On June 10 the European Trade Commissioner bowed to intense protectionist lobbying and imposed quotas on a range of textile and clothing imports from China. What happened next? Yep, European retailers are facing an autumn stock crisis, with the quotas "blocking millions of garments in ports and warehouses while shelves go empty in the shops" according to a report in today's Daily Telegraph.
...The British Retail Consortium said there are now over 55m sweaters and 12m pairs of trousers worth €800m (£550m) stuck in transit. "Smaller retailers are not going to have their autumn collections in time, even though they have already paid Chinese suppliers," said Alisdair Gray, head of the BRC's Brussels office.
Women's bras and underwear, along with a range of other items, are now in short supply. Peter Mandelson, EU Trade Commissioner, says "the problem has been caused by importers trying to beat the restrictions after the Shanghai Memorandum of Understanding was signed". But that's not what retailers say:
"The Commission doesn't understand the delivery cycle," Mr Gray said. "These orders were made months ago. Brussels rushed through controls without thinking through the detail."
...Lucien Odier, head of France's CNSH buyers network, said the EU's quotas were indefensible. "It's a catastrophe for our shops," she said. "The merchandise is paid for, delivered, and fitted with our labels, but they are still awaiting customs clearance."
The European Commission was hoping retailers would simply switch to European manufacturers (ignoring, of course, the potential inflationary consequences). But that has not proved so easy. Quoting again from Alisdair Gray of the British Retail Consortium:
He praised Chinese suppliers, saying they provided first-rate service. "You can call up Chinese factories and tell them exactly what you want, and they'll do it. But you can't do that with the Italians and the French. You can't negotiate with those guys," he said.
Announcing the quotas on June 10, Mandelson said they would "be fair on both sides" and provide "clarity, certainty and predictability". I wonder if the pantless and braless European consumers would agree.
UPDATE: Alex Singleton at the Globalization Institute weblog points to a 16 August Wall Street Journal article on this subject.
Isn't this really a case of what you ask for is what you get: trouble. If Mandelson had stood firm with the laggard producers in the first place he would have avoided all this. What a mess. Mind you the old style feminists will probably be happy :).
"The European Commission was hoping retailers would simply switch to European manufacturers"
Yes, well he obviously also forgot one other very important issue in economics: timing. Isn't the argument that they do all the 'just in time' stuff - eg Spanish Inditex - nearer to home (often, of course, availing themselves - ahem, ahem - of undocumented migrants) and all the seasonal stuff at a distance. So what they have stuck in the ports is all this autumn's new releases.The FT keeps mentioning the retailers are threatening legal action. Power to their elbow, right on!
Posted by: Edward Hugh | Tuesday, August 16, 2005 at 08:06 PM