It appears the European Union (EU) is preparing to battle China over its current trade deficit, which continues to expand -- one estimate circulating in Europe is that the deficit is increasing at a rate of 20 million U.S. dollars per hour. The EU has announced a major change in policy. Trade Commissioner Peter Mandelson has proposed that the EU start anti-subsidy investigations itself instead of waiting for individual companies to request action, which is believed to be aimed at China. In the past, the EU has avoided using the use of countervailing duties against China because of its non-market economy.

This change in direction appears to be part of the European Union's more aggressive stance toward China; however, it's not clear if this new position will be used against textile and apparel imports from China. The current import quotas will expire at the end of December 2007. Such measures would be a blow to Chinese exporters who have planned to expand exports to the EU in 2008.