Wednesday, August 17, 2005

Much pain and little gain

Who benefits from the quotas imposed on Chinese textile imports? Not the Chinese producers, obviously, and, therefore, not the Chinese economy. In fact, the Chinese have a justified grievance over those quotas as no evidence has ever been produced, as the City Comment in yesterday’s Daily Telegraph, points out,
“… that China had breached world trade rules in law or spirit, or had been dumping clothes on the EU market”.
So who does? Not the consumer in the EU, where affordable clothes are widely available only because of Chinese imports. Not only are they cheaper than the overpriced and now overprotected European textiles but the producers seem to understand the language of business better than their European counterparts.

According to Alisdair Gray, head of the British Retail Consortium’s Brussels office:
“You can call up Chinese factories and tell them exactly what you want and they’ll do it. But you can’t do that with the Italians and the French. You can’t negotiate with those guys.”
No wonder they had to lobby the Commission to impose quotas on the imports.

The retailers are not happy either. They have found that orders that had been paid for are remaining in transit, while shelves are not being filled.

According to the BRC, 55million sweaters and 12million pairs of trousers, worth £550m, are stuck in transit. Inevitbaly, the most hard hit are the smaller retailers whose autumn collections may not appear in the shops.

Nor are retailers in other member states particularly happy. The French textile producers may have lobbied for the quota but the French buyers’ network’s spokesman, Lucien Odier, thinks the quotas are indefensible and a “catastrophe” for the shops.

The German and Swedish governments have written to the Commission demanding that the quotas be relaxed. The Swedish Trade Minister, Thomas Ostros, has made it clear that the companies whose goods, that have been paid for, are not coming through, may bring a legal action.

The main problem from the retailers’ point of view (apart from the whole idea of textile quotas) is that the Commission, consisting as it does of complete drongos at all levels, who are incapable of understanding how a business works, cannot grasp how a delivery cycle works. Orders that were made months ago cannot just be abandoned and written off in days on the regulators’s say-so.

Peter Mandelson, the Trade Commissioner, once touted as a free-marketeer, sees the matter differently. It is all the retailers’ fault, apparently, for ordering goods when they should have been concentrating on obeying instructions.
“The sheer scale of their attempt to beat the restrictions [by rushing through huge orders just ahead of the ban] has presented us with immense difficulties.”
Not half as immense as the difficulties the various retailers face.

Still, one has to feel sorry for Mr Mandelson. He has had to break off his holidays to come back to Brussels and negotiate his way out of the impasse.

It seems that the quotas are not actually going to be all that useful to the producers who had been the intended beneficiaries. Nobody is going to switch from cheap and sensible Chinese manufacturers to expensive unreliable European ones. If they did, prices would go up and consumers would vote with their feet, or, more likely, their computers.

In the meantime, another question presents itself in Britain. Army uniforms are made in China. Given the various financial problems the MoD has faced, it is unlikely to start paying out the sort of money European textile manufacturers would want, not to mention their inability to supply goods as they are ordered. Is there a derogation from the quota for the services? I think we should be told.

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