The recent dispute between China and the European Union in the so-called "bra wars" highlights simmering world trade tensions. Underlying the row is the dissolution last year of the 1974 MultiFibre Agreement guaranteeing annual export quotas in textiles for many small developing countries.
The agreement was phased out as part of the ongoing world trade liberalisation
With a huge, low cost and relatively skilled labour force China was well placed to take advantage of this opening. In 2004 the EU and China reached an understanding that EU textile imports from China should not exceed a certain level. In June the EU trade commissioner Peter Mandelson imposed import quotas for this year and next in response to the huge surge in Chinese textile imports. Retailers used up the quotas very quickly and huge stockpiles built up at ports causing European clothes retailers keen to import cheap Chinese goods to make a huge hullabaloo. Also, some Chinese textile companies were reportedly trying to circumvent the restrictions by faking certificates of origin to suggest they were made outside China.
As a result of the huge fuss, a deal was reached in early September under which half the blocked goods will be released unconditionally. The remainder will count against 2006 quotas.
However the deal still needs to be ratified by the 25 EU member states, many of which have large textile industries to protect. In any case, the deal is only a shortterm fix and does not solve the underlying problems.
The US has a major dispute with China as well. China's textile exports to the US surged 97 per cent to $7.4 billion in the first six months of 2005 and in May the US imposed quotas.
Under the terms of China's accession to the Trade Organisation (WTO) in 2001, Washington allowed to introduce quotas.
The US had a $162 bn trade deficit with China last year, the highest with any single country in its history.
Interestingly, China's huge foreign exchange reserves essentially underwrite US spending as a huge proportion is held in treasury bills! China's huge foreign exchange reserves essentially underwrite US spending as a held in treasury bills!
In essence, the current row mirrors those trade disputes that took place between the
Despite its verbal commitment to free trade, the administration of Ronald Reagan forced Japan to accept temporary restrictions on its exports of cars and electronic goods to the US.
As with his predecessor, Chinese boom is having a apparent. profound impact on the
He notes: trends continue for another airlines ordered 53 challenging the US's title as total of £2.3bn. the world's largest economy? reshaping international where costs are cheaper. trade patterns. often hi-tech component
hat are assembled there an
then re-exported. Exports to China have helped to keep economies like those of US and Japan during the Japan and South Korea
afloat. In this respect China is itself being shaped by vast global processes. These can work against it. For example, 1t was recently reported that European clothing multinationals are shifting from China to and George Bush's trade nego- Eastern Europe in order to tiators are pursuing exactly be closer to their home marthe same strategy towards kets and respond to rapidly ments in the latest issue of sectors in which China's New Left Review, the dominance is becoming
For example, during the world one: If current recent ciTese and trian recent trip Tony Blair trip to decade or so, China will be Airbus's planes - worth a
Although this was good news for European workers, Like Japan and the East it seems to be inevitable that Asian newly industrialising Airbus will source more of countries before it, China is its components from China
However, one dampener will not have helped.
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this major series JOE CRAIG looks at the effect of the hunger strikes and the "peace process". When the Provisionals split from the Official