(PRWEB) April 10, 2005
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 ChinaÂs 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 USAÂs 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 TurkeyÂs 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 EUÂs 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. EuratexÂs director general, Bill Lakin, says that the decision had been made after Âserious and extensive consideration of available data and following a unanimous decision at a Euratex board meeting in Vienna, Austria, on March 4Â. According to Mr Lakin: Âthe time has now come to limit the seemingly voracious appetite of Chinese exporters for the European marketÂ.
The products concerned are: knitted jerseys and pullovers; woven trousers and shorts; womenÂs or girlsÂ blouses; panty-hose, stockings, tights, and socks; womenÂs or girlsÂ woven overcoats and raincoats; menÂs or boysÂ suits; menÂs or boysÂ jackets or blazers; womenÂs or girlsÂ dresses; brassiÃ¨res; 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 ChinaÂs export figures. But during this period, EU imports of items in the categories targeted for safeguard quotas rose in volume by 625%. Imports of womenÂs shirts and blouses rose by 244%, and imports of brassiÃ¨res by a staggering 493%. Moreover, the increases were accompanied by sharp falls in prices. The average price of womenÂs shirt and blouse imports fell by 41%, while jerseys and pullovers and brassiÃ¨res 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 officialsÂ 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.
ÂPost-Quota Scenarios: How Free is Free Textile and Clothing Trade?Â was published in Issue No 115 of Textile Outlook International. Other reports published in the same issue include: ÂProfile of Klopman International: European Leader in Polyester/Cotton WorkwearÂ; ÂGlobal Trends in Fibre Production, Consumption and PricesÂ; ÂProfiles of Two Chinese Clothing Companies: Jiangsu Sunshine Group and Youngor GroupÂ; ÂTrends in World Textile and Clothing TradeÂ; and ÂSurvey of Chinese Garment Company Strategies: Summer 2005 Buying SeasonÂ.
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