi-conductors’ (1).
In economic terms, the seizure of goods was a failure. The only people it hurt were struggling European retailers, dependent on cheap Chinese goods to keep the bar-code readers blipping. If the EU didn’t buy from China, it’s likely that it would buy from some other low-wage country like Korea instead. But then this never was an economic policy, so much as another attempt by EU commissioners to assume political leadership in Europe.
The EU has been flailing around for a while, looking for an issue that will speak to European publics. Three years ago, ‘Core Europe’ tried criticising the USA over Iraq, but that failed to unite wider Europe. Attacking China looks like a safe bet, but it compromises Europe’s supposed liberalisation – revealing the underlying policy of regulated trade.
Now that the policy has fallen apart, Mandelson is blaming everybody but the Commission. He says that the Chinese have broken their agreement and that the southern European countries are responsible for taking refuge in protectionism. This is another indication of the EU Commission’s lack of accountability, and spinning Peter Mandelson brings all the right talents to the job.
James Heartfield is speaking on Can creativity save the British economy? on 21 September 2005 at 7pm, at the Design Council, 34 Bow Street, London WC2E 7DL
(1) New York Times, 6 May 2002
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