EU Tariffs Shoed In

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The latest chapter in the sorry saga of the EU’s protectionist (mis)adventure is reported by Bloomberg:

    “The European Union imposed duties on 9.7 billion euros ($12.3 billion) of Chinese and Vietnamese shoes and sneakers, escalating a trade conflict as Europe’s deficit soars…The EU’s 25 governments applied two-year tariffs of 16.5 percent on some leather shoes from China and 10 percent on shipments from Vietnam.”

I completely agree with Alisdair Gray, director of the British Retail Consortium in Brussels, who is quoted as saying:

    “This won’t save a single job in Europe, nor will it stop manufacturing jobs shifting to China.”

Peter Mandleson, the EU Trade Commissioner, makes the point that “free” trade is different from “fair” trade, but all the associated talk of counterfeiting, and limited market access in China seem to me to be over-hyped red herrings. It is more likely that this is about fading industries (in this case, “mainly small businesses [some employing under 10 people] concentrated in southern Europe”) being hit by cheap competition, and the fear that they might go out of business (forget, for the moment, the happy consumers who are buying cheap products). Instead of taking difficult strategic decisions, such as moving production offshore, focusing on high-end, niche markets, design, or other value-added activities, these businesses are just throwing up their arms and asking for help (in return for votes).

In a wonderful example of political double-speak, Mandleson is also quoted in relation to the new EU strategy for China, as saying:

    “’We cannot argue for openness from others while sheltering behind barriers of our own,’ he said. ‘Our prosperity is directly linked to the openness of markets we try to sell into. China will be the single greatest test of Europe’s capacity to make globalization an opportunity for growth and jobs in the years ahead.”’

The theory is fine, but the practice is not. So where is the joined up thinking from Europe’s leaders? As with the US, where narrow interests in Congress have lead to misguided, anti-China initiatives, so the EU has placed the short-term interests of a few small businesses in front of the big picture that they prefer not to look at. The problem will not go away, and it has to be addressed with some brave political thought.

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2 Responses to “EU Tariffs Shoed In”

  1. Jeremy Gordon Says:

    IHT reports today that China may mount a legal challenge to the EU move: http://www.iht.com/articles/2006/10/05/business/trade.php.

  2. Archive » The Antipodean (Free Trade) Approach| China Business Blog Says:

    […] Antipodean (Free Trade) Approach Related entries: General, Trading As the EU and US battle with China over cheap […]

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