EU presses for global textile deal

Date: 28/03/1996

By Shada Islam

THE European Commission is stepping up its demands for better access to textile and clothing markets in Asia and Latin America as part of a proposed new deal to speed up the liberalisation of world trade in textiles.

The Commission's top negotiators say that if Asian and Latin American countries open up their markets to European textiles and garments, the EU may be able to return the favour by speeding up the elimination of quotas and other restrictions imposed on Asian exports under the 30-year-old Multifibre Agreement (MFA).

The MFA is set to be progressively phased out over a ten-year period ending in 2005. Textile exporting and importing nations agreed during the Uruguay Round of trade liberalisation talks to dismantle the MFA-inspired import quotas, thereby making the global trade in textiles and clothing subject to the free trade rules of the World Trade Organisation (WTO).

Work on 'integrating' textiles and clothing into the WTO began last year. As part of the accord, importers agreed to free up 16&percent; of their overall textile and clothing trade in 1995, 17&percent; in 1998, 18&percent; in 2001 and the remaining 49&percent; in 2005.

But textile exporting nations say that importing countries, including the EU and the US, have done the bare minimum to fulfil their Uruguay Round obligations. “We are quite disappointed with the way the new agreement has been implemented so far,” says Indian Textiles Minister G. Venkat Swamy.

Speaking at a recent conference organised by the Foreign Trade Association (FTA), a lobby group representing the interests of the EU's large retail organisations, Swamy said the EU and the US had not yet started to dismantle existing restrictions.

Asian textile exporters complain that instead of freeing trade in products which are currently subject to quotas, both the US and the EU have 'liberalised' imports of items which had never been restricted. In the EU's case, integration has so far focused on jute products, coated and rubberised fabrics, floor coverings, men's suits and ensembles, women's petticoats and ties.

“These items are not commercially meaningful for textile exporters,” says Sanjoy Bagchi, executive director of the Geneva-based International Textile and Clothing Bureau, which represents the interests of Asian and Latin American textile exporters.

“The integrated products represent only 8&percent; in value terms of the EU imports from developing countries,” Bagchi told the FTA conference. “This integration has not liberalised any MFA restrictions. Consequently, it will have absolutely no impact on the EU's textile trade.”

Technically, the Union and other importing nations have fulfilled the legal requirements of the deal on phasing out the MFA. But exporters say that the minimalist attitude of importers is damaging the credibility of the whole exercise.

The US has already said that it will liberalise the lion's share of its textile and clothing quotas in 2004. “A whopping 86&percent; of the US textile trade will be integrated right at the end,” said Julia Hughes, divisional vice-president of government relations for the Associated Merchandising Corporation (AMC), a US retail group.

The Union, in contrast, has still not made up its mind. With the second phase of textile integration due to start on 1 January 1998, the Commission has promised to finalise its position by early 1997.

“We could either be generous or restrictive,” said an EU official, adding: “In any case, unlike the Americans, we will develop our textile strategy stage by stage.”

One idea being explored by the Commission's services is to link speedier MFA liberalisation to the opening up of markets in Asia. “What we are saying is simple: if exporting countries want to persuade the EU to undertake a meaningful integration exercise, exporters must show an example by opening up their markets,” Peter Carl, director for external economic relations at the Commission, told the FTA meeting.

An EU policy document approved by the Commission last year also stressed that the bloc should use the prospect of “a more rapid integration” of textile and clothing products into the WTO system as a “lever” for the accelerated opening of third countries' markets.

“If accelerated market access could be obtained only from certain third countries, it would also be worth examining the adequate liberalisation of selected quotas,” stated the document.

Commission officials have promised to consult all interested parties, including exporting countries, EU industry and retail groups as it strives to finalise the list of products to be integrated during the second phase of MFA liberalisation, starting in 1998.

The FTA has already said that in order to achieve real liberalisation, the new list of products should include a “reasonable share of products which are subject to quotas in the EU”.

The suggestion is that restrictions should be removed on items such as

T-shirts, woven shirts for men and boys, and knitted trousers, where the main suppliers (Bangladesh and Turkey) are not subject to quotas. The FTA argues that keeping quotas in place for other, smaller suppliers, makes little sense. It also wants an end to quotas on babies' and children's clothing, and other items such as woven ski suits and swimwear.