Lisbon to fight planned changes to textile import regime

Date: 24/04/1997

PORTUGAL is expressing deep concern at EU plans to change its textile and clothing import regime, and plans to protest vigorously when foreign ministers meet in Luxembourg next week.

“If governments accept European Commission proposals for more flexibility when applying import quotas, Europe's domestic textile industry will be threatened with severe job losses,” said a Lisbon official.

The Commission and northern EU member states reply that the Union is committed to more liberalisation, in line with global moves towards free trade, and officials dismiss the Portuguese stance as outdated and unrealistic.

The debate is a clear demonstration of the tensions emerging within the Union over the long-term effects of global competition.

Faced with growing imports from China and Hong Kong, and pressure from other countries such as India and Pakistan, European textile producers have a very uncertain future.

While the Union remains a net exporter of raw textiles - the world leader with a 3.5-billion-ecu surplus - its deficit in clothing has grown to over 18 billion ecu, primarily due to Chinese imports.

Overall, that meant a trade deficit of almost 15 billion ecu for the sector last year and the gap is growing, according to recent figures from the textile industry lobby Euratex.

“The industry lost over 100,000 jobs last year,” protested the organisation's Francesco Marchi, warning that more losses could be on the way.

Portugal is threatened disproportionately by this trend, as almost a third of its workforce and exports depend on textiles. Its administrators can become quite emotional as they oppose what they see as inconsistencies of approach among Europe's richer economies.

“The Commission should stand by its commitments to industry no matter whether they are on airlines or textiles,” said a Lisbon spokeswoman, deploring what she described as serious breaches of the rules by EU officials.

When the Commission allowed in extra quotas from China last year, Portugal took it to the European Court of Justice - a case Lisbon is confident that it will win. Nevertheless, faced with Asian demands for more access, consumers' calls for cheaper products and traders arguing for the dismantling of barriers, the country seems to be fighting a losing battle in the long run.

At issue when ministers meet next Tuesday (28 April) is a special provision in the EU's rules on textiles imports which allows quotas to be increased under 'exceptional circumstances'.

The concession was designed primarily for trade fairs and other occasions when some flexibility helps oil the wheels of commerce. But everyone agrees that its workings should be made clearer.

The Commission is looking for a mandate to allow unused quotas in one textile category to be transferred to another (as long as both categories pose a similar threat to EU industry), and to be more flexible across accounting years.

It originally hoped to allow variations of up to 10&percent; under such 'exceptional circumstances', although 3&percent; looks set to be the likely outcome now. The definition of 'exceptional' remains vague.

Portugal is firmly resisting these moves, claiming that any change should make the provision stricter and allow less, not more, room for manoeuvre.

Euratex is sympathetic to Portugal's position, stressing that there is already substantial flexibility in the rules and that quotas are gradually increasing under the world agreement on textiles and clothing. But it feels there is a need for compromise.

It does not accept, however, that Europe is artificially and unfairly protecting its industry.

Where trade is opened fairly, argues Marchi, EU textiles are perfectly competitive on global markets, as evidenced by export growth in the 1980s. “We can cope with competition as long as other countries play by the rules,” he said.

But while Europe has largely opened its doors under world trading rules, the rest of the globe is finding ever more devious ways to keep foreign products out, claims Euratex.

“Europe applies the letter and spirit of the Uruguay Round, the US applies the letter, but other countries do what they want,” said Marchi.