DALLAS, Sep 5, 2005/ FW/ --- In a historic move today, EU Trade Commission Peter Mandelson and his counterpart, Chinese Minister of Commerce Bo Xilai signed in Beijing an agreement that allows the “release of millions of Chinese garments blocked by EU customs officers because they exceed import ceilings,” reported Reuters.

And although this is seen as an “equitable deal” according to the same report, this accord is fast becoming an example of politics, business and general population sentiment disagreeing.

Currently the 25-member European Union is holding a China-EU Business Summit at the Chinese capital. With the newly signed agreement, half of the 88 million pieces of clothing that is being held at EU ports will be released, while half will be taken back by China.

This looks good at first glance, but according to another report by a French news agency, Simon Fraser, Head of the Cabinet for the European Trade Commission under Peter Mandelson in Brussels, has recognized that under the category of knitwear, the importations from China into Europe for 2005 will in fact be more than the twice as what was planned by the 2005 Shanghai Agreement.

Thus, out of the 48 million knitwear pieces still at customs, the European Union will accept only 25 millions on top of the quota planned by the Shanghai agreement for 2005.

The other half will be taken back by China. To allow this, 10 million pieces out of these 25 million pieces will be taken « in advance » on their quota for 2006 (which amounts to 199.7 million pieces for knitwear) and the remaining 15 million pieces will be transferred on the unused quota for another category, cotton fabrics, Mr. Fraser was quoted.

As far as the remaining categories still held by the customs are concerned, 18 million men’s trousers and 11 millions brassieres, how it will be divided, i.e., how much much will be allowed to enter the EU and how much will be taken back by China has not been reported yet.

If this makes your head spin, “Francesco Marchi, director of economic affairs at Euratex which represents Europe's textile sector, criticized the agreement as « a gift » to China,” again, reported by Reuters.

Add to that Europe in general is still angry over the surge in China’s European exports with the abolition of global quotas in January 1, 2005.

And, there is still a universal “mistrust” on China due to its continuous disregard of copyright laws of other countries that includes both the U.S. and European Union members’ copyright laws.

And like what the average Americans have been asking for two decades now, i.e., “Why is the U.S. trading with China when they pirate our movies and make replicas of our products?” the Europeans are beginning to ask the same question and more.

Like the U.S., the Europeans are feeling the “pinch” of cheap unskilled labor versus experienced and skilled worker. With China’s low wages, it is easy to see how they can manufacture cheaper goods compared to the U.S., France and Italy, where wages are much higher.

The average American workers had seen their jobs exported overseas as retailers choose to buy Chinese goods versus American-made goods because the ones made in the Far East is cheaper and businesses can make more profit.

From the looks of it, the average European worker is facing the same fate as their American counterpart. But, it does not end there!

As with the U.S. experience with its economic downturn, there was a general “non-buying” of goods and services by those affected by the tight economy. Hence, retailers also felt the pinch. The result – less profit, and more jobs lost. It is a vicious cycle.

Europe, with the very high Euro dollar is feeling the pinch in its economy already, as average workers find it harder to buy goods and services. And like the U.S., it is also seeing its jobs being exported overseas.

And with the general mistrust on China due to its non-compliance of copyright laws of other countries, it is easy to understand why the general population on both sides of the Atlantic feels “safer” if their governments trade with other developing countries like Tunisia or Bangladesh.

This situation is fast becoming a Public Relations nightmare for China and the EU government.

China needs to change its image as a “counterfeiter” while the EU government has to make the Europeans see that this new accord is for the better.

In the end, whoever wins the PR war will not matter, because protectionism will set in if the governments (U.S. and EU both) cannot provide jobs to its population.

And in situation like this, the average worker, who is also the average consumer, will suffer!