13 October 2005 - This summer’s ‘Bra Wars’ crisis over Chinese textile exports is set to spread to the footwear, bicycle and automobile sectors, the European Parliament has warned.

China’s huge, low-cost labour market combined with increasing technical expertise will give firms based there a price advantage in an increasing numbers of economic sectors, making the textiles crisis just the tip of the iceberg, MEPs heard during a debate in Strasbourg today.

Speaking to fellow MEPs, Dr Lucas challenged the traditional assumption that the EU and US will keep leading in knowledge-intensive industries while developing countries focus on low-skill, low-value sectors.

“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”, Dr Lucas said.

“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 report calls on the European Commission to develop a long-term strategy for EU industry which takes into account these new challenges, and to re-think its existing assumptions about the winners and losers from economic globalisation.

Dr Lucas will also warn of the impact Chinese competition is having on unemployment and working conditions in many areas of the developing world.

“The impacts are not just being felt in the EU where, according to the European Apparel and Textile Organisation, up to 1 million jobs could be lost in the textile industry by the end of next year, but also in the developing world as well.

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

“In The Philippines, for example, the Government has ruled its minimum wage will no longer apply to its textiles sector. In Bangladesh, where 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 has tried to increase overtime hours and lift restrictions on women’s night work.”

China’s costs are kept artificially low, according to Dr Lucas, by its continued failure to protect workers from exploitative pay, long hours and industrial accidents. Independent trade unions are prohibited, and health and safety rules routinely violated.   The report calls on China to adopt basic labour rights, and proposes the establishment of an exchange programme between European and Chinese trade union officials to enable China to learn from best practice elsewhere.

The report also warns that China’s rapid economic growth is increasing pressures on its own natural resources, as well as those of other nations, and calls for an intensification of EU-China co-operation on sustainable technologies, together with pressure on China to play a full part in stemming imports of, and trade in, illegal timber and wood products.

“The EU must see the textiles crisis as a wake-up call to the true costs of unregulated free trade, and adopt a global trading system based on high social and environmental standards, with quotas where necessary, that would be both fairer and more sustainable for workers in both the North and the South”, concluded Dr Lucas.

ENDS