GENEVA — European Union Trade Commissioner Peter Mandelson warned Tuesday that failure to release Chinese apparel imports held in customs warehouses could inflict severe economic pain on retailers and consumers, and torpedo the recent EU-China import accord.
“I am not confident the Shanghai Textile Agreement will be sustainable unless we release goods held at the border,” Mandelson told the European Parliament’s trade committee. “This is a large volume of garments, I realize.”
The goods have been blocked because they exceeded quota levels agreed upon between the EU and China in June. Mandelson noted that if EU member states rejected his proposals to release the goods the ramifications could be severe and could result in shortages during the fall and higher retail prices for apparel.
He appealed to member states to take the long-term view and support his proposals.
“Decisions are sometimes painful, but the alternative is often worse,” he said. “Are we going to send all the unlicensed goods back to China? Who will pay for this? Who will compensate importers and retailers for the loss of contracts?”
Mandelson has come under increasing pressure from retailers and importers to resolve the crisis.
“With almost 100,000 items from jumpers [sweaters] to underwear languishing in warehouses and containers across Europe, it is little wonder that U.K. autumn collections are at risk, Christmas ranges could be limited and many spring fashions invisible if something is not done,” said Sir Digby Jones, director general of the Confederation of British Industry. “And it will be the unwitting customers who, as always when countries indulge in protectionism, end up having to pay more money.”
The CBI chief also castigated the Brussels-based European Commission — the executive arm of the EU — for its handling of the crisis.
“Trying to jump through protectionist hoops to safeguard the interests of a minority of member states is ridiculous and will solve nothing in the long run,” Jones said.
But Mandelson is under equal pressure from domestic textile and apparel producers not to choose an option that waters down the bilateral agreement, which restricts the annual growth of Chinese textiles and apparel imports to the EU in 10 sensitive categories to between 8 and 12.5 percent until the end of 2007.
“European industry would be prepared to carefully examine any workable proposals which might be made to alleviate the situation of those who had placed orders for such goods in good faith,” said Filiep Libeert, president of the European Apparel & Textile Organization.
But Libeert stressed “any solution must remain within the framework of the original overall agreement reached with the Chinese authorities on June 10 and must not damage the interests of EU manufacturers.”