Introduction
The Article „A temporary truce on textiles“appeared on the Economist website on September 7th 2005. We discussed this article in one of our economics lessons and I found it quite interesting, so I decided to put it in my portfolio.
Article
The article is about the so called “Bra Wars” and its solution which has been found lately. The “Bra Wars” is the conflict between the European Union (EU) and China concerning textile imports from the Chinese industry. The quotas which are given to Chinese textile imports have been exhausted since June, so any types of clothes from sweaters over trousers to even bras began pilling up in warehouses around Europe. Also the retailers began to get excited because they are in need of the ordered clothes.
In order to settle the differences between the EU and China the EU government had to walk on a narrow path. On the one side there are nations with big textile industries like, for instance, France and Italy, on the other side there are nations, which want to support their retailers with cheap Chinese imports. So the EU government had to find a solution to satisfy all parties and of course also the Chinese.
Finally after long negotiations the EU and China found a preliminary solution, at least. The stocked goods are allowed into Europe, but half of them are counted as part of other quotas. Especially as part of the next years quotas.
Personal Opinion
The solution may be a fine preliminary solution but in my option it just gives some delay to the European textile industry. According to the article the quotas have to be lifted in 2008 because of the World Trade Organization rules. So in 2008 the European textile industry will have to face to problem again, but hopefully it has adapted by then. For me the question is how a whole industry can adapt to the danger of low-cost competitors. In my option most of the European textile companies will start building factories in China or other low-cost countries like Bangladesh or Morocco. So the EU will somehow not be able to maintain its textile sector.