Textile importers needled by delay in liberalisation

Date: 26/09/1996

By Shada Islam

EUROPE'S top textile and clothing importers are emerging as powerful advocates of global free trade.

No longer content to sit on the sidelines as the EU deliberates trade policy, European importing companies are vigorously backing Asian and other textile exporting nations' demands for faster EU moves to liberalise world textile trade.

Importers' organisations such as the Foreign Trade Association (FTA), which represents major European retail houses and mail-order firms, are still not as influential as European textile and clothing manufacturers or trade unions in the textile sector.

The European Commission, which is getting ready to unveil its new proposals for dismantling the Multi-Fibre Arrangement (MFA) - the agreement which has regulated world trade in textiles and clothing for more than 30 years - has formally consulted both Euratex (the European textile industry association) and representatives of the European Trade Union Confederation (ETUC), while the FTA was given only an informal hearing.

FTA delegate general Konrad Neudorfer is, however, scheduled to meet Trade Commissioner Sir Leon Brittan on 15 October.

The association's current focus is on speeding up the removal of EU quotas on imports of textiles and clothing as part of the agreement on phasing out the MFA reached in 1994 in the GATT Uruguay Round.

The international trade pact is set to be progressively phased out over a ten-year period, ending in 2005.

During this time, textile exporting and importing nations have agreed to dismantle the MFA-inspired import quotas, thereby making world trade in textile and clothing subject to the free trade rules of the World Trade Organisation (WTO).

With 16&percent; of world trade in textiles and clothing 'integrated' into the WTO last year, the Commission is now finalising its proposals for liberalising an additional 17&percent; of the market in 1998. Decisions on a further integration into the WTO of 18&percent; and 49&percent; of textile and clothing trade will be taken in 2001 and 2005 respectively.

Asian nations claim that, so far, both Washington and Brussels have failed to provide “meaningful market access” to exporters. To make matters worse, the US has already said it will only remove the lion's share of its quotas in 2004.

This puts the onus on the Union to pursue the goal of global free trade. If the EU fails to make “a great leap forward” by liberalising quotas in 1998, “no one should count on free trade in textiles and clothing in nine years”, warns Åke Weyler, head of the Swedish Textile Importers' Association, adding: “The agreement to phase-out the MFA will be completely dead in practice.”

The Commission has promised to make a “balanced” liberalisation proposal which will offer exporters improved access to EU markets and give European textile manufacturers more time to restructure.

Despite FTA and Asian appeals, key Asian exports such as T-shirts, blouses and trousers will not be liberalised, but EU negotiators say other items currently subject to quotas will be.

The Commission claims that it could have come up with a more “generous” offer, if Asian countries had agreed to lower their tariffs in exchange.

“But we have not had any luck in convincing exporting nations to agree to this,” said an EU official.

Asians say that the Union's attempt to introduce new “conditions” in world textile trade is “preposterous”.

European importing firms are convinced that the EU must speed up the elimination of quotas. “They hurt and disrupt trade and lead to an increase in prices,” says the FTA's Maria Robson.

Textile importing firms in the Union, meanwhile, are also disgruntled at the disruptive impact of the EU's anti-dumping measures on their traditional purchasing patterns. The FTA's legal adviser Hendrik Abma argues that European textile manufacturers often use the anti-dumping legislation to “harass and destabilise” textile exporters. The mere threat of an EU anti- dumping investigation creates uncertainty in markets, prompting importers to begin a desperate but often fruitless search for new suppliers.

FTA members are worried about the Union's decision to open an anti-dumping inquiry into imports of bed linen from Pakistan, India and Egypt. There is also concern that the EU will soon impose fines ranging from 3&percent; to 36&percent; on imports of undyed cloth from India, Pakistan, Indonesia, China, Taiwan and Egypt.