chapter  5
22 Pages

The EU, China and textiles diplomacy under the WTO

In this chapter we consider emerging patterns of trade diplomacy in the post-MFA era. We do this by focusing specifically on the trade dispute that took place between the EU and China in the summer of 2005, regarding the implementation of the final and most controversial stage of the ATC. Although, as we discovered in the previous chapter, the ATC was established in 1994 as part of the Uruguay Round, its subsequent implementation by the EU and other developed countries has proven to be very controversial. On the one hand, the specific mechanics of the ATC enabled importing countries to backload the elimination of MFA import quotas, to the extent that approximately fourfifths of these remained in place until the very end of the 10year transition period in 2005. On the other hand, within a few months of the eventual removal of quotas, the EU and the USA took advantage of WTO ‘safeguard’ provisions to introduce new trade restrictions against China. In the EU case, this decision proved to be especially problematical when it emerged that the new agreed limits for T&C imports had been reached within a matter of weeks of a deal being struck, and as a result approximately 77 million Chinese garments were left stranded at various European ports. Although this episode – quickly dubbed ‘bra wars’ by the British press – was resolved relatively quickly, it nevertheless left a number of very big and important questions unanswered.