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The EU May Impose New Quotas Against China

From: ASAP

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Just weeks after the global elimination of quotas, the EU could impose new quotas against textile and clothing imports from China, according to the latest issue of Textile Outlook International. The European Commission is being pressed to impose the quotas by Euratex, a Brussels-based organisation which represents the European textile and clothing industry.

Although quotas restricting international textile and clothing trade were eliminated on December 31, 2004, an importing country can take action to restrict imports from China by imposing quotas under a special textile safeguard provision which was incorporated in China’s agreement of accession to the World Trade Organisation (WTO). Textile safeguard quotas apply to specific product categories and can only be imposed if it can be shown that imports of such products have caused market disruption.

Textile safeguard quotas have already been imposed by three countries: the USA, Turkey and Argentina. The USA took action against China as early as November 2003, but in December 2004 it was announced that Argentina and Turkey had decided to follow the USA’s lead.

Quotas limiting imports of certain Chinese textile and garment products into Argentina were imposed on January 1, 2005. And Turkey imposed safeguard quotas on 42 categories of Chinese export items on January 9, 2005 -- nine days after the global elimination of quotas in accordance with its WTO obligations. The Chinese government reacted strongly to Turkey’s action. Nonetheless, consultations with the Chinese authorities have been held and concluded and the import restrictions continue.

Turkey, no doubt, hoped that the EU -- its main market -- would follow its lead. But the EU has seemed keen to distance itself from safeguard action. The EU’s preferred approach is to adjust its preferential tariff rates under the umbrella of its GSP (Generalised System of Preferences) scheme by favouring the less dominant supplying countries at the expense of the bigger and more self-sufficient countries such as China.

However, it looks as though that stance will now be put to the test. On March 9, 2005, Euratex -- representing the European textile and clothing industry -- announced that it had filed petitions with the European Commission to have safeguard quotas imposed on imports of 12 categories from China. Euratex’s director general, Bill Lakin, says that the decision had been made after “serious and extensive consideration of available data and following a unanimous decision at a Euratex board meeting in Vienna, Austria, on March 4”. According to Mr Lakin: “the time has now come to limit the seemingly voracious appetite of Chinese exporters for the European market”.

The products concerned are: knitted jerseys and pullovers; woven trousers and shorts; women’s or girls’ blouses; panty‑hose, stockings, tights, and socks; women’s or girls’ woven overcoats and raincoats; men’s or boys’ suits; men’s or boys’ jackets or blazers; women’s or girls’ dresses; brassières; other garments; other overcoats, jackets or blazers; and woven fabrics of flax or ramie.

Overall, Chinese textile and clothing exports to the EU grew by 46.5% in value between January 2004 and January 2005, according to China’s export figures. But during this period, EU imports of items in the categories targeted for safeguard quotas rose in volume by 625%. Imports of women’s shirts and blouses rose by 244%, and imports of brassières by a staggering 493%. Moreover, the increases were accompanied by sharp falls in prices. The average price of women’s shirt and blouse imports fell by 41%, while jerseys and pullovers and brassières dropped in price by 36%.

The Euratex announcement followed a visit to Beijing by EU trade commissioner Peter Mandelson, during which he urged China to moderate its textile and clothing exports. After the announcement, EU officials were preparing to visit Beijing in order to advise the Chinese government of the EU import levels which would be acceptable. The visit appeared to be aimed at persuading the Chinese authorities to apply voluntary restraints so that the imposition of safeguard quotas could be avoided.

If the EU officials’ visit to Beijing fails to achieve its objective, there is a strong chance that the EU will be joining Argentina, Turkey and the USA in imposing safeguard quotas -- provided, of course, that actual market disruption can be demonstrated. In making its decision, the Commission will have to pay special attention to the views of the ten new member states which joined the EU in May 2004. All have important, but vulnerable, textile and clothing industries.

The prospect of further quotas is likely to deter buyers in the West from striking big deals in China. Buyers fear that, if new quotas are introduced, the goods they have already ordered may get held up because the quotas get used up too quickly. Rather than risk having unstocked shelves, many buyers are erring on the cautious side by placing orders with a variety of supplying countries. Few want to have all their eggs in one basket.

Ends.

“Post-Quota Scenarios: How Free is Free Textile and Clothing Trade?” was published in Issue No 115 of Textile Outlook International. Other reports published in the same issue include: “Profile of Klopman International: European Leader in Polyester/Cotton Workwear”; “Global Trends in Fibre Production, Consumption and Prices”; “Profiles of Two Chinese Clothing Companies: Jiangsu Sunshine Group and Youngor Group”; “Trends in World Textile and Clothing Trade”; and “Survey of Chinese Garment Company Strategies: Summer 2005 Buying Season”.

Textile Outlook International is a bi-monthly publication from Textiles Intelligence Limited covering strategic issues in the global fibre, textile and apparel industries. The report is available in printed and electronic format, and costs US$585/Euro450. To order a copy, please send your full contact details and payment to: Linda Fyles at Textiles Intelligence, International Subscriptions, 10 Beech Lane, Wilmslow SK9 5ER, United Kingdom. Tel: +44 (0)1625 536136; Fax: +44 (0)1625 536137; Email: [email protected]

Posted April 5th, 2005 ASAP Fashion News Fast - Fashion news for the apparel industry and consumers to learn more about the clothing business.

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