Industry blames Union quotas for unsatisfactory chapter in toy story

Date: 11/12/1997

Mark Turner takes stock of just what is in store for shoppers as they embark on the seasonal search of European toy shops

With pre-Christmas selling in full swing, the European toy industry is yet again cursing the EU for stymying sales through its restrictive import system.

It claims Union quotas on toys and toy parts from China are making it impossible for retailers to react quickly enough to cash in on the year's surprise successes.

However, the signs are looking increasingly positive that as of 1998 the European Commission will call for an end to the quotas, marking a major victory for European importers.

At present, the Union limits Chinese toy imports to a total of 1.2-billion-ecu worth of products.

Furthermore, this is split into a number of seemingly arbitrary categories, causing huge friction and confusion at customs posts.

Arguments are still raging, for example, over whether Dr Spock or Spiderman dolls qualify as human toys, and over whether mechanical teddy bears should be categorised as cuddly toys or machines.

Given that Chinese products account for more than one-third of Europe's 12.1-billion-ecu toy market, the restrictions are a huge thorn in the side of toy manufacturers and importers.

Although around 35&percent; of the Chinese quota was not used in 1996, the industry nevertheless attacks the entire system as crude and insensitive to intricate market shifts.

Maurits Bruggink, of the Brussels-based Toy Industries of Europe (TIE), said companies which back an unpopular product in one year find it very difficult to compensate with big sales in future years.

“Imagine in one year a company has a licence to import 10-million-ecu worth of toys from China, but the product does badly,” he explained. “The next year, the company as a result might only get a 5-million-ecu licence, simply to discover that it has a major hit on its hands, but is unable to import more. The toy industry can lose out on major opportunities because of this.”

Alternatively, it must find hugely complex ways round the regulations. Only through setting up 25 new companies could the 'Golden Bear' toy group garner sufficient licences to import this year's UK smash hit Teletubbies.

This year, however, TIE feels that the wind of change is gathering force.

Previously, many Spanish and French manufacturers within the European Federation of Toy Producers agreed with the European Commission's protective stance and found themselves at loggerheads with the more free-trading rival organisation Toy Manufacturers of Europe.

But this year both organisations merged to formed a single pressure group, TIE, with a unified message. “Everyone now agrees that the toy quota does not help the industry. This is making the Commission's position very hard to justify,” said Bruggink. “Many French and Spanish companies now do import from China and are recognising the need for more liberal trade conditions. The toy economy is becoming more and more global.”

The industry in now awaiting the release of a key European Commission report assessing the quota regime.

Although officials admit that it is becoming increasingly difficult to justify the quota system, the report appears to have been snagged by political wrangles in Trade Commissioner Sir Leon Brittan's cabinet.

That, claims Bruggink, is because the Commission is keen to retain as much leverage as possible in the run-up to negotiations on Chinese accession to the World Trade Organisation next year, to force Beijing to reduce its own tariffs on European goods.

Commission officials deny this, playing down the impact of WTO negotiations.

“I think that kind of argument is fairly groundless,” said one expert. “The European Commission would find it very hard to justify holding on to quotas just for that reason.”

He added that TIE, despite its title, did not represent the entire toy industry. “There are a number of manufacturers who would prefer the quotas to stay in place,” he insisted, although he admitted: “The balance is in favour of the others.”

As far as TIE is concerned, the message is clear. “To keep de facto limits on imports from China in 1998 would be ridiculous,” said Bruggink.