WASHINGTON — European Union Trade Commissioner Peter Mandelson, facing intense pressure from retailers across Europe, said Sunday he will introduce proposals to EU member states today to release millions of euros worth of Chinese apparel imports stranded at Customs warehouses since the EU imposed special import limits in June.
If the proposals are accepted by the 25 EU member states, a large amount of Chinese-made sweaters, T-shirts, trousers and bras could be released as early as mid-September, Mandelson said in an interview with the British Broadcasting Corp. Sunday.
Mandelson appeared to be taking action into his own hands as EU and Chinese negotiators, meeting in Beijing for a fourth day Sunday, failed to break an impasse aimed at fixing the textile and apparel import deal they cut in June.
Both sides are expected to resume discussions today, but the timing of their talks is now cutting close to a separate round of U.S.-Sino negotiations over a similar comprehensive import agreement slated for Tuesday and Wednesday in Beijing.
“There was a dramatic overshoot of the quotas and that was most unfortunate. But I do not believe that importers and retailers should be penalized unfairly for that,” said Mandelson in the BBC interview. “Therefore I shall be making proposals to European member states tomorrow for procedures to start unblocking goods, which are currently held at the borders.”
The EU and China reached a deal in June restricting imports on 10 categories of goods to annual increases of 8 to 12.5 percent through 2007 but the quotas filled quickly and millions of euros worth of Chinese-made apparel was stranded at the borders, prompting an outcry from European retailers, who claimed their shelves would be empty for the holidays.
It is unclear how Mandelson will propose to fix the situation. Possibilities include borrowing against next year’s quota to bring in fall and holiday goods or expanding the current quota levels to clear the stranded merchandise.
The EU and U.S. have moved to replace the system of safeguard quotas that China agreed to when it joined the World Trade Organization in 2001 after the global system of quotas expired in January and imports of Chinese apparel and textiles surged into those markets.
The two economic superpowers hope a more comprehensive agreement, as opposed to a piecemeal individual safeguard approach, will secure some certainty for both importers and retailers in their long-term sourcing plans and domestic textile manufacturers filing for import restrictions but facing a long review and determination process.
Under current safeguards, growth is limited in the targeted import category to 7.5 percent and safeguards can be renewed through 2008.
In the U.S., Chinese apparel and textile imports have shot up 46.6 percent in the first half of the year to 7.9 billion square meters equivalents, worth $10.8 billion. So far, the U.S. has imposed safeguards on imports worth $1.31 billion.
As U.S. negotiators and industry lobbyists and executives convene in Beijing this week to hammer out their own deal with the Chinese, all sides are closely watching the EU-Sino negotiations.
“It is a lesson and an instruction on what [U.S.] negotiators have to take into account, said Brenda Jacobs, counsel for the U.S. Association of Importers of Textiles & Apparel. “They can’t operate in a vacuum. They have to know what orders exist and what will be subject to quota because the number [quota limit] will reflect real business and we need a number that will actually accommodate business and not harm U.S. companies.”
Missy Branson, senior vice president of the National Council of Textile Organizations, said she expects the EU’s actions to have an impact on the U.S.-Sino talks in terms of timing and perceptions but not necessarily substance.
“I think it will influence the way people think about this negotiation but whether it influences the outcome or not remains to be seen,” Branson said.
She urged U.S. negotiators to avoid drawing any correlations with the EU deal and said the U.S. should instead look at the “U.S. industry, U.S. economy and the world economy to make its own determinations.”