Euratex seeks safeguard norms

Written by Malcolm Subhan | Updated: Mar 19 2005, 05:30am hrs
Brussels matters to Indian exporters. Witness the heated debate on here involving the European textile and clothing industry, EU governments, members of the European Parliament, and the EUs trade supremo, Peter Mandelson. The industrys Brussels-based lobby, Euratex, fired a salvo against Chinese textile and clothing exports to the EU on March 9, when it asked Mandelson and the EU governments to take action against 12 categories of products imported from China. The products targeted included knitted jerseys and pullovers, trousers and shorts, blouses, dresses and even woven fabrics of flax or ramie. It is surprising that Euratex did not ask Mandelson to take safeguard action against India also. After all, EU maintains that India would benefit almost as much as China from the removal of quotas.

The short answer is the absence of EU import statistics. Euratex based its call for safeguard action against China on the basis of Chinas own export data. The fact is that so far EU has statistics only as regards imports from China; they cover only the month of January and are incomplete.

But the EU cannot take safeguard action against India, even if it had the most up-to-date import statistics. This is because Mandelson must first publish guidelines on the use of safeguard measures. Action can be taken against China under the special textile safeguard clause which is contained in the agreement on Chinas accession to the WTO, but the EU must adopt guidelines, setting out clear "danger zones" for imports from other countries.

Mandelson, fortunately, seems to be in no hurry to restrict imports from developing countries. His immediate response to Euratexs demand for safeguard action against China was to declare that he had "received representations from the European textiles industry," but that he was "also conscious of the potential damage to the industry in developing countries." He told European Parliaments International Trade Committee on March 15 that he wanted to ensure "a smooth transition to the post-quota system." To this end, he intended to publish guidelines which set out clear danger zones. "If Chinese export levels in any sector were to reach such danger zones, we would investigate these further," he declared.

In other words, restricting Chinese, or Indian, exports to the EU through quotas would amount to reviving the very system had that been abolished. Euratexs director-general, William Lakin, agreed with Mandelson on this, but he has challenged Mandelsons claim that cheap imports have a positive impact on prices paid by consumers: European importers are the main beneficiaries such imports.

Mandelsons relaxed approach is justified. A surge in EU imports from Asia was unlikely in January, given that shipments of textiles and clothing subject to quotas in 2004 would remain subject to these quotas even if shipped on December 31. Any surge after January would probably be at the expense of exports from smaller suppliers, given that EU consumer demand for these products, because of poor economic conditions.

Even so, some EU governments want to make it more difficult for Indian exporters. When the 25 EU foreign ministers met here on Wednesday, their agenda included the revised generalised system of preferences (GSP) scheme, due to come into effect on April 1. The main issue before them was whether to exclude Indian textile and clothing exports from the revised scheme. Unable to reach an agreement, they referred the matter back to their deputies in Brussels, and hope it will be sorted out before they meet again on March 24.

A number of EU countries, with Portugal in the lead, want to exclude Indian textiles and clothing from GSP benefits. So does Euratex. Mandelson, however, wants to keep Indian textiles and clothing in the GSP scheme. In the European Parliaments international trade committee, Sajjad H Karim, who represents a UK constituency, wanted to modify the revised GSP schemes vulnerability criteria, to allow Pakistan to qualify for additional tariff preferences. Mandelson said "any specific clause for Pakistan would represent a de facto discrimination," making the EU "vulnerable to challenge" in the WTO. "I do not want to risk triggering another WTO case," he added.