WASHINGTON, June 6 (UPI) -- As European textile producers face market disruptions caused by China's growing textile market, European Trade Commissioner Peter Mandelson assured Italian producers Monday his new trade policy would protect European interests without making Europe China's enemy.
"I am not deaf to the calls that have come from here, from the heart of Tuscany and from many other regions of Europe, for protection from imports from abroad and notably from China," Mandelson told textile producers in Florence, Italy. "(But) Europe must strike a balance between keeping other markets open and helping our own industries adapt."
Despite fears by both Brussels and Washington that China's surging exports will only continue to cause market disruption and extensive job losses, Mandelson cautioned that the long-term solution was not restoring quotas on Chinese textile exports, but rather managing market change.
"We need to equip ourselves for changes in the face of the competitive pressures exerted by the emergence of new trading power," he said. "We must define how Europeans, with our single and united trade policy, can best harness globalization while protecting our interests."
Under extreme pressure from European textile producers, Mandelson promised to offer special safeguards to protect producers and to give "breathing space" to make the necessary adjustments to the changing market.
However, while he has said he will continue to protect European interests, he has also stated that China be allowed to continue liberalizing its textile market, arguing Europe must learn how to adapt to the emerging market in a globalized economy.
"We need to make the case for open markets when the public mood is showing signs in favor of more protected markets," said Mandelson. "History is littered with graphic examples of economic depression and the destruction of jobs and wealth when markets have been closed rather than opened."
Mandelson said he was optimistic over the future of the European textile and clothing sector, citing estimates that as many 250 million Chinese will be able to afford luxury products in the next five to seven years. China is expected to be the third-largest market for luxury goods; the majority of those goods will come from European producers.
"Europe must do all it can to expand our long-term access to China's marketplace," said Mandelson. "China is not the enemy."
Despite criticism by some in the European textile industry, Mandelson assured producers the EU was doing enough to protect European interests.
"Now some of you may say that the U.S. is doing more for its industry than the EU," he said. "Let me assure you that this only a matter of timing and here I am talking of days or weeks. I am trying to find a more durable, wide-ranging solution with China."
Two weeks ago, Mandelson announced the EU would engage in formal consultations with China over the textile dispute at the World Trade Organization in the hopes Beijing would take some preventive action to curb its surging exports. The decision to take the dispute to the WTO will allow China 15 days to apply self-constraints on two of its export categories: T-shirts and flax yarn.
If China doesn't put a voluntary cap on its exports within that period, the EU, under the terms of its accession to the WTO, can impose a 7.5 percent ceiling to curb growth on both those products.
While the EU is already considering imposing quotas on two products, it is also looking at expanding quotas on seven other textile categories and is monitoring 11 others.
Mandelson has remained "hopeful" the textile dispute can be solved through negotiations, but has said if China does not lower its exports, the EU will take action.
"If I cannot solve this through negotiation, I intend to propose measures that will assist you, reaching a balance in the different views and interested express by all EU member states," said Mandelson.
Unlike the EU, tensions between Beijing and Washington have continued to escalate over textiles, currency issues and piracy, even after a visit by U.S. Secretary of Commerce Carlos Gutierrez last week.
Gutierrez asked Chinese counterparts to understand the political pressure in the United States with China's surging exports and its refusal to float its currency.
However, the Chinese government fought back saying the United States cannot place domestic blame on China. Beijing has also said the textile dispute must be resolved in order to continue positive relations. It also backed out of its agreement to impose tariffs on its exports in order to slow the growth of its surging textiles, accusing both the United States and Europe of trade protectionism and violating free-trade agreements.
"The textile products issue is a very serious problem for trade and economic relations between China and the United States," said Vice Premier Wu Yi, in a released statement on the Ministry of Commerce Web site. "If it is not handled well, it can seriously harm the process of economic cooperation."
