Consumers go to court over cotton duties

Date: 03/04/1997

By Mark Turner

A LEADING consumer group is planning to take the European Commission to court over its alleged failure to consult them properly in a contentious trade dispute.

BEUC, an umbrella organisation which represents consumer groups across the EU, will tell the European Court of First Instance tomorrow (4 April) that the Commission ignored its legitimate interest in a decision on whether to impose anti-dumping measures on unbleached cotton from Asia.

The Commission decided in February to impose provisional anti-dumping duties on grey cotton imports from China, Egypt, Turkey, Indonesia, India and Pakistan worth around half a billion ecu. The move came in response to complaints from European cotton producers that cheap imports from the six countries involved constituted unfair competition.

Together with member states, the Commission is now poised to decide whether the duties should be permanent. At the last count, national governments were split down the middle, with six votes on either side and Germany, Luxembourg and Austria wavering.

BEUC's challenge centres on the fact that when the Commission took the decision to impose provisional duties, it decreed that although consumer groups had an interest in many anti-dumping cases, on this occasion they did not, as unbleached cotton is a raw material rather than an end-product.

But BEUC argues that this goes against both Union and World Trade Organisation anti-dumping rules. Europe's chambers of commerce also came out strongly against the imposition of permanent anti-dumping duties this week, arguing the “negative effects” of such a move would largely outweigh the positive ones.

The case comes as protectionists and free-traders are laying down the battle lines over the future of EU anti-dumping policy ahead of a special meeting in early May.

Union anti-dumping rules are, in essence, designed to protect EU producers from artificially cheap external competition. Although they are applied to only 0.5&percent; of Union imports, they can raise high passions among overseas producers, especially those disproportionately affected such as China and Korea.

In response to criticisms, Trade Commissioner Sir Leon Brittan and EU free market enthusiasts are calling for the Union to place more emphasis on consumer choice and less on local production when deciding future cases. This is opposed by protectionist member states, which fear the ravages of unchecked foreign competition.

At the centre of the debate is Article 21 of the anti-dumping regulation, which describes how 'Community interest' should be taken into account when deciding whether to invoke anti-dumping measures. At present, the article states that all parties - including producers, users and consumers - should be consulted during investigations, but it leaves the details very unclear.

“Hitherto, the Commission has viewed complaining industries' views as dominant; we are asking it to take consumer demand into account as well as supply,” said a BEUC spokesman.

But this is viewed with concern by EU industry. “Change the philosophy and you change the practical implementation of anti-dumping mechanisms,” warned a spokesman for the employers' lobby UNICE.

“It is very important to get the principles right. We oppose any weakening of the instrument which would threaten European industry.”

All eyes are now on the Dutch, who are expected to come forward with a paper next month building on the Commission's proposals.

Rumours have been rife that the Netherlands, which has a strong importing and wholesaling tradition, will attempt to abolish the EU's anti-dumping rules altogether.

But an official in The Hague this week rejected such speculation as “complete nonsense”.