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Source link: http://archive.mises.org/4134/knickers-in-a-bind/

Knickers in a Bind

September 27, 2005 by

The EU has taken aim at China’s textile industry. This is harmful to all parties, and, what’s more, it won’t actually save the EU’s textile producers. There are suppliers in dozens of other countries with the cost structure capable of filling Chinas void. The global marketplace in textiles will continue to evolve according to the voluntary interactions of buyers and sellers. FULL ARTICLE

{ 3 comments }

Aaron Singleton September 27, 2005 at 12:12 pm

We discussed this very issue today in my international trade and finance class. I’m going to recommend this article to the class. They could use a real free market perspective on the effects of trade restrictions in the real world.

Stefan Karlsson September 27, 2005 at 12:13 pm

What is most disappointing is to see how nearly all EU countries have supported the quotas. Of the 25 member countries, only Sweden (refreshing to see Swedish politicians for once getting it right), Denmark and Holland opposed the quotas.

Basic economic theory shows that it will undeniably be bad for the EU as a whole with protectionist measures like the textile quotas. However it is possible for a few member countries like Italy and Portugal (Both of whom saw textile production declines of 10-30% after the quotas were temporarily lifted) who are still textile exporters to the rest of the EU to receive net gains at least in the short-term if the super-competitive Chinese textile industry is shut out.

But that only means that the losses for the rest of the EU is so much greater, which makes it suprising to see only 3 countries opposing the move. As far as I know, Germany and Britain for example have virtually no textile industry left and would thus definetly lose a lot from this, but they still supported the move.

Yumi September 27, 2005 at 1:09 pm

This article by Mr. Nulle and the EU competition law show how ignorant EU commissioners and legislators are of basic economics: they damage many businesses and consumers’ interests by not letting goods reach them when they are in demand. The Commission also epitomises bureaucratic waste and inefficiency. For instance, the following link is to an old article but it’s about the resources spent on translation alone. The organisation just gets bloated and bloated.

http://news.bbc.co.uk/1/hi/uk_politics/1490243.stm

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