The European Union and China will face continuing tensions over trade unless European businesses respond rapidly to China's growing manufacturing clout, Peter Mandelson, the EU's trade commissioner, warned on Wednesday. Mandelson was speaking after announcing an anti-dumping investigation into Chinese shoes, days after negotiating an end to trade dispute with China over textiles.
Mandelson said at a conference on EU-China relations that he expected trade friction to spread to other sectors as China continued its economic progress.
“Yesterday textiles, today footwear, tomorrow what? Consumer electronics? Cars? Where will it go and when will it end? We are at the beginning of the China story and not the end.”
The Trade Commissioner said he “won't fight shy” if the footwear probe proved that Chinese shoes were being sold in Europe below the cost of production, even though China could respond with a complaint to the World Trade Organisation.
Challenge faced by Europe's shoe industry
Exports of Chinese shoes to the EU have increased by 700 per cent this year. However, he said that he remained firmly opposed to “the unhealthy protectionism that is arising in Europe just as it is in America”.
While stressing that he could not “ignore politically” the distress signals from European manufacturers, Mandelson said he was ready to challenge politicians who suggest that “we can pull the economic blanket over our head and somehow the economic hurricane will pass”.
Mandelson said that the agreement on textiles was not a template for future trade frictions.
“We can make pragmatic interventions but the idea that we can simply roll out some comprehensive general plan to resolve trade frictions between us and the Chinese is an illusion,” he said. AS an alternative, he urged European companies to speed their restructuring efforts and “move up the value chain” to counter cheaper imports. “I am not going to be remembered for my mandate as the man who turned his back on free trade.”