EU’s textile industry looks to Cancún for drop in tariffs

Date: 03/07/03

Trade barriers need to come down to get rid of unfair competition, reports Karen Carstens

THE EU's textile manufacturers envision a bigger, better and more competitive global bazaar in which to ply their trade.

And they hope this will feature high on the agenda at the World Trade Organization ministerial meeting in Cancún this September.

William Lakin, director- general of industry body Euratex, sees the conference in Mexico - the fifth such WTO session after the November 2001 talks in Doha, Qatar - as an opportunity to press the case for markets to open wider for European textiles and clothing exports.

At the conference, Lakin said the EU's shopping list will include a reduction of all textile and clothing tariffs to 15% and below. "They should really be no higher than this for any country," he said, adding that tariffs are in excess of 30% in some countries, and about 70% in India, one of the EU's potentially biggest markets, due to a burgeoning middle-class of consumers.

A second crucial point on Lakin's list is a ban on all forms of restrictive non-tariff barriers. "We need to remove all the non-tariff barrier certification taxes." This would eliminate customs problems, making it easier to oversee export operations and leading to greater transparency.

Finally, the WTO's focus on "trade-related aspects of intellectual property rights" (TRIPS) must also be reinforced via "rules and discipline" to ensure "there is no dilution of the opportunity we might have to fight against unfair competition" in the form of subsidies or dumping.

"If we achieve all these things, we see opportunities of increasing exports from the EU very substantially."

For example, Lakin said, "exports to South Korea and Brazil began to double in the 1990s, when they began very timidly opening their markets [by reducing their tariffs and non-tariff barriers]."

Exports over the period 1999-2000 increased by nearly 59% to South Korea and 49% to China - which Euratex has branded "our principle competitor but potentially also our principle customer".

India, however, still "stands out" as a place with high tariffs and lots of additional taxes, making it "virtually impossible to sell a quality garment into that market", Lakin said.

Tearing down barriers is, on the other hand, also a frightening prospect for many European manufacturers.

But, as the former Euratex president Jean de Jaegher put it, ahead of the 2001 Doha talks:

"Of course, this would mean that strong exporters such as Greater China [the mainland plus Hong Kong and Taiwan] and India would increase their sales to Europe. No problem. Europe would then also sell a lot more to these countries."

He also complained that "globalization" did not yet apply to textiles and clothing: "Today there is purely and simply no world market for textiles. A glance at customs duties, whether bound or applied, shows this. Much of the Asian and South American market is simply closed to imports.

"You have only to look at the tariff levels applied by some of our major suppliers."

Euratex, however, expects European imports to increase when a WTO agreement on textiles and clothing expires on 31 December 2004. It says China and India will benefit the most from the dismantling of the agreement.

And officials believe they will see increased price pressures on categories such as cotton and cotton-blend fabrics and yarns, T-shirts, sweaters, men's trousers, women's blouses and men's shorts.

Textiles is one of the hardest-fought issues in the WTO, but a system of import quotas that has dominated the trade since the early 1960s is now being gradually phased out.

Part of a special feature on the EU's fashion industry.

http://www.wto.org/english/thewto_e/minist_e/min03_e/min03_e.htm http://www.wto.org/english/thewto_e/minist_e/min03_e/min03_e.htm

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