June 01, 2005

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To catch a liar

Tim Worstall caught out the EU in a lie over stats related to the looming textile quotas on China. Today Jake van der Kamp in the SCMP follows through with the next part of the lie.

EUlie.jpg

Quota restrictions on garment exports, which were imposed by the developed world on developing countries 30 years ago as a route (supposedly) to gradual adoption of worldwide free trade in garments and textiles, were finally abolished on January 1.
That's right. America and Europe have had decades to prepare for this liberalisation of trade. Decades.
...mainland knitwear exports to the EU account for only 0.2 per cent of the EU's imports and we are talking here of EU imports after eliminating trade between EU countries. Of course, knitwear exports also account for barely 25 per cent of the mainland's exports of garments and textiles to the EU. They are the most egregious examples of the garment export boom to the EU.

But I am only following the example of European trade negotiators in being selective in choosing my example. When they complain about China's rag trade exports they invariably pick on women's white silk ballroom gloves or floral handkerchiefs or similar minute categories. Very well, fellas, we will let you say what enormous increases in import growth you have seen in your own selective choices so long as you also tell us how tiny a proportion each of them constitutes of your import bill.

But let us look at the bigger picture here. The red line in the second chart shows you what really irks Europeans in their trade with the mainland. It is that the mainland's trade surplus with them has shot up to a level US$5 billion a month and it has all happened very recently. The figure three years ago was barely 10 per cent of what it is at present.

And now look at the blue line. It represents a four-month average of the mainland's trade surplus with the EU in textiles and garments. Up to 2002 this accounted for most of the overall surplus but now, even after having risen with the abolition of quotas, it accounts for barely 20 per cent. If the EU wants a culprit for its sudden trade imbalance, that culprit is not textiles and garments.

Try the light green line on the chart instead. It represents the mainland's trade surplus with the EU in machinery and electrical equipment. In deficit until 2003, this category is now running at a surplus of US$2 billion a month in the mainland's favour. Yet I have not heard a peep from the EU about this one. The rag trade is an easier target.

But let us be grateful that the attention of Europe's politicians has now been focused inwards with France's rejection of an EU constitution. They will have to start looking for their villains in their own countries again, which, fortunately, means less attention to pseudo-villains abroad.

I wonder if the numbers are the same for the US? I imagine they are.

You see, even the EU and USA believe in the bogeyman...even if he doesn't really exist.

posted by Simon on 06.01.05 at 10:57 AM in the




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Those Textile Quotas.
Excerpt: Following on from my angry snarling about the EU’s likely re-imposition of quotas on Chinese textile imports and the lies being told to support such, Simon’s World has an interesting piece from the South China Morning Post. It would appear
Weblog: Tim Worstall
Tracked: June 1, 2005 04:17 PM


Comments:

Why don't we hear anything from organizations supposed to defend consumer interests? Consumer interests are hurt here by the lies of our European leaders.

posted by: ivan on 06.01.05 at 04:59 PM [permalink]

It's pretty simple. The interests of consumers are diverse and the price improvements (relatively) small - the benefits are difuse. On the flipside the costs are concerntrated and have a large impact (loss of job, bankruptcy). So naturally the small special interests make a huge amount of noise.

It's a variation on the tragedy of the commons. You're right - the answer is to get consumers to band together to overcome the special interests...but that's true in far more situations than just this.

posted by: Simon on 06.01.05 at 05:09 PM [permalink]




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