National interest and Sino-EU Textile Dispute

National Interest and Sino-EU Textile Dispute- Italian role
Meng-jen Chang[1]

Abstract
“Bras war” took place in 2005 and is terminated in October 2007. What the interesting point was that this event divided EU Member States into two parts (in favor or against quotas towards China). Italy involved in this crisis was one of most influential countries being eager to impose the safeguards on China. The Sino-EU trade dispute occurred because of the Italian mobilization to defend the interest of the European textile producers. The case study that Italy tended to transfer its national interest to international negotiation table brought us a clear-cut picture in which domestic affairs influence international negotiation. When governments met in the international arena, their actions reflect the political situations at home. Here, again we introduce domestic politics into the analysis of international economic negotiation by observing the Italian role within the EU.

Keywords: Bras War, Sino-EU Textile dispute, Italy, three-level game

國內利益與歐中紡織貿易衝突-義大利角色
摘要

歐中內衣大戰緣起於2005年中旬，於2007年十月真正落幕，肇因世貿組織架構下的紡織與服裝條約的終止。事件的發生，著實造成歐盟內部成員國分裂，一派支持設限；另一派則持自由貿易口號。歐中紡織紛爭中，鑑於義大利擁有最大的紡織工業，為了國家利益，義大利是強烈要求對中成衣設限的會員國。貿易紛爭的發生最大原因歸咎於義大利藉宣稱捍衛歐洲紡織市場與代表歐盟紡織業者的利益，進行內部廣泛的動員與跨國結盟，迫使主張自由貿易派失利以及歐中紡織糾紛的加劇。歐中紡織紛爭的案例可看出歐盟會員國政府在國際談判桌上的動作，反應出其國內利益的考量，本文借觀察義大利在歐盟的角色來分析內部因素在國際經濟談判的重要性。


關鍵詞： 內衣大戰、歐中紡織紛爭、義大利，三層次賽局
Introduction

The major subject of this paper is the observation of Italian reaction to protect the European textile and clothing industry as European import quotas was capped on Chinese textiles and clothing goods in 2005-2007. The political drama regarding the “bras war” became a spotlight and thus a host of international media paid attention on this event.[2] Although Sino-EU textile row took place in 2005 it indeed drop the curtain in October 2007.
Drawing on the three-level game approach, this research aims at figuring out the Italian influence on so-called event. How and to what extent did the Italy influence and participate in the EU trade policy decision-making? Do domestic factors matter in the international negotiations? Do national interest affect the outcome of trade negotiations?
A brief review of the literature with respect to the links of domestic politics to international negotiations will be discussed in the following section. After an overview of literature, the next part will mention about the evolution of Sino-EU textile dispute (2005-2007) and then next step is to explore the domestic factors in terms of Italian mobilization that affect the EU’s trade policy towards China.
This paper, through an examination of Sino-EU trade disputes, offers an explanation about how the domestic politics influence the outcome of international negotiation. Since there are neither sufficient data and expertise nor space to cover all the 25 EU Member States in this contribution, the following analysis will focus principally on one of pivotal players of the third-level game, that of Italy. This is not to suggest that Italy constitutes the crucial player among the EU Member States to decide on the relationships with China. Apart from the major players France and Spain, there are also several Member States like Scandinavian countries who particularly play counterparts within the EU towards Chinese textile products. The role choice of Italy pivots on its biggest textile industry, fierce reaction and on its pioneer of lobbying the European Commission.[3] In addition, the negotiation outcome has been seemed to the victory of trade protectionism within the EU. It is worthy digging out the Italian influence in this event because of above reasons. The paper concludes that the three-level game will bring clear-cut process of the EU decision-making in which Italy promoted its national interest to the European level by aligning other EU Member States of South Europe and Central-East Europe. The final goal of the analysis is to assess the mobilization of interest groups in Italy and the role and performance of the Italian government in a European policy field against China during three periods of Sino-EU negotiations.


Analytical Framework: the Three-level Game, the link of Domestic Politics and International Negotiation

Most theories of international relations neglect the influence of domestic politics because they consider the state as a unitary actor. A growing literature on International factors can matter international negotiation, but what lacks is a theory of domestic influences, especially there is a dearth of their interaction with international factors. A growing literature on endogenous policy formation treats interest groups as participant in a competition for political favors. For the analyst of international negotiation, they have noted that the existence of domestic differences. On the contrary, from the realist school’s point of view, the better understanding of international relations and international negotiations is to dig out the interplay of unitary, rational and national actors, who pursue their maximized self-interest.
Although Neo-realism admits that domestic politics is not very important to explain significant foreign policy decisions or international political outcomes a slew of recent researches on the international relations field advances the proposition that domestic politics is typically a centerpiece of the explanation for states’ foreign policies.[4] A systemic theory depicts states as unitary, rational actors, rather a domestic-political explanation treats one state as non-unitary, and which pursues a sub-optimal foreign policy because of the interaction of the actors represented within the state. Differences among states in their internal preferences and political institutions have important effects on international politics. Moreover, domestic political interactions lead to diverse state foreign policy practices. As a consequence, Waltz admits that neo-realist theory of international politics can’t be a theory of foreign policy.[5] Milner also spoke up that states are not unitary actors; that is, they are composed of actors with varying preferences who share power over decision-making.[6] International politics and foreign policy become parts of the domestic struggle for power and the search for internal compromise. How do domestic politics matter? Great deal of literatures on political economy indicates that domestic politics connect deeply with international trade negotiations.[7] Large numbers of literatures about two-level games initiated by Putnam are eager to answer this abovementioned question.[8] However, due to particular status of the EU two-level games theory seems to be unfit to be put on the EU. Instead, three-level game extended by two-level game can depict how Italian-led position can be transferred to European level and to the international negotiation table.

The background of Sino-EU trade row on textile

Like European T&C sector had predicted, following the final stage of liberalization on January 1 2005, textile and clothing exports to Europe from China experienced a rapid upsurge and sharply drops in unit prices. Some categories of imports increased in a matter of months were 100% or more. On 14 March European Textile and Apparel Association (Euratex) first asked EU and 25 Member States to take the safeguard with regard to 12 categories of imported Chinese textile products. European producers together pushed the Commission to take a tough stand in a way that EU should use the safeguard against China in order to protect their interest. 13 Member States urged to curb Chinese garments by any safeguard measures as soon as possible.
Indeed, the investigation revealed a dramatic deterioration of production and employment in the European T&C sector in some kind of categories.[9] EU Member States likely to lose its advantage would be the Central and Eastern European countries, which benefit from tariff-free access.
On 17 May 2005, Peter Mandelson launched formal consultations with China for two of the nine categories of textile imports i.e. T-shirts and flax yarns after trade data revealed significant increases (ranging between 51% and 534 %) in Chinese imports. A formal request for consultations was made on 27 May 2005.
Meanwhile, the irate Chinese authorities were about to eliminate export tariffs on 81 categories from 1 June 2005 to show their rage in return. At moment the Sino-EU textile dispute was likely to escalate. As a result, rather than using the Textile Specific Safeguard Clause the EU and China reached an agreement that would cap Chinese imports at agreed levels each year until 2008. This agreement covers 10 product categories that will be restricted to a certain rate of imports, while allowing for an average growth in exports from China to Europe.[10] These annual allowances would be subject to an annual increase from 8% to 12.5% in ten categories of textiles quotas EU investigated. This would allow Chinese exports to continue to grow, but at a rate that would allow EU producers to adjust their structure.[11] Basically, this agreement was agreed upon that China would limit its export growth to the EU for a period of 3 years from 2005 to the end of 2007.

However, by the end of August, the difficulties of the shipment 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 last June. The stockpile for sweaters has reached 55m items, seven out of ten categories of textiles quotas were already reached alarming levels, blocking whopping stocks of garments in European ports, and stirring once again angry reactions from EU distributors (most from the north Europe).[12]
Textile-producer Member States such as South Europe and Central-East Europe obviously insisted that any quota increase for 2005 needed to be included into the quotas of 2006 and 2007 in order to maintain the sum of quotas granted by the Shanghai agreement until 2008. On the contrary, Northern Europe supported the increase in Chinese textile import ceilings for 2005 and leaved quotas for the following years unchanged.
Mandelson cannot help but renegotiate with China in order to meet the need of the opposite lobbies and get out of gridlock. On September 5, he came to terms with Chinese commerce minister, letting in the 88 million items (valued at around 600 million dollars) blocked at the EU borders, and including half of these stocks in China’s 2006 quota and in unfilled quotas of other textile products for 2005.

Double-Checking System replaced quotas using (Memorandum of Understanding with Beijing) (2007/10)

Those products covered by the agreement with China have increased more slowly thanks to ‘Memorandum of Understanding with Beijing. European textile-producer countries temporarily got a breath time. During this transitional period, the Commission under the Italian-led producer member states’ proposal supported European companies like Prada and Gucci to fight against the Chinese counterfeit. The Commission has also backed the idea of an Origin Marking system proposed by Italy for certain products including textiles that would require imported textiles to carry an origin label in which let consumers know what clothes they buy. The fears still remain that a trade war is likely to be triggered over textile issues by the expiry of textile quotas by the end of 2007. France, Italy and Spain supported the proposal proposed by Euratex to extend the period of quota for one year, however Northern Europe ruled out this idea and counterpart, China as well.
New agreement was reached in October of 2007 by imposing no restrictions on imports, but both sides were committed to cooperating to ensure a smooth transition. The Commission worked out new idea and proposed China a double-checking surveillance system for 2008 that would cover eight textiles product categories with particular sensitivities to replace quotas applied against China.[13] The benefit from this system is to call off the quotas but set condition for China in which allows EU to monitor textile import patterns, by which imports have to be licensed before they leave the dock in China and allows EU to see in advance likely developments. At the beginning, China rejected this proposal initiated by the Commission. China accepted this proposal after it had pondered on this measure over and over.

Domestic Factors of EU Member States: Italy as a leading competing trade structure country with China

Why Italy had fierce reaction about the restrictions on Chinese garments? It at first should be mentioned about T&C sector in Italy. Obviously, Italy keeps its strong leadership in terms of its contribution to total T&C employment and is by far the most prominent location for this industry.[14] This prominence is particularly remarkable in the clothing sub-sector where Italy accounts for close to 40% of EU production.[15] In each of the three sub-sectors within the textiles, clothing and leather manufacturing sector, Italy was one of the principal manufacturing Member States both in terms of value added and employment. A little over one third (34.1 %) of the value added generated by the textiles, clothing and leather manufacturing sector as a whole in the EU-25 came from Italy in 2003 (EUR 22.5 billion) (see Table 1).

Table 1 Manufacture of textiles, clothing and leather products (NACE Subsections DB and DC) Value added and employment: ranking of the top 5 Member States, 2003
Rank

Highest value added (EUR million) (1)

Share in EU-25 value added
(%) (1)

Highest number of persons employed (thousands) (2)

Share in EU-25 employment
(%) (2)

Highest share of national industrial value added
(%) (3)
Highest share of national industrial employment
(%) (4)

1
Italy (22 479.8)
34.1
Italy (757.5)
25.2
Portugal (14.9)
Portugal (30.8)
2
France (8247.0)
12.5
Poland (298.9)
10.0
Lithuania (11.4)
Lithuania (23.5)
3
Germany (8046.9)
12.2
Portugal (284.9)
9.5
Estonia (10.7)
Estonia (18.8)
4
Spain (6 695.6)
10.1
Spain (279.6)
9.3
Italy (10.1)
Italy (15.4)
5
United Kingdom (6481.3)
9.8
France (227.4)
7.6
Luxembourg (7.7)
Malta (14.9)
(1) Hungary, Malta, Slovakia and Sweden, 2002; Denmark, Greece, Cyprus, Latvia, Austria, not available.
(2) Sweden, provisional; Hungary, Malta and Slovakia, 2002; Denmark, Greece, Cyprus and Austria, not available.
(3) Slovakia and Sweden, 2002; Denmark, Greece, Ireland, Cyprus, Latvia, Hungary, Malta and Austria, not available.
(4) Sweden, provisional; Hungary, Malta and Slovakia, 2002; Denmark, Greece, Ireland, Cyprus and Austria, not available.
Source: Eurostat (SBS)

Textile sector is one of the core pillars of the Italian economy, but the vulnerable industry was quaking as the end of quota on Chinese imports took place.[16] The export of textiles and clothing contributes 10% in total Italian export. Italians are very proud of this traditional textile sector that created huge Italian export.[17] However, Italian textile manufacturers have been pressed hard by Chinese competition.
The incessant protests organized by uneasy employees brought about sharp strike in Italy that it drew an attention of all political parties and government who were involved this purely domestic account. Italian T&C sectors claimed that the quantity of Chinese garments obviously increased 449,5 percent from the January 2004 to January 2005, in particular the quantity of Chinese bra has arisen 25.2 per cent comparing to 2004-2005. According to the data of ISTAT (Istituto nazionale di statistica), the percentage of textiles and clothing goods imported from China arose 63,7% in February 2005 than last year. Imports of clothing went up 41,3%. Table 2 and table 3 indicated that China is a biggest imported source of textiles and clothing to Italy.

Table 2Value of Italian Import from key Market- Textile sector

2004
Weight%
2005
Weight%
Gen-March
2005
Weight%
Gen-March
2006
Weight%
World
6.984
100
6.986
100
1.698
100
1.853
100
China
790
11,3
1.133
16,2
255
15
319
17,2
Germany
721
10,3
685
9,8
179
10,6
198
10,7
Turkey
495
7,1
518
7,4
135
7,9
149
8,1
France
493
7,1
440
6,3
116
6,9
111
6
Fonte: Elaborazione Osservatorio Economico Ministero Commercio Internazionale su dati ISTAT
Table 3 Value of Italian Import from key Market- Clothing sector

2004
Weight%
2005
Weight%
Gen-March
2005
Weight%
Gen-March
2006
Weight%
World
7.553
100
8.191
100
2.194
100
2.530
100
China
1.520
20,1
1.952
23,8
443
20,2
546
21,6
Germany
1.035
13,7
973
11,9
262
11,9
253
10
Turkey
587
7,8
586
7,2
158
7,2
164
6,5
France
476
6,3
533
6,5
157
7,1
171
6,8
Fonte: Elaborazione Osservatorio Economico Ministero Commercio Internazionale su dati ISTAT

Mobilization of textiles-related associations

A great deal of relevant T&C associations and trade unions urged the forward step and measures of the EU to tackle with the EU enlargement in May of 2004 and removal of quota in 2005 since Italy had foreseen the calamity in its T&C sector before phase-out of ATC.[18]
On 21 February 2005, Confartigianato-Moda was the first warning that 100,000 jobs would be lost due to removal of quotas to Chinese textiles.[19] The Italian dominant textiles-Fashion sector, Smi-Ati (il Sistema Moda Italiana e l’Associazione Tessile Italiana, and then names Federazione Imprese Tessili e Moda Italiane)[20] and CNA (Confederazione Nazionale Dell’Artigianato e Della Piccola e Media Impresa) joined the line to call for emergent measures against flooded Chinese garments.
Femca Cisl, Filtea Cgil and Uilta-Uil are three major trade unions in Italy. In 2004 they hammered out some proposals about trade and industrial policy in order to tackle with the growing unemployment and dislocation in T&C sector.[21] Owing to phase-out of ATC job loss in Italian T&C sector was getting worse. Some companies like Marzotto SpA, owner of the Hugo Boss label, Gucci, Cavalli, Fendi held a strong manifestation in Prato called by three trade unions and guided by general sectary of Cisl Savino Pezzotta in 8 March of 2005. The aim was to push the pressure on Italian government to take the decision on anti-dumping measure on Chinese goods and also protest for de-localization of Italian textile industry.
Giovanni Nenciarini, president of Confartigianato di Prato and Carlo Longo, president of Prato Industrial Union pointed out the difficulty of failing to face the Chinese challenge that 74 % of their companies had less than 5 employees and they lost 5,000 employees of textile sector in two years. Badly, the export dropped from 3.300 million of euro of 2001 to 2.577 of 2003.[22] Valeria Fedeli, European Trades Union Federation: Textiles, Clothing and Leather and General Sectary of Italian trade union (Filtea Cgil) on the side of producers had called for the intervention from Italian government to curb the job loss in T&C sector.[23] Luca Rinfreschi, president of Chamber of commerce of Prato on behalf of textile producers provided that it is difficult for them to compete with China because their factories have no more than 100 or 200 employees. The sectary of local Filtea-Cgil, Manuele Manigolli put into doubt that if Chinese textile sector gets the state subsidy. Another group like Commissione di Studio sui Distretti Produttivi Italiani advocated to cap Chinese garments. According to them, the unfair Chinese challenge to Italian textiles has led to the damage of Italian exportation.[24]
Meanwhile, Filtea-Cgil was not only seeking the help from the Italian government but also from European level to accelerate the procedure of employing safeguard against China.[25] Fashion Association and trade union of textile sector (Le Associazioni di categoria della filiera della moda e le Organizzazioni Sindacali del settore) lobby Italian government and the Commission to protect not only their interest but also that of European market.[26]
Tuscany is a traditional textile-producing region in Italy. Claudio Martini, President of Tuscany Region said that he had met with Italian vice minister of produce activity and Trade Commissioner, Peter Mandelson to present deeply concern on the issue of textile crisis. He further unified other European textile-producing regions and cites in line with pushing pressure on the European Commission.[27] Moreover, he went to China in June of 2005 to discuss the issues on textiles and footwear sectors.

Italian producers association cooperated with EURATEX (The European Apparel and Textile Organization)

Since Italy has strong T&C industry it no wonder plays a relevant role in the European Apparel and Textile Organization (EURATEX).[28] The Italian textiles-Fashion sector sent a message to the Commission through Euratex. Euratex, for its part, made an ardent plea to the Commission on 9 March for safeguard measures. Received the request for safeguards against certain Chinese textile imports presented by Euratex, Commissioner Mandelson started the assessment. The Commission first published guidelines that would clarify under what circumstances it would consider Textiles-Specific Safeguard Clause (TSSC) action against textile and clothing imports from China.[29] On 14 April Peter Mandelson met with representatives of the Italian textile industry and Euratex to discuss the safeguards against Chinese textile exports.[30]
Italian textile and clothing producers showed their influence by unifying all relevant associations not only at national level but also European level. This advocating coalition was so powerful that trade Commissioner, Peter Mandelson needed to placate Italian textile producers in Florence.[31] When EU decided to release Chinese clothing blocked in the port, Italy was angry at the EU’s conduct.[32]
Even in June of 2007 Peter Mandelson decided to quit the quota he had sent a letter to Italy’s best- selling newspaper, Corriere della Serra to explain current situation.[33]
During two years and half of breathing time (quota against China until the end of 2007), Italian producers tended to extend the period of quota against China for one year and transfer its rules, like adopting trademark of original country, fighting with counterfeit and so on to European law.[34] Furthermore, the Commission accepted the Italian proposal of obligatory trademark of original country of extra-EU in 16 December 2005.[35]

Opposite position of Italian retailers and consumer association

Despite the phase-out of ATC and removal of quota, retailers lost amount of money from this event. United Colors of Benetton and Sisley, big Italian clothing producers and retailers was a victim.[36] Paolo Banfi, President of textile machinery manufacturers textile machinery industry (ACIMIT)[37], had 19 percent of Italian textile machine exports went to China, call for quitting the quota.[38] In addition, Italian consumer association took side with retailers.[39] Commission of European Consumer Consultative Group supported the action of Italian consumer association. Italian consumer association on behalf of consumers wrote a letter to Trade Commissioner, Peter Mandelson to consider consumers’ benefit.[40]
In spite of their close business connection with China Italian government was hardly to stand on their side. The voice of Italian retailers cannot be heard by national government due to national interest, so Italian retailers turned to European level and sided with European retailer associations.[41] Some examples can be cited: the European Association of National Organizations of Textile Retailers (AEDT), which represents 400,000 retailers in Europe, urged in a statement that a solution be found without delay.[42] Other relevant importers and retailers are represented by the Brussels-based associations, for instance Eurocommerce, the Foreign Trade Association (FTA) and the European Association of Fashion Retailers supported by big retailer companies such as Carrefour, Metro, Inditex, Esprit Europe and Adidas.[43]

The reaction of Italian institutions

The action taken by Italian Parliament
To curb illegal Chinese goods Italian House of Representatives approved in 7 June of 2005 the application of obligatory trademark (Made in Italy).[44] The members of parliament lashed out the Chinese textile products by the data of Euratex claiming that those products had increased 46,5 percent and thus urged the government to apply the sanction at the European level in order to protect the national industry.[45] During the break time that EU imposed quota against China, Italian parliament at home has ruled the obligatory trademark, fighting against counterfeit and monitoring of imported textiles and clothing goods in order to take further measures to protect Italian textile industry from the Chinese challenge.[46] Italian parliament also urged government to transfer above measures it approved into European rules.

Action taken by Italian Government (Before first agreement with China)

Italian government was under the pressure of large numbers of associations and textile producers. Italian Minister of Productive Activities (Il ministro delle attività produttive) Antonio Marzano, wrote to Peter Mandelson to call for safeguard.[47] Minister of Economics, Giulio Tremonti also consented to safeguard.[48] Minister of Labor and Welfare, Roberto Maroni sharing the same position with his party (Lega Nord), proposed to apply anti-dumping measure.
Italian Deputy Minister of Productive Activities, Adolfo Urso met American undersecretary of Trade, Grant Aldonas talking about the monitor system of Chinese textile products.[49] Mr. Urso on behalf of Italian textile sectors argued that the anti-dumping tariff allowed by the Clause of Safeguards could be applied by the Commission to curb Chinese goods.[50] Adolfo Urso visited Peter Mandelson talking primarily about the impact of Chinese textile imports on European and Italian manufacturers in the wake of the removal of textile quotas on January 1 2005. Later on 16 March, Adolfo Urso exhorted Peter Mandelson to impose quotas on Chinese-origin textiles and clothing garments. Italian government already sent a letter earlier in March 2005 officially requesting safeguard measures, along with Portugal, citing that the Community industry is at grave risk of injury.[51] The European Commission has said it was considering steps to slow Chinese textile imports, fearing they may grossly exceed levels over the past few years when they were restricted by quotas.[52]
After the first agreement reached by both sides Italian Deputy Minister of Productive Activities, Adolfo Urso was content with the Sino-EU agreement in June of 2005. Meanwhile, Italian Premier, Silvio Berlusconi announced the victory in Senate that the Commission would employ safeguard to protect 20 categories of textiles and clothing.[53] But, two months later EU was forced to sign the other agreement with China to release the stockpiles of textiles and clothing goods in the European port. Northern League, as its part, claimed the wrongdoing of the EU, for instance Roberto Cota, under-sectary of Ministry of Productive Activities required furiously Italian Premier, Berlusconi to interfere this event.[54]
A spokesman for the Italian government over the issue of release of shipments said Italy was ready to the compromise with other EU Member States.[55] Mr. Urso in a statement on 25 August argued that we are reaching the maximum import quota for several types of Chinese textile items, but there is a clear sign that Chinese textile exports will have taken over one third of the European market by the end of 2007. Mr Urso considered that Italy’s textile sector is alive and kicking thanks to the quantitative restriction.[56] As a result, Mr Urso stated the position of Italian government is to bring China’s 2006 export quotas forward to the year of 2005.[57] After all, Italy was seeking the support from the France and other textile producing countries.

In the period of breathing time (September 2005-the end of 2007) Italy sought to impose Italian law with regard to protect T&C sector to the European level. Italian Prime Minister Romano Prodi received at Palazzo Chigi with a delegation of SMI-ATI and other associations, including Paolo Zegna (President), Michele Tronconi (Acting Vice President and President of Euratex) and Gianfranco Di Natale (General Director) concerning about the recovery of T&C sector.[58]
As the phase-out of quota was coming again Italian Minister for International Commerce and European Policies Emma Bonino (May of 2006-January 2008) on 5 June 2007 claimed to extend a further year of the period of quota against China due to the expiry in the end of 2007.[59] Italian proposal is advocated by Portugal, France, Union des Industries Textiles (Uit), Euratex, the man-made fibre industry body (CIRFS), AIUFFASS (users of man-made filament yarns and silks) and Eurocoton.[60] However, such idea was never a popular solution accepted by all EU Member States, in particular North Club. Hence, the opposite attitude of the importing countries turned Italy to support double-check monitor system.[61] At least, Emma Bonino ensured Italian position on 31 July 2007 of accepting double-check monitor system because a majority of EU Member States was in favor of so-called system.[62]

Conclusions

Considering T&C sector is vital for Italy, thence Italian government gave way to taking the protectionist decision to meet the need of trade union, textile producers and employees. A great deal of societal roles was involved in the textile event at not only national level but at European level, because the initiative of the Commission, the outcome of negotiation and the final say of the Council about Sino-EU textile dispute will affect the benefit of many parts involved in this issue. Owing to the vital interest of T&C sector, Italy as a pioneer made an attempt to impose the quota against China and beefed up its influence to the European level is understandable. The outcome of Sino-EU negotiation marked the victory not only of Italy but the EU Member States of textile producers. On the one hand, Italy successfully aligned other Member States to defend their national interest. On the other hand, this event indicated the importance of domestic factors to the international negotiation. Even though there was opposite voice against protectionism within Italy textile producers still can achieve their aim by forming a big advocating coalition not only from national level but European level to affect national government and the Commission.
Under the pressure of strong Italian textile associations and trade unions, Italian government was keen to support them in the wake of the interest of the T&C sector as national interest, even though Italian retailers and importers have close business with China. The voice of Italian retailers cannot be heard by national government due to national interest, so Italian retailers turned to European level and sided with European retailer associations. On 8 March Italian Productive Activities Minister Antonio Marzano told that the data from the first two months of monitoring were alarming and Italy has raised the issue of the problems for the textiles and clothing industry. Prime Minister Silvio Berlusconi raised the issue again at the spring EU summit on March 22-23.
Strong European textile producers led by Italy and Euratex successfully affected the European decision to impose the quota against China by ardently lobbying the Commission, European Parliament and the Council of Ministers. Italian textile producers, textile associations and trade unions did a fantastic job to reintroduce the quota that Trade Commissioner had promised not to go back. With successful mobilization of Italy, 13 EU Member States including South European Countries and Central-East Countries under the pressure of European textile producers urged to impose quota. Despite removal of the quota imposed on Chinese garments was decided in October of 2007 Italy had done a range of safeguards to defend its interest from Chinese threat in the near future.
The T&C sector, one of major pillars of Italian economy is experiencing a tough crisis facing the liberalization of this sector and the emergence of made in Chinitaly that the products with low quality but made by Chinese immigrants in Italy. Until now, Italy has successfully imposed the origin mark system into European law with the help of friends such as France, Spain and Portugal in order to deal with illegal Chinese garments. In addition, the protection of intellectual property of the European goods has been set on the European agenda against Chinese counterfactual goods. Of course, if China can respect the rules of the WTO like what Luca Cordero di Montezemolo, the president of Confindustria has said, there will not loom the trade row between the EU and the China.
Unless to say, three-level game provided a clear-cut picture in which Italian national interest was pushed from national level to the international level. With this framework a slew of national interest of each EU Member State trying to influence European and international level can be dug out with case study.

Appendix 1-The position of relevant roles about in favor of or against quota
Associations, companies Position (against)
Associations, companies Position (favor)

CNA (Confederazione Nazionale Dell’Artigianato e Della Piccola e Media Impresa)

FEDERAZIONE NAZIONALE DELLA
MODA CONFARTIGIANATO

Smi-Ati (il Sistema Moda Italiana e l’Associazione Tessile Italiana)
The Italian textiles-Fashion sector (Federazione Imprese Tessili e Moda Italiane)

3 Trade Union (Femca Cisl, Filtea Cgil and Uilta-Uil)

Fashion Association and trade union of textile sector (Le Associazioni di categoria della filiera della moda e e le Organizzazioni Sindacali del settore)

ITF (Italian Texile Fashion)

ConfCommercio
ACIMIT (Italian textile machinery manufacturers)

Italian association of consumer (Altroconsumo)

Benetton, Sisley and other retailers



References
Camera dei Deputati, Mozioni sulle iniziative per favorire la tracciabilità di prodotti importati, n. 228 del 22/10/2007, available at < idseduta="0228&Resoconto="amoz02">.
CGIL, “Tessile, Fedeli Export Cina: Dato Abnorme, Governo intervenga”, CGIL Ufficio Stampa, 23 March 2005, .
Collinson, S. “Issue-System, Multilevel Games and the Analysis of the EU’s External Commercial and Associated Policies: A Research Agenda”. Journal of European Public Policy 6, no. 2 (June 1999): 206-224.
Commissione Europea, La Comunicazione della Commissione delle Comunità Europee, “Il futuro del settore tessile e dell’abbigliamento nell’UE allargata”: Commento e valutazioni del settore TA italiano, Milano, 23 gennaio 2004, .
Elsig, M. The EU’s Common Commercial Policy: Institutions, interests and ideas. Ashgate: Aldershot Press, 2002.
European Commission, Economic and Competitiveness analysis of the European textile and clothing sector in support of the Communication: The future of the textiles and clothing sector in the enlarged Europe, Commission Staff Working Paper, 21/ 11 2003, Brussels, <>.
European Commission, COMMISSION REGULATION (EC), No 1084/2005 of 8 July 2005 amending Annexes II, III and V to Council Regulation (EEC) No 3030/93.
European Commission, Speech by Peter Mandelson to textile producers. EU-China Textiles: Manage change and adjustment, not trade, Palazzo della Regione, Florence, Italy, 6 June 2005, <>.
European Commission, Netherlands Germany, Denmark and Sweden asked External Trade Commissioner, Peter Mandelson for making import restrictions more flexible”, Agence Europe, Brussels, 17 August 2005.
European Commission, Guidelines for the use of safeguards on Chinese textiles exports to the EU, Brussels, 6 April 2005, .
European Commission, China - Textiles: The Commission examines request for safeguards, Brussels, 14 April 2005, .
European Commission, The report of EU Trade Commissioner Peter Mandelson to European Parliament about textiles: Comments on European Textiles in China and the outcome of the EU-China Summit in Beijing, Strasbourg, 13 December 2007, <>.
Fearon, J. D. “Domestic Politics, Foreign Policy, and theories of international relations”. Annual Review of Political Science 1 (1998): 289-313.
Hill, C. “The capability-expectations gap, or Conceptualizing Europe’s international role”. Journal of Common Market Studies 31, no. 3 (1993): 305-328.
Hubel, H. “The EU’s Three Level Game in Dealing with Neighbors”. European Foreign Affairs Review 9 (2004): 347-362.
Jolstad, F. “Interactive Levels of Policy-Making in the European Union’s Common Commercial Policy”. Arena Working Paper 13, Oslo: Arena, 1997.
Katzenstein, J. P., ed. Between Power and Plenty: Foreign economic policies of Advanced Industrial States. Madison: University of Wisconsin Press, 1978.
Leal-Arcas, R. “The EC in the WTO: The three-level game of decision-making what multilateralism can learn from regionalism”. European Online Papers 8 (2004), <>.
Marks, G. “Structural Policy and Multilevel Governance in the EC”. In The State of the European Community, edited by A. W. Cafruny and G. G. Rosenthal, 391-410. Boulder, CO: Lynne Reinner, 1993.
Milner, V. H. Resisting Protectionism: Global Industries and the Politics of International Trade. NJ: Princeton University Press, 1988.
Milner, V. H. Interests, Institutions and Information: Domestic Politics and International Relations. NJ: Princeton University Press, 1997.
Moyer, W. H. “The European Community and the GATT Uruguay Round: preserving the common agricultural policy at all costs”. In World Agriculture and the GATT, edited by P. A. William: CO and London: Lynne Rienner Publishers, 1993.
Patterson, L. A. “Agricultural Policy Reform in the European Community: A Three-Level Game Analysis”. International Organization 51, no. 1 (1997): 135-165.
Putnam, D. R. “Diplomacy and Domestic Politics: The logic of Two-Level Games”, International Organization 42 (1988): 427-460.
Togna, M. “Non dazi, ma politiche industriali”. Rassegna on line del lavoro, politica ed economica sociale, 4 November 2003, .
Wallace, W. “Collective Governance. The EU Political Process” in Policy-Making in the European Union, edited by H. Wallace and W. Wallace 3rd edn: 523–542. Oxford: OUP Press, 2000.
XIV LEGISLATURA, XIV COMMISSIONE, SEDUTA DEL 14 SETTEMBRE 2005, available at <>.
Waltz, N. K. Theory of International Politics, MA: Addison-Wesley Press, 1979.
XIV LEGISLATURA, ALLEGATO B AI RESOCONTI, SEDUTA DEL 2 MAGGIO 2005. Atti Parlamentari, 19014-19020.

[1] Ph.D in Comparative and European Politics of University of Siena and Assistant Professor at Department of Italian Culture and language of Fu Jen Catholic University.
[2] When ex-French President Jacques Chirac said that there was brutal and unacceptable invasion of the
European and US markets by Chinese textiles. And when all five countries of the South Europe camp wrote to the European Commission appealing for EU’s action to end the surges of clothing imports from China meanwhile, on the contrary, government ministers from four countries of North Club (Denmark, Finland, Netherlands and Sweden) argued for ensuring the stockpiled clot Gregor, R. and Hollinger, P, “Brussels to Probe Chinese Textile Import”, Financial Times, 19 April 2005.
[3] In order to understand what Mandelson did, you have to understand that in April he was being
burned in effigy by Italian textile manufactures outside the Commission building in Brussels, see in China, Mandelson recovered his gloss”, The International Herald Tribune, September 9 2005.
[4] Fearon, “Domestic Politics, Foreign Policy and theories of international relations”, 289-313.
Frederick W. Mayer, “Making Domestic Differences in international negotiations: Strategic Use in
internal side-payments,” International Organization, Vol. 46, No. 4, 1992, pp. 793-818. Frederick W.
Mayer, “Domestic Politics and the Strategy of International Trade,” Journal of Policy Analysis and Management, Vol. 10, No. 2, 1991, pp. 222-246.
[5] Waltz, Theory of International Politics, p. 121.
[6] Milner, Resisting Protectionism: Global Industries and the Politics of International Trade, and Milner, Interests, Institutions and Information: Domestic Politics and International Relations.
[7] Jongryn Mo, “Domestic Institutions and International Bargaining: The Role of Agent Veto in Two-Level Games,” The American Political Science Review, Vol. 89, No. 4, (Dec., 1995), pp. 914-924. Helen V. Milner and B. Peter Rosendorff, “Democratic Politics and International Trade Negotiations: Elections and Divided Government as Constraints on Trade Liberalization,” The Journal of Conflict Resolution, Vol. 41, No. 1, New Games: Modeling Domestic- International Linkages, (Feb., 1997), pp. 117-146. Keisuke Iida, “When and How Do Domestic Constraints Matter? Two-Level Games with Uncertainty,” The Journal of Conflict Resolution, Vol. 37, No. 3, (Sep., 1993), pp. 403-426. Jongryn Mo, “The Logic of Two-Level Games with Endogenous Domestic Coalitions,” The Journal of Conflict Resolution, Vol. 38, No. 3, (Sep., 1994), pp. 402-422.
[8] The model considers international negotiations between two countries as simultaneous negotiations at both the domestic level and the international level (two negotiators from the governments). Over domestic negotiations, the government builds coalitions with societal actors; while at the international level, the government tries to implement these concerns that will have deleterious effects at home by negotiating with its counter-part. Win-sets are the main concerns in two-level game theory. Win-sets occur when the concerns of actors at both levels overlap, large win-sets make an international agreement is likely. See Robert D. Putnam, “Diplomacy and Domestic Politics: The Logic of Two-Level Games,” International Organization, Vol. 42, 1988, pp. 427-460.
[9] This increase in Chinese imports is linked to a decrease in the production of T-shirts in the EU, mainly in Greece (-12%), Portugal (-30% to -50%) and Slovenia (-8%).
[10] These include pullovers, men’s trousers, blouses, t-shirts, dresses, bras, flax yarn, cotton fabrics, bed linen, as well as table and kitchen linen. See COMMISSION REGULATION (EC) No 1084/2005 of 8 July 2005 amending Annexes II, III and V to Council Regulation (EEC) No 3030/93 on common rules for imports of certain textile products from third countries.
[11] Speech by Peter Mandelson, EU – China Textiles: “Manage change and adjustment, not trade”, Speech to textile producers, Florence, Italy, 6 June 2005, SPEECH/05/325, available at < temp="sppm033_en">.
[12] The distributors argued that these shipments were done by the contracts with Chinese exporters dated from before the EU-China trade agreement. See Netherlands Germany, Denmark and Sweden asked External Trade Commissioner, Peter Mandelson for making import restrictions more flexible”, Agence Europe, Brussels 17 August 2005.
[13] What this system asks is that China needs to issue an export license for all exports and the EU licensing offices in the Members States will issue an import license relatively, see European Commission, The report of EU Trade Commissioner Peter Mandelson to European Parliament about textiles: Comments on European Textiles in China and the outcome of the EU-China Summit in Beijing, Strasbourg, 13 December 2007, http://ec.europa.eu/commission_barroso/mandelson/speeches_articles/sppm189_en.htm.
[14] The location of T&C sector is very immense. In North Italy, there are many locations in each province, for example, Trento (Borgo Valsugana), Veneto (San Bonifacio, Lonigo, Schio), in Lombardy ( Busto Arsizio, Gallarate, Como, Clusone ) and in Emilia Romagna (Correggio,Carpi, Santa Sofia); In Central Italy there are Toscana (Casentino-Val Tiberina, Empoli, Prato, Poggibonzi), In Marche (Cagli, Pergola, Ostra, Cingoli ) , in Umbria ( Assisi, Ubertide) and in Lazio (Valle del Liri); In South Italy, there are Abruzzo ( Giulianova, Teramo, Crecchio), Campania ( San Marco dei Cavoti, Calitri, Sant’Agata dei Goti, San Giuseppe Vesuviano), Basilicata (Pescopagano), Puglia ( Putignano, Martina Franca, Nardò-Gallipoli) and Sicily (Ucria-Sinagra).
[15] European Commission, “Economic and Competitiveness analysis of the European textile and clothing sector in support of the Communication: The future of the textiles and clothing sector in the enlarged Europe ”, Commission Staff Working Paper, 21/ 11 2003, Brussels, http://ec.europa.eu/enterprise/textile/documents/sec2003_1345en.pdf.
[16] Italy had argued that it has already lost nearly 50,000 jobs in the past years (2003, 2004). The textile industry has almost 70 thousand companies and employed 570, 000 people in Italy in 2003 or one third of textile workers employed in what was then 15-state EU. This sector offers large occupation, in particular for female workers (70% of 800,000 employees).
[17] Morgando, “La Crisi del Comparto Tessile, Intervento 4 maggio 2005 dell’ on. Morgando - Dirigente Nazionale Dipartimento Politiche Industriali,” Margherita online, 01-06-2005, http://www.margheritaonline.it/dipartimenti/scheda.php?id_dipartimenti=8829&sezione=3.
[18] Commissione Europea, “La Comunicazione della Commissione delle Comunità Europee “Il futuro del settore tessile e dell’abbigliamento nell’UE allargata: Commento e valutazioni del settore TA italiano”, Milano, 23 gennaio 2004, http://www2.cna.it/servizi/cnabruxelles/servizi/Posizioni%20comuni/Tessile/Comunicato_definitivoTA.pdf.
[19] This association contains 28,000 textiles and clothing companies in Italy. It argued that Lombardian Region like Como, Sondrio, Brescia, Bergamo, Legnano, Val Canonica, Brianza and South regions like Tricase, Casarano and Nardò, have lost 6,000 employees in 4 years. In 2004 nearly 120 companies closed. See Confartigianato Newletter, http://195.103.237.153/minisiti/categorie/moda/se_moda.jsp?id=348.
[20] Smi-Ati representing about 2,000 partner companies with about 100,000 workers is one of the largest Federations.
[21] Some proposals they offered as the following: 1. Introduce the original label “Made in Italy” 2. Stand up for clamping down on counterfeit. 3. Impose the sanction. 4. Strike down the illegal importation. See “Prosegue la Mobilitazione del Sistema Moda”, Comunicato ai lavoratori: FEMCA - FILTEA – UILTA, 18 January 2005.
[22] Silvia Gambi, “La Crisi del tessile spinge a Prato tremila operai in Piazza”, L’Unità, 9/3/05; Ilaria Ciuti, “Tessile, governo e Ue si muovano”, La Repubblica, 9/3/05; Stefano Vetusti, “Operai e industriali uniti per salvare la moda: Piccolo non è più bello, il governo ci aiuti”, La Nazione, 9/3/05, also see http://www.cgil.it/FIRENZE/2005/empoli.htm.
[23] La Cina si avvicina, abolite tutte le barriere doganali, La Repubblica, 10/01/2005, available at <>.
[24] Marco Fortis, “Il punto sui Distretti Industriali”, Distretti, 21/06/2006, 18.
[25] Marco Togna, “Non dazi, ma politiche industriali”, Rassegna on line del lavoro, politica ed economica sociale, 4 November 2003, http://www.rassegna.it/2003/settori/tessile/prato.htm; “Tessile, Fedeli Export Cina: Dato Abnorme, Governo intervenga”, CGIL Ufficio Stampa, 23 March 2005, http://www.cgil.it/ufficiostampa/ufsta/ht/index.htm.
[26] Confartigianato Moda, “Petizione del comparto moda per richiedere condizioni di commercio equo e sostenibile nel settore tessile abbigliamento calzaturiero e pelletteria”, http://195.103.237.153/minisiti/categorie/moda/FedModa/Notizie/20050225pet.htm.
[27] The interview of Claudio Martini, “Impegno pieno della regione per la crisi del tessile”, L’Unità, 08/04/2005, http://presidente.regione.toscana.it/index.php?codice=10227.
[28] Interview with director of economic affairs of EURATEX, Francesco Marchi, 24 April 2006.
[29] European Commission, Guidelines for the use of safeguards on Chinese textiles exports to the EU, Brussels, 6 April 2005, http://ec.europa.eu/trade/issues/sectoral/industry/textile/memo060405_en.htm.
[30] European Commission, China - Textiles: The Commission examines request for safeguards, Brussels, 14 April 2005, http://ec.europa.eu/trade/issues/sectoral/industry/textile/pr140405_en.htm.
[31] European Commission, “Speech by Peter Mandelson to textile producers, EU-China Textiles: Manage change and adjustment, not trade”, Palazzo della Regione, Florence, Italy, 6 June 2005, http://ec.europa.eu/commission_barroso/mandelson/speeches_articles/sppm033_en.htm.
[32] Notiziario CAN Federmoda, Ottobre 2005, http://www.cnacremona.it/portale/images/allegati/federmodaeu0510.pdf.
[33] “EU lifts Chinese textile quotas”, Euractiv, 10 October 2007, http://www.euractiv.com/en/trade/eu-lifts-chinese-textile-quotas/article-167516.
[34] For example, ITF (Italian Textile Fashion), group of Italian Chamber of Commerce tried to influence Italian government to support the system of monitoring of textile products sold on European Markets, see speech of Luca Mantellassi, 25 September 2006, http://www.unioncamere.eu/images/stories/doc/doc%20news%20Uc%20Bruxelles/intervento%20presidente%20mantellassi%20(2).pdf.
[35] Ersilia Monti, “Intervista ad Antonio Franceschini, secretario nazionale dell’Unione CNA Federmoda”, 02 March 2007, http://abitipuliti.org:8080/abitipuliti/news/inter.
[36] “Benetton e la crisi del tessile,” Newsletter del 25 March, 2005, http://it.supereva.com/finanzaworld/content.php?canale=analisiitalia&file=analisi_italia/2005-03-25.xml.
[37] This association represents Italian numbers approximately 300 manufacturers, with 22,000 workers and an overall annual turnover of 2,532 billion euros.
[38] Interview with Chinese diplomat of Rome in 27 May 2007, and see China’s textile machine market hot, 2004-01-20, http://www.chinademands.com/news.jhtml?method=detail&channelId=279&docId=476275.
[39] Altroconsumo is an Italian association of consumer. President of Altroconsumo, Paolo Martinello criticized that the quota against China was unacceptable because it hurt the Italian consumer’s interest.
[40] “Prodotti tessili dalla Cina. Altroconsumo: non tutto fila per il consumatore”, 13 May 2005, http://www.altroconsumo.it/map/show/12740/src/81961.htm.
[41] Interview with Italian diplomat who takes part in 133 Committee in Brussels in 25 April 2006.
[42] Chris Buckley, “China calls on Europe to ease textile quotas: Talks set to begin as containers pile up”, International Herald Tribune, 26 August 2005, http://www.iht.com/articles/2005/08/25/business/textile.php.
[43] Interview with servant of European Trade Commission, 24 April 2006.
[44] XIV LEGISLATURA, XIV COMMISSIONE, SEDUTA DEL 14 Settembre 2005, http://legislature.camera.it/_dati/leg14/lavori/stencomm/14/indag/iniziative_comunitarie/2005/0914/pdf001.pdf.
[45] XIV LEGISLATURA, ALLEGATO B AI RESOCONTI, SEDUTA DEL 2 MAGGIO 2005. Atti Parlamentari, 19014-19020.
[46] Mozioni sulle iniziative per favorire la tracciabilità di prodotti importati, n. 228 del 22/10/2007, http://www.camera.it/resoconti/resoconto_allegato.asp?idSeduta=0228&Resoconto=amoz02.
[47] The Italian version of his letter. «Non auspichiamo certo, signor Commissario, l’introduzione di dazi (salvo i cosiddetti dazi antidumping) quanto piuttosto la piena e puntuale applicazione di quelle misure di salvaguardia che i meccanismi comunitari contemplano a fronte di principi di fair competition da parte dei paesi terzi.
[48] “Ora sono tutti pro dazi”, L’Archivio, 19 Maggio 2005, http://jjbthearchive.wordpress.com/2005/05/19/ora-sono-tutti-pro-dazi/.
[49] TESSILE, URSO: “ITALIA E USA INSIEME PER MONITORARE IMPORT CINESE”, Comunicato Stampa del Ministero del Commercio Internazionale, Roma, 15 marzo 2005, http://www.mincomes.it/storico/news2005/marzo/cs150305.htm.
[50] Ibid, see http://www.mincomes.it/news/news2005/marzo/cs150305.htm.
[51] Hong Kong Trade Development Council, “Italy, among others, pushes for textile safeguards, but Commission waits for guidelines and figures”, 31 March 2005, http://sme.tdctrade.com/sme_content.aspx?contentid=341903&src=sme_tm&sec=Textile&w_sid=194&w_pid=903&w_nid=11605&w_cid=341903&w_idt=1900-01-01&w_oid=166&w_jid=.
[52] Visit of Adolfo Urso, Italian Deputy Minister for Productive Activities, to Peter Mandelson, Audiovisual services, 16/03/2005, http://ec.europa.eu/avservices/video/video_search_en.cfm?videoref=&StartRow=141&keyword=mandelson&witch=video&src=1.
[53] Jake su, “Ora sono tutti pro dazi”, L’Archivio, 19 Maggio 2005, http://jjbthearchive.wordpress.com/2005/05/19/ora-sono-tutti-pro-dazi/.
[54] Luisa Grion, “Compromesso tra i Paesi della Ue. Ora l’Italia approva il via libera di Bruxelles”, La Repubblica, 6 settembre 2005, http://tradewatch.it/osservatorio/articles/art_414.html.
[55] Graham Bowley, “Retailers not thrilled by China textile deal, but EU countries likely to clear accord,” International Herald Tribune, SEPTEMBER 7, 2005, , accessible 7 May 2007.
[56] Nevertheless, Italy needs some restructuring in order to address the needs of its 800,000 employees. Italy will ask the Textile Committee to allocate part of the 2006-2013 structural funds to the textile industry. Now it needs to do just as much to protect the shoemaking industry by activating anti-dumping measures.
[57] “Italian Textile Industry Is Alive And Kicking But Needs Restructuring”, August 25 2005, http://www.tg-supply.com/article/view.html?id=13982.
[58] “Prodi meets with Smi-Ati management Tuesday 25 July”, Mare Moda news 2006, http://www.maredimoda.com/html/Read-news.30+M5a04ff9435d.0.html?&L=1.
[59] She claimed that the deadline of quota against China of Brazil, South Africa and U.S. is in the end of 2008, so if the period of quota against China of the EU is end one year before that all Chinese products in textiles and clothing would flow into EU market.
[60] Hong Kong Trade Development Council, “Chinese textile suppliers to EU unlikely to face new safeguard procedures in 2008”, 23 November 2007, http://www.tdctrade.com/imn/07112304/textiles032.htm.
[61] “Prodotti tessili cinesi: dal 2008 stop alle quote sulle esportazioni”, 30 luglio 2007, http://www.consocometa.com/index.php?Itemid=110&id=1050&option=com_content&task=view.
[62] Giseppe Sarcina, “Mandelson scrive: basta quote tessili Via libera ai cinesi”, http://www.rosanelpugno.it/rosanelpugno/node/17175.