China EU Trade Meets New Barriers Again, Trade Protection Tools Are Updated.

Although the anti-dumping investigation initiated by the European Union against China in the first half of 2007 was zero, this does not mean that the trade between China and Europe is changing to a "liberalization" direction.

In July 22nd, the EU economic ministers' meeting held talks until midnight. The conclusion of the meeting was not to extend the quota period, but decided to study a "double monitoring mechanism" to achieve a smooth and orderly pition.

In January 1, 2005, according to the WTO timetable, the global textile trade quota was officially cancelled on schedule.

The massive export of Chinese textiles that was liberated overnight resulted in a sharp increase in exports, triggering an urgent restriction on the European Union and launching the "special safeguard investigation".

In June 11th of that year, after marathon negotiations, the two sides agreed to set up annual quotas for the 10 categories of textiles exported to the EU by the end of 2007.

China is back to the quota era.

Then, will China's textile trade after the quota restrictions be cancelled again after 2008?

The first textile network analyst Wang Jin for the business weekly analysis, said, "the abolition of textile quotas is a good thing in the general direction, but no quota restriction does not mean that there is no absolute quantitative restriction."

"Taking into account the obvious increase in the number of domestic orders of many domestic enterprises, both sides should be cautious."

Wang said that after entering the post quota era, textile and clothing exports will also enter a period of high friction.

Stuart Newman, spokesman for the The Foreign Trade Association (FTA), which represents the interests of European importers and retailers, reminds us that if the monitoring data show that China's export to European textiles is surging again, the EU may still use special safeguards.

"That will revert to the situation before the settlement of Sino European textile trade disputes in 2005."

He said.

In fact, the EU has been divided on whether to extend the quota period.

On the one hand, Italy, France, Spain, Portugal and other large garment manufacturing countries want to continue to protect their own textile industry, but the United Kingdom, Sweden and Holland and other countries and apparel retailers hope to supply low priced goods to consumers. They believe that after two years' care, EU textile manufacturers have already made preparations for full competition with Chinese counterparts.

The European Union of foreign trade (FTA) urged the European Union to end its textile restrictions on China's exports to Europe by the end of this year. The chamber of Commerce believes that more and more developing country products are now exported to the international market. These cheap and good products make consumers finally profit. The European Union should not turn a blind eye to it. Taking restrictive measures will only protect those European industries that have lost competitiveness.

Michel Tronconi Tronconi, chairman of the European textile and Garment Association (Euratex), which represents the interests of textile enterprises, called on the European Commission to "extend the number of EU's textile and clothing products to China for an additional year" in an appropriate way. "Michelle"

The reason is that in 2005, the EU and China concluded the textile trade dispute through signing the memorandum of understanding on textile trade between China and the EU. The United States, Brazil, South Africa and other countries followed suit, but their measures did not end until 2008.

"We do not want to become the focus of China's exports in 2008."

If the EU ends the quota a year earlier than the US, he said, "China's exports of textiles will be concentrated in the EU market."

Fortunately, France's request for an extension was not widely supported, and Italy, which had appealed to extend the quota period, finally gave up its original position.

Bonino, the EU's EU minister, said: "considering that it is impossible to reach an agreement on the extension of quotas, Italy supports the review system."

Although textiles are one of the main industries of China's favorable balance of production, most of China's exports are labor-intensive textile and textile materials with low added value. At the same time, they import expensive textile machinery and equipment from Europe and import large quantities of cotton from the United States and import chemical fiber fabrics from South Korea.

Moreover, the European Union is the largest exporter of high-grade textiles and garments in the world, and many garment companies in EU member countries have processing plants in China.

"In textile trade, the most beneficial ones are the developed countries in Europe and the United States. They are the leaders of trade."

Zhao Yumin, director of the international market department of the Research Institute of the Ministry of Commerce, said that in the whole interest chain, Chinese textile manufacturers have only 10% profit, and 90% of the profits belong to brand owners, wholesalers, distributors, retailers and other links.

What's more, labor intensive textiles have many alternative export countries and alternative suppliers.

In the competition with Vietnam, Indonesia, Kampuchea and India, the profit margins of Chinese enterprises are getting lower and lower.

Wang Qianjin believes that before next year's new year's day, China's Ministry of Commerce and trade associations are likely to introduce new rules, including special quota restrictions and new requirements for textile exports to the European Union.

Cao Xinyu, vice president of the China Textiles Import and Export Chamber of Commerce, said that China will take measures to ensure stable export growth.

But they all say it is hard to predict what measures the Chinese government will take. Everything is still in the air and needs repeated consultation between China and Europe.

In an interview with Italy media, EU Trade Commissioner Mandelson said that in order to ensure a smooth pition next year, the EU is seeking to jointly monitor the export of textiles to China with China, and the relevant negotiations are just beginning.

He said that even if China and Europe could not achieve dual monitoring, the EU would unilaterally closely monitor the import changes of China's textiles and clothing.

The abolition of textile quotas does not mean full liberalization. Once again, the trade situation between China and Europe is becoming more and more delicate.

After the end of the twenty-second China EU economic and Trade Committee meeting in June 12th this year, Mandelson's remarks abroad were tough, saying that the EU could no longer tolerate the huge trade deficit with China, and warned EU China trade relations at "crossroads".

According to the Ministry of Commerce's "China's foreign trade situation report (Spring 2007)", the EU is China's largest trading partner. In the first quarter of this year, bilateral trade increased by 30.3% over the same period last year, of which exports to the EU increased by 34.5% and exports amounted to 51 billion 540 million US dollars.

According to EU statistics, the trade surplus between China and Europe last year was 128 billion euros, and this year it may reach 170 billion euros.

In the context of the continuous growth of trade between China and Europe and the continuous rise of trade surplus, trade frictions will inevitably show a high trend, and the rise of European protectionism, which has always flaunted free trade, will inevitably follow.

It is worth noting that the specific way of EU trade protection may change in the future.

Trade protection is often reflected in anti dumping barriers, technical standardization measures and environmental protection. The use of the three is always the same.

A few months ago, the 2006 Global trade protection report written by Cliff Stevenson, the European trade director of the Mayer Brown Rowe & Maw law firm and the chief economist of the European competition and trade group, showed that last year there were 187 anti-dumping cases in the world. Compared with the 354 anti-dumping cases in 1999 and 364 anti-dumping cases in 2001, the current international anti-dumping activities are in a cyclical downturn.

He believes that this is mainly due to soaring prices worldwide.

Contrary to the international anti-dumping case, the anti-dumping case filing for China's export products grew all the way, and a record high reached 70 in 2006.

In 2006, the EU was the largest economy with the most anti-dumping measures. China was the biggest victim of anti-dumping. 12 of the 35 anti-dumping investigations launched by the EU last year were against China.

However, during the 6 months of the first half of this year, the EU did not initiate anti-dumping investigations against China.

Since the Sino EU textile trade friction in 2005 and the EU's anti-dumping case against Chinese shoes, the EU's anti-dumping policy has been questioned by all parties.

In December 6, 2006, the European Commission published the green paper on the EU trade remedy tool in the changing global economy. It consulted publicly on the use of trade remedy tools such as anti-dumping, countervailing measures and safeguard measures.

EU Trade Commissioner Mandelson said that with the further development of economic globalization, the existing EU trade remedy policies, especially anti-dumping policies, can no longer meet the requirements of the times, and continue to follow the old mechanism "not in line with the interests of all parties".

In June this year, the European Union issued a smoke bomb through the media such as the Wall Street journal, and declared that the EU could recognize China's market economy status before the deadline for 2016, in order to provide a bargaining chip for China to open the market to a greater extent, especially in the service industry, so as to balance the trade deficit.

Mandelson also frequently expressed the hope that the "friendly" attitude of the European Union could be positively responded to by China, otherwise more and more EU members would lose patience.

Market economy status has always been one of the sticking points of trade disputes between China and Europe.

Since the EU does not fully recognize China's market economy status, the EU always chooses a similar market economy country's similar commodity as a reference standard, such as India or Turkey, which makes it easy for EU to judge the existence of dumping behavior in Chinese enterprises and then impose punitive tariffs.

Therefore, the recognition of China's market economy status is of great significance to China's low labor cost manufacturers.

However, on the twenty-second China EU trade mix, because of the failure to respond, the European Union issued an evaluation report that although China has reached one of the five criteria of the market economy status, it has gone one step further from the other four standards. However, the EU's position on China's non market economy status has not changed.

At the same time, despite the fact that the anti-dumping investigation initiated by the European Union against China in the first half of 2007 was zero, suddenly the "stick" of anti-dumping was suddenly left behind, but its trade protection tools were shifting from anti-dumping to various technical barriers and green barriers.

In June 1st this year, the EU chemicals regulatory system "registration, evaluation, management and restriction system of chemicals" (REACH act) came into effect.

Observers believe that this case will enable China to face the biggest trade barrier since its accession to the WTO, because it will bring about 30 thousand chemical products and downstream textile, light industry, pharmaceuticals and other products in the EU market into registration, evaluation and licensing of 3 management and monitoring systems.

Domestic trade experts point out that because all the cost of material inspection and registration is borne by enterprises, it is estimated that the cost that Chinese enterprises will bear for REACH is about 500 million to 1 billion US dollars per year, and the average cost of exporting products to the EU is about 5% higher.

According to preliminary statistics, it will have an impact on some more than 30 thousand enterprises in China, which will reduce the total import and export volume of chemical products in China and Europe by 10%, and the total output value of China's chemical enterprises will also drop by 0.4%, which may lead to 200 thousand chemical and related workers losing their jobs.

Now it seems that although the textile quota is about to be abolished, the REACH act undoubtedly puts new fetters on enterprises. Besides, those textiles that are not subject to quotas will also be subject to the REACH act.