September 19, 2006
Solidarity on trade conspicuous by its absence
Trade, apart from peace and prosperity, is always held up as the great EU success story. If only the EU could get its act together in other areas, such as foreign affairs, it would be a global power, the argument runs.
Lorenzo Bini Smaghi, an Italian member of the European Central Bank board, is suggesting that the unity on trade should be a model for countries in the eurozone to boost the currency’s political weight.
Yet in the last few weeks European solidarity on trade has been conspicuous by its absence.
Last year’s imposition of quotas on Chinese textiles angered nations of shoppers such as the UK and Sweden. They were riled again this summer when the European Commission ruled that Chinese and Vietnamese shoes were being dumped on European markets. Many are made by European companies that have outsourced production.
The same north-south faultlines appeared, where Italy, Portugal and the like that still have small family-owned shoemakers, pressed for duties while Peter Mandelson, the British commissioner who is a liberal by instinct and a European by conviction, floated two proposals but both were sunk. In the meantime, the Doha trade talks collapsed.
Now hectic lobbying is under way to extend the duties that will expire on October 6 without agreement.
Romano Prodi, the new Italian prime minister, has been hitting the phones to line up votes. Vocal industry lobbies have been yelling from the sidelines. Rumours of the UK vacillating after Italy offered to support it in opposition to restrictions on working time have been denied. The Italians are shocked that countries they backed in the past on anti-dumping have not returned the favour.
"The old idea of backing each other up seems to have gone out of the window," says one trade veteran.
Mandelson has washed his hands of the affair, saying it is up to governments who want the measures to knock heads together. He will not be disappointed if they fail, as he unveils his review of the whole regime in October. Globalisation of supply chains has made it harder to judge what is in "the European interest".
Ambassadors meeting on Wednesday have been asked to provide a rare written statement of their position in an attempt to find consensus and the whole wrangle is unlikely to be resolved until the last moment. It could fall to justice ministers meeting in Luxembourg on October 5 to take a decision.
Andrew Bounds
