30 August 2005 - The European Parliament’s International Trade Committee today warned the ‘bra wars’ crisis in the textiles industry is spreading to the footwear, bicycle, car, iron and steel industries.

A new report, drafted by Green MEP Caroline Lucas and adopted as the International Trade Committee’s formal position this morning, warns the textiles crisis – dubbed ‘bra wars’ after it was reveled that millions of bras destined for the British high street were being held by customs officials at EU ports – is likely to spread to other sectors of the economy soon.

In an exchange with Trade Commissioner Peter Mandelson, who addressed the committee before it voted to adopt her report this morning, Dr Lucas told him:

“The challenge facing us today on textiles is just the tip of the iceberg – these problems are systemic, not just sectoral.

“Those who believe that Chinese competition presents no threat to Europe, since we can give up what’s left of our older manufacturing base and concentrate instead on knowledge-intensive industries, appear to be in denial of the fact that China and indeed India are fast developing their own low-cost but highly-skilled expertise in these areas too.

“Almost 20 per cent of China’s exports are already classified as high-tech, and with two million graduates a year there’s every reason to believe that this percentage will grow.

“The traditional assumption that the EU and US will keep leading in knowledge-intensive industries while developing countries focus on low-skill sectors is now being seriously contested. You’re squirming on a pin because you can’t accept that the free trade model you support just isn’t working.”

The report demands the EU re-examines its commitment to global free trade, and takes immediate steps to prevent the current impasse over textiles to spread “soon” to the bicycle, automobile, machinery and iron and steel industries.

It also calls for an urgent investigation into the impact of free trade between the EU and China on other sectors of the economy, such as high-tech manufacturing.

The MEPs also warned the scrapping of the Multi-Fibre Agreement in January had already costs hundreds of thousands of jobs across the developing world.

Unrestricted trade in textiles threatens economic catastrophe in Bangladesh, the Philippines and Cambodia and was already causing some poorer countries to roll back workers’ rights in a ‘race-to-the-bottom’ attempt to compete with the Chinese on price.

In The Philippines, for example, the Government has ruled its minimum wage will no longer apply to its textiles sector. In Bangladesh, almost 90 per cent of all industrial goods exports are produced by a textiles and clothing industry which employs 1.8 million workers, the government recently announced that it would increase authorised overtime hours and reduce the restrictions on women’s night work.

Chinese costs are kept artificially low, according to Dr Lucas, by its continued failure to protect workers from exploitative pay, long hours and industrial accidents. Though China is becoming a world leader in energy efficiency and renewable energy production, its industrial pollution and environmental degradation are amongst the worst in the world. Many workers are prevented from joining or establishing independent trade unions and health and safety rules are routinely violated.

At the same time, some 100,000 workers lose their lives in industrial accidents every year, and more than 100 million Chinese still live on less than a dollar a day, with the gap between rich and poor widening fast.

As long as China enjoys free access to EU markets the problem will escalate, warned Dr Lucas: “’Bra Wars’ will spread to other areas, and soon. Indeed, the current crisis in the textiles industry is just the tip of the iceberg.

“In China, we are confronted with a country that doesn’t just have a comparative advantage in low wages and high tech – in fact it has an absolute advantage in a growing number of areas, from footwear to machine components, from bicycles to automobiles.

“This is free trade run wild. I am delighted that the International Trade Committee has adopted my report and recognizes that the EU must see the textiles crisis as a wake-up call to the true costs of free trade, and that a trading system based on high social and environmental standards, with quotas where necessary, is both fairer and more sustainable for workers in both the North and the South.”

ENDS