Rich nations demand action to tame Chinese textiles

European nations cranked up pressure yesterday for emergency action to curb a surge in imports of cheap Chinese clothing, while Washington took steps of its own that could lead to limits on shipments from China.

The European Union's executive gave the go-ahead for an investigation lasting up to 60 days into the dramatic rise in imports of nine products since the end of a global quota regime for textiles and clothing trade on January 1.

But three Mediterranean rim states backed France's call for the European Commission to cut short its probe and move straight to formal consultations with Beijing, which would then have 15 days to curb exports voluntarily or face external action.

Like France, Italy, Greece and Spain argue that a whole European industry, and tens of thousands of jobs in a sector workforce of some 2.5 million are in imminent danger from rampant Chinese shipments.

Imports of pullovers and men's trousers from China have leapt by over 400 per cent since the quota system was scrapped.

"There have been disproportionate increases... in the first quarter, accompanied by considerable cuts in average prices, which pose a grave threat of irreparable damage to the Spanish and European textile industries," Spanish Trade Secretary Pedro Mejia said in a letter to EU trade chief Peter Mandelson.

After joining the World Trade Organisation in 2001, China agreed to let member states restrict textile imports if a sudden surge in shipments threatened to disrupt their markets.

The provision allows WTO member states to limit the rise in Chinese imports to 7.5 per cent above the previous year.

The US administration accepted apparel industry demands yesterday for investigations into whether action is needed to restrain imports of seven categories of Chinese products.

Its probe will look into imports of shirts, sweaters, dressing gowns and brassieres, which totalled about $1.45 billion in 2004 and have increased sharply in 2005.

This is in addition to investigations the Bush administration launched on its own in April to determine whether to restrict imports of pants, shirts and underwear from China.

Mr Mandelson said he would not be rushed into a decision to fast-forward the process leading to possible curbs, which would normally take up to 150 days.

"I will look at all such requests. I take them seriously, of course... and we will make whatever move is justified by the facts when we are ready to do so," he said in Bangkok.

He has warned EU member states that over-hasty action could fall foul of WTO rules and trigger a legal challenge from China. Roughly half of the 25-nation bloc is opposed to invoking the fast-track procedure to curb imports.

China made 17 per cent of the world's textiles and clothing in 2003. The WTO expects that market share to rise to above 50 per cent in three years following the abolition of the quota system, which protected rich-nation producers for decades.

A Chinese textile industry chief said yesterday Bejing had no plans to limit its own clothing exports with higher tariffs, saying it also had already taken some measures - such as curbing lending - to prevent excessive growth in the industry.

"We don't want trade war, or mutual restraints," Cao Xinyu, vice chairman of the China Chamber of Commerce for Import and Export of Textiles, told reporters in Beijing. "We hope both sides can find solutions through dialogue."

China has already moved once to hold down its clothing exports, with an export tax that has applied to each item of clothing, regardless of value, since January 1.

The European Commission has said that 11 additional categories of Chinese textile and clothing imports are under scrutiny because they are close to the "alert level" requiring an investigation into the potential damage to European industry.