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Copyright © 2006, Emerald Group Publishing Limited
You could not make it up!
“The Commission believes there is not actually a bra shortage as such but a problem of distribution. It is, therefore, launching a Laundry Basket Amnesty. People will be asked to delve to the bottom of their laundry baskets, bring out the items which have lain there neglected for a few years and deliver them to local collection points with no questions asked. This will put 100 million bras back into circulation.” In order to deal with any trouser shortage “the EU Fashion Victim Relief Committee has announced that the minimum fine for sneering at people in flares will be raised to 250 Euros to encourage people to wear trousers hanging at the back of the wardrobe” (Oliver Pritchett).
The above is obviously (as I hope you will realise) not really part of EU textile policy but in the light of recent events and the almost terminal incompetence displayed nothing would surprise me. I suppose we should allow that the Commission was to a degree handicapped by the need to obtain Member State agreement on any course of action and that the original quotas were simply too low, for which the Member States must also carry some blame. In June restrictions were announced (to last until 2007) on a range of garments imported from China. This sort of action was permitted under the arrangements agreed when China entered the WTO late in 2001. As a result of the manner in which the restrictions were introduced millions of garments were trapped in warehouses as the new quotas were rapidly used up – so no new EU import licences could be issued. According to Mr Mandelson none of these events could have been foreseen. Really! In my opinion any competent undergraduate on our International Fashion Marketing programme here at MMU could have predicted the consequences of abruptly interrupting the fashion process and the retail ordering cycle. The concept of the apparel supply chain with its associated lead times is pretty well established in the literature. I accept that advances in global supply chain management have resulted in falling lead times but I doubt that anyone thinks they have fallen to zero. In addition, it was pretty clear from the trade statistics post 2002 (both in Europe and the USA) that imports from China had exploded as soon as ATC 3 was liberalised in 2002. The old chestnut about achieving breathing space for EU suppliers to adjust was then wheeled out but the MFA phase out started in 1995 – how long do we want? In fact it could reasonably be argued that the industry has had since 1974 to get ready to face new competition. Could there really have been any doubt about the impact of the phase out and the emergence of a quota free world? Standard economic theory gives firm predictions which are contained in all theoretical texts. In addition, there are at least two major reports which predicted the rise in imports especially from China – one produced by Nordas for the WTO and one produced by IFM (Paris) for the Commission itself! The impact of the Commission’s actions were entirely predictable as was the situation which provoked those actions.
In the end a solution to the blockade was reached involving half the goods being let in outside the quotas with the other half being deducted from future quotas. The action did not in any event do anything to “save” the remaining EU apparel sector (in the case of the UK it is really too late for that anyway) as orders simply were diverted to other low cost suppliers, especially India. This was not surprising either as a good case could be made for arguing that the main effect of the MFA itself was trade diversion rather than trade restriction. The main lesson of the whole sorry episode (apart from what it tells us about the competence of the relevant authorities) is that we have still after all these years got a long way to go before coming to terms with the reality of global shifts in economic power which (because of the labour intensive nature of apparel production) the apparel industry captures so dramatically. The idea that quotas will in some way even now make a dramatic or significant difference to the rise of China as the major producer of apparel is hardly worth considering as our main response – but it seems we do think this way. It will be interesting to see what the impending WTO meeting in Hong Kong can do to remedy this situation.