The EC has just announced its proposals for the 3rd stage of integration of textiles and clothing products into the WTO system, whereby a fifth of the textile and clothing imports under restraint would be liberalized. However, in terms of the implementation of its commitments, a large proportion of the balance of imports in this sector from the developing world would in fact still be under quota restraint in December 2004.

by Chakravarthi Raghavan

Geneva, 26 July 2000 -- Just about a fifth (in volume and value) of the textiles and clothing imports from developing countries which are under restraint in the EU markets would be liberalised and integrated into the WTO system in December 2004, an analysis of the EU Commission’s third stage integration plans show.

The EU Commission had announced in Brussels on 12 July its proposals to the Council of Ministers for the 3rd stage integration of textiles and clothing products, and said it would eliminate some 37 bilateral quotas against developing country trading partners, and that it was “a powerful signal” of the EC’s commitment to multilateral obligations and to progressive and fair dismantling of textiles import restrictions.  But a preliminary analysis of the EU Commission’s proposals carried out by the International Textiles and Clothing Bureau (ITCB), an intergovernmental body of developing country exporters of textiles and clothing products, shows that just about 21.05% by volume and 21.36% in value of the textiles and clothing products, whose imports from the developing countries were under restraint in 1995, would have been integrated into the WTO and brought under the normal trade rules of that body by December 2004.

In terms of the implementation of the EU’s commitment at the WTO’s Agreement on Textiles and Clothing (ATC) -- for “progressive and fair dismantling” of the trade restrictions, as the EC has put it -- a large proportion of the balance of the imports in this sector from the developing world would still be under quota restraints in December 2004.

To put it another way, in the 120th month of the WTO, in volume terms 2,388,398 tons and, in value terms 26,442 million ECUs (or $24,881 million at current exchange rates) worth of the exports of textiles and clothing products to the European Community would be under bilateral discriminatory quota restraints.

Comparing the EU’s programme with that of the United States is a difficult exercise, apart from the more general problem of the US data and trade regime being more transparent and public, while that of the EU being much less.

But to the extent it is comparable, the US' announced programme would have ‘integrated’ in the 120th month of the WTO, by removing all quota restrictions, imports of 19.52% of the trade under restraint in December 1994. The value estimation works out to about 15.1 percent.

In relation to the textiles and clothing regime, the EU notified its integration programme for stage I (commencing 1 January 1995) in 1994 on the basis of imports in the base year 1990 for the then EU-12. With the accession of Austria, Finland and Sweden, it notified its 2nd stage integration programme for the EU-15, but did not publish or notify the details of the 1990 base figures for the EU-15. Estimations and calculations for the EU are based on 1995 data.

And the two major trading entities ask their trading partners to believe that over-night, at the stroke of midnight of 31 December 2004 and 1 January 2005, there will be a massive end to all quotas and the entire trade brought under normal rules.

And if this makes the WTO and its ATC sound like a post-dated cheque on a crashing bank, it must be because in the developing world, governments and critics lack faith.

The 3rd stage integration under the WTO’s Agreement on Textiles and Clothing go into effect on 1 January 2002, but the plans of the countries imposing import restrictions (under the old multifibre agreement) have to be notified to the WTO by end 2000.

The Commission’s proposals are subject to review and approval by the EU Council of Ministers.

// In announcing its proposals, the EU Commission had declared that in view of the significant restrictions EU exporters face in many non-EU countries, the Commission has considered its approach at this stage to retain a number of quotas in the most sensitive products. The EU Commissioner, Mr. Pascal Lamy had also demanded that in parallel with the EU’s action, other countries should open up their own markets to EU exports to provide a balanced liberalizing outcome.//

The proposals contain some 58 full product categories, and another four products which are not in any of its product categories.

But according to the ITCB analysis, only 11 of these categories were actually under quota restrictions for some members. The remaining categories include such items as seat belts, garden umbrellas, pillows, cushions, comforters, silk handkerchiefs, cordage and ropes, travelling rugs, fabrics of paper yarn, yarn of certain vegetable fibres such as true hemp, floor and dish cloth, tarpaulins, sacks and bags etc.

None of the major items in exports of developing countries where restraints are concentrated—cotton yarn, woven cotton fabrics, woven MMF fabrics, knit shirts, knit jerseys and pullovers, woven trousers, shirts and blouses, woven shirts, overcoats and jackets, bed linen, other garments, trousers etc—are included in the 3rd stage integration process.

The eleven EU product categories to be integrated, and are now restrained, are: No 10 gloves, mittens and mitts, knit; No 18 Pyjamas, bathrobes, dressing gowns, other than knit; No 21 Parkas, and anoraks, other than knit; No 24 Pyjamas, bathrobes, dressing gowns, knit; No 27 Skirts; No 32 woven pile fabrics and chenille fabrics; No 33 certain synthetic filament fabrics, woven; No 36 continuous artificial fibre fabrics, woven; No 37 artificial staple fibre fabrics, woven; No 68 babies’ garments; and No 73 track suits, knit.

The quota utilization ranges (in terms of products and individual countries) from a 2 percent range (woven synthetic filament fabrics by Indonesia and Korea) to a 143% utilization of quotas by Hong Kong China for parkas; anoraks, other than knit. The average quota utilization is about 50 percent.

If the EC proposals are implemented, rather than the WTO/ATC’s promise of a progressive phase-out of quotas, out of some 219 quotas (specific limits and sub-limits) in place, only 52 or less than 24% would have been eliminated until virtually the end of the 10-year period.

In terms of integration into the WTO, of the total imports (restrained and unrestrained) of 5,186,526 million tons into the EC in 1995, only 2,681,579 tons or 51.70% would have been integrated by Dec 2004.

In terms of restrained imports (those on which there was actually quota restrictions), of the 3,025,219 tons or 58.33% of the total imports in 1995, in December 2004 only 636,821 tons or 12,28% by volume of imports would have been integrated.

The EU has been able to avoid integrating any significant restrained products. The large bulk of restrained products, about 79% would have to be liberalized at one stroke at the end of the transitional period.

In value terms, of the 44,951 million ECU worth of textiles and clothing imports into the EU in 1995, there were restraints on imports of 33,625 million ECU worth of products.

In stage I (when the WTO entered into force and 16% of the trade was to have been integrated), in value terms none of the restrained products were liberalized. In stage II, beginning 1998, 1,578 million ECU worth of the restrained imports were liberalized. In stage III (beginning 2002), 5,605 million ECU worth of restrained imports would be liberalized. The balance of 26,442 million ECUs are to be liberalized over-night on 1 January 2005.-SUNS4717

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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