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EU probes surge of Chinese textile imports

The EU's top trade official, Peter Mandelson, said on Sunday that he would open a formal, two-month investigation of the flood of Chinese textiles into European markets.

He also warned of possible sanctions by summer and swifter measures that could allow Europe to impose limits on a range of Chinese-made items, like T-shirts and brassieres, within weeks. "Europe cannot stand by and watch its industry disappear," Mandelson said at a news conference.

Mandelson cited a 534 percent rise in sweater imports and a 413 percent rise in imports of men's trousers during the first three months of this year, compared with a year earlier, as examples of why the inquiry was needed.

The European Commission will examine evidence of surging imports in nine product categories, including blouses, women's overcoats, and flax and yarn products.

The investigation comes as French and Italian clothing manufacturers, in particular, are pressuring Mandelson to limit imports from China, which is making huge gains after an end to quotas.

But getting tough with China -- Europe's second-biggest trading partner after the US -- is a delicate matter.

While irked by China's low-cost clothing exports, European officials are mindful of keeping good relations to smooth the way for sales of lucrative Western technologies like nuclear power stations, high-speed trains and aerospace equipment as the Chinese economy booms.

Mandelson emphasized that Europe's choice to move forward with an investigation should not sour commercial relations with Beijing.

The move "is not a threat to China's textile interests and it is not an attempt to block China's rising position in the international trading system," he said.

"Nothing I do or say is going to jeopardize or imperil China's international trading position or that vitally important trading relationship between China and Europe."

Mandelson said he expected to continue discussions -- already under way for several weeks -- with Chinese officials during a visit to Hong Kong and Southeast Asia in coming days.

Mandelson said that above all, he wanted to avoid a trade war with China even as calls from some European politicians grew louder to impose immediate measures to prevent job losses in Europe.

"We're talking about people's livelihoods, we're talking about their jobs and their businesses," he said, while adding that the revamping of some European industries was necessary to keep Europe competitive in global markets.

Before imposing sanctions, investigators must establish that harm has been done to European manufacturers.

Penalties could involve freezing imports at current levels and capping growth at 7.5 percent a year, a measure foreseen under China's accession to the World Trade Organization in 2001.

But rather than punitive steps, Mandelson said he wanted China to step up its own limits on exports to relieve the need for Europe to impose measures that could be used to restrict Chinese products but that might also pose a risk to harmonious relations.
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