/ 4 March 2005

Mandelson gets tough with China

China must restrict its textile exports to avoid destabilising world trade with a flood of cheap goods, the European trade commissioner, Peter Mandelson, warned last week.

Speaking in China for the first time since taking on the European Union trade portfolio, Mandelson said many developing nations were unwilling to enter a new round of trade negotiations because they feared China would seize the lion’s share of benefits.

Beijing needed to make painful concessions if the Doha round of talks was to be put back on track after being abandoned in October 2003, he said.

There has been increasing alarm over a surge in Chinese clothing exports since global textile quotas expired at the end of last year.

Beijing imposed export tariffs on certain products on January 1, but Mandelson said such measures may not be enough.

”The only way to lay these concerns to rest may be for [China] to contribute more than may at first sight appear necessary or reasonable,” he said.

After two decades of rapid growth in bilateral trade — with increases of 20% a year — Europe is China’s biggest business partner. But problems persist. Mandelson called on Beijing to protect intellectual property rights and revalue the yuan, pegging it to a basket of currencies including the euro, rather than only the dollar.

On the question of when the EU would lift its arms embargo imposed after the 1989 Tiananmen Square massacre, Mandelson suggested trading concessions would help.

”We in Europe are preparing to move forward to lift the arms embargo. But if and when we do, we shall find the step easier if we can point to clear evidence that China is taking account of our concerns in other areas of policy which will allow us to feel confident about our next move,” he said. — Â