The European Commission began delivering a clear picture of the post-quota era in a Communication to the Council, the executive arm of the European Union.Imports from China will surge after quotas will have been eliminated, EU Commission implicitly predicts. India and Pakistan would also largely benefit from the removal in EU quantitative limits, the Commission said in its 41-page report
“a href=”http://trade-info.cec.eu.int/textiles/documents/178.pdf”>
EU’s Commission : The future of textiles and clothing sector in the enlarged European Union (.pdf file).”/a>
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After China joined the WTO by the end of 2001, a large number of its textile and apparel exports already benefited from a removal in EU quotas. .
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Those liberalized imports were up no less than 46% in value in 2002 while rising 192% in volume terms. At the same time, average unit price fell 50%. .
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In the meantime, imports from other countries declined 13% in value and 11% in volume. China share in those liberalized imports rose from 25% in 2001 in value terms up to 38% in the first half of 2003. .
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In volume terms, China share increased from 14% to 37% in the same period.
“This would impact not only on EU production, but also on that of smaller and poorer third countries, some of which risk being squeezed out of the markets in certain market segments,” EU Commission outlined.
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While major exporting countries such as China, India and Pakistan will take advantage of the removal in limits, they could continue imposing very high tariffs to textile imports from other nations, EU Commission said.
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“The EU will be a very open market without its firms being able to expand into many countries whose imports barriers remain very high,” the report argues.
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Brussels actually found a way to put pressure on major exporting countries and to force them in more rapidly lowering their tariffs.
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The preferential treatment currently offered to developing nations is being changed, the Commission proposed.Brussels could threaten to withdraw the 20% reduction offered to a series of products from certain countries under the Generalised System of Preferences (GSP).
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“When certain objective criteria are met, showing that a country is already very competitive in one sector, that country may be graduated and lose the preference for that sector,” the Commission explained.
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Clearly, EU tariff reductions will focus on least developed countries, such as Bangladesh, Laos, Nepal or Cambodia, already benefiting from a duty-free access to the European Union, in theory.
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Since EU rules of origin impose a double transformation in the producing country, poorest countries without domestic textile capacities do not take advantage of the duty-free access, being forced importing fabrics from other origins.
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Removing the double transformation requirement would have a dramatic impact on textile trade between the European Union and low-cost nations, the Commission made it clear.
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It would actually boost textile exports from India, China, Pakistan or Taiwan and Korea to other low-cost apparel producing nations.
The EU would prefer granting cumulation of origins within groups of countries “having a sufficient coherence in geographical and economic terms.”
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“Another option would be to allow cumulation among neighbouring preferential regions, provided there is sufficient complementarity in their textile and clothing production”.
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More clearly, the EU could accept that vast areas would be formed with textiles freely circulating within these groups of nations without apparel exporters losing the duty-free treatment.
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So-called ACP countries could also take advantage of such a large cumulation in origins.
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ACP countries are already granted a duty-free access under specific rules of origin.In addition to the change in rules of origin, the European Union would also impose a label requirement to GSP eligible products.
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The label would be only offered to plants complying with minimum labor standards, as they were detailed by the International Labour Organization (ILO).
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Such labels would also push European consumers in selecting those products made under minimum working conditions.
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Already existing certification bodies would verify that apparel are made in compliance with labor standards.
Date:11/25/2003
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