European retailers are sharpening their attack on the European Union's decision to restrict textile exports from China amid evidence that blocked shipments of sweaters could lose them €800m ($994m) in retail sales during the autumn and winter trading season.
On Thursday Thomas Östros, the Swedish trade minister, wrote to Peter Mandelson, the EU's trade commissioner, highlighting the problems faced by Swedish clothing companies led by Hennes & Mauritz and warning that, without a rapid solution, “there is a considerable risk that these companies could bring legal action”.
His views were echoed by Bendt Bendtsen, Denmark's economics minister, who wants to discuss changes to the quota system with Mr Mandelson.
The shipment difficulties have emerged because China has already exceeded its 2005 export quotas for sweaters and men's trousers, two of the 10 categories covered by a China-EU textiles agreement signed in June. The stockpile for sweaters has reached 55m items, according to the EU's quota-monitoring system, while retailers estimate the trouser surplus at 11m items.
The developments are a blow to Mr Mandelson, who won plaudits in June for negotiating a truce with China. However, he angered retailers last week when he blamed them for “trying to beat the restrictions” by placing massive orders in the run-up to July 11, when the agreement came into force.
The blocked sweaters are worth €200m-€250m ($249m-$311m) at cost price according to the British Retail Consortium, and could run to €800m in sales for retailers across the EU, one senior retail executive said.
Mr Mandelson has given the 25 EU governments until today to supply comprehensive trade figures to assess the cost value and volumes of stranded goods and thus to gauge the potential damage to retailers. The retailers are also warning that a Brussels proposal to allow an additional 6m sweaters into the EU did “not scratch the surface” of what was needed to bridge the gap between orders and deliveries.
A spokeswoman for the European Commission said on Sunday: “We are obviously aware of the issues …We cannot comment now on the scale of the problem when we don't know exactly what the scale of the problem is. That is why we have asked for more information from the member states. Until we have that, it would also be premature to say what we can do to address this problem as well as possible.”
Mr Mandelson had hoped to hold emergency talks with Bo Xilai, his Chinese counterpart, by the end of last week. However, a spokeswoman in Brussels said the high-level discussions were put on hold, pending further progress among negotiators at a technical level.
China's interest in addressing the concerns of European retailers could be overshadowed from tomorrow by the launch of a separate bilateral round of textile negotiations with the US.