Toy makers await opinion on import quotas

Date: 19/09/1996

By Elizabeth Wise

TOY makers are awaiting an opinion next week from a European Court of Justice advocate-general on a challenge to the EU's quota regime for Chinese-made toys.

The UK is contesting the toy import quotas set by a majority of EU governments in 1994, maintaining that the Union regime is over-protective and the quotas unnecessarily strict.

Spain, with a toy industry of its own, is in the opposite corner, fighting any proposals which would allow more Chinese toys into Europe's market.

The advocate-general is expected to give his opinion next week (26 September), with the full Court likely to deliver its verdict on the case before Christmas. While the judges are not required to follow the advocate-general's advice, their rulings agree with his opinion more often than not.

The battle over toy imports began in February 1994, when 11 EU governments outvoted the UK and introduced quotas for three categories of Chinese toys designed to cut imports by about a third.

When the quotas took effect, European importers began complaining that they were losing money, unable to receive shipments of toys they had contracted to buy from China. Within weeks, London and other capitals received thousands of complaints.

Five months later, nine EU governments agreed to increase quotas in one of the three categories, that of stuffed animals. But the import limits for the other two categories - “non-human” plastic figurines and “miscellaneous” (toy weapons) - remained unchanged.

The crack-down on non-human dolls led to a tongue-in-cheek debate in EU circles over the fairness of allowing models of Star Trek figure Captain Kirk to enter the Union freely, while his invaluable Vulcan advisor Dr Spock was stopped at the border.

In 1993, imports to the EU of the three toy groups were worth a combined 1.14 billion ecu. The quotas were designed to bring that total down to 793 million ecu, and imports did drop significantly in 1994.

The UK responded by taking the Council of Ministers to court, claiming the quotas were not needed.

Why, asked London, when Spain was the only EU country to have toy import quotas before 1993 and those only affected 2&percent; of Union imports in the three categories, were more restrictive and more widespread quotas needed?

In oral arguments to the Court in June, UK officials said the quotas constituted “almost penal” measures, not only for Chinese producers but also for Europe's toy industry. They also said that Council statistics showing increasing Chinese exports did not justify the quota levels.

In further support of the UK's case, toy manufacturers say that much of the Chinese quota remained unfilled last year and point out that the Commission wrote to toy importers telling them they could apply for licences to use the left-over 1995 allotment this year.

Another UK argument is that Spain's toy industry is strongest in the production of toys such as pedal cars and large, animated (human) dolls, outside the three categories controlled by quotas - proof, London maintains, that the 1994 quotas are unnecessary.

Industry analysts say that Chinese components are included in many Spanish and French-made toys, and that manufacturers in both countries have pleaded for the exclusion of components from the import restrictions.

Germany is lining up behind the UK, but the Commission is siding with Spain.

The case is also seen as an indicator to how the Court of First Instance will rule on a case brought by European subsidiaries of US manufacturer Tyco Toys regarding the quantity of Chinese toys they may import.

Maurits Bruggink, secretary-general of Toy Manufacturers of Europe, said his association hoped the advocate-general would support the UK position. “The longer the quotas stay, the more it will hurt European industry,” he said.