PINR Analyzes Impact of E.U. Textile Quota Expiration

The Power and Interest Report (PINR) has published a new economic brief dealing with textile quotas in the European Union. The report, published October 17 and titled "E.U. Textile Quotas Set to Expire in December," is available on the PINR web site.

According to the brief, the expiration of European Union limits on Chinese textile imports will result in a large rise in those imports, causing harm to European textile manufacturers. However, the brief notes, the cessation of the quotas has to be implemented under World Trade Organization agreements that only allow limits on Chinese exports through the end of this year.

Italy, which is active in the textile industry, asked European Union Trade Commissioner Peter Mandelson to allow the limits to expire, the brief says. Italy also has stood in opposition to France's calls for additional measures on Chinese textile imports, according to the brief.

PINR says the damage done to European textile firms will be most strongly felt in places such as Italy, which is heavily dependent on the textile industry and has a weak economy and significant public debt. Benefits of reductions in textile limits include lower prices for European citizens and obvious financial gains for China. However, the brief says, rigid labor markets and weak economies pose a danger to European economic stability, which is causing European textile firms to lobby their governments for protectionist measures that would shield them from the effects of Chinese textile imports.

An additional factor to be examined, the brief says, is a likely reduction in confidence that Europeans possess with respect to E.U. institutions. Discontent at the standing of the Euro relative to the dollar and the impact of Chinese imports could intensify, according to PINR. And while PINR says that pressure on the European Union could result in an extension of the current limits, the brief contends that such a move is not likely to materialize.