Brussels 11th January 2005
MARKET ACCESS
for European Textiles and Clothing
A Memorandum for Trade Commissioner Peter Mandelson
This brief memorandum seeks to explain the commitment of Europe’s textile and clothing industry to market access and to set out how best this can be achieved in the context of the Doha Development Agenda and of the various bilateral trade negotiations in which the European Union is engaged.
Market access is not confined in this context to the reduction of customs duties to levels comparable to those of the EU, but also covers the host of non-tariff barriers erected by many countries to block imports onto their domestic markets, whether they are of a fiscal, administrative or certificatory nature.
RATIONALE
Figures for the year 2003 show that EU-15 exports of textiles and clothing goods amounted to €40 billion. This represents close to 25% of annual turnover, and demonstrates the importance of export growth to the well-being of this industry, more particularly at a time when the elimination of quotas will by definition lead to increased import pressure in certain categories of product in terms of volume and of price.
EU exports have grown regularly over the years, and have held up quite well in 2003 and 2004 in spite of uncertain economic conditions in many parts of the world, a strengthening Euro and many virtually closed markets.
The ability of the industry to rapidly and substantially increase its exports can be demonstrated by its performance in respect of three countries that chose to begin to open their markets in the Nineties or as a result of a Free Trade Agreement – South Korea, Brazil, and Mexico. In each case European exports grew substantially, falling off only in respect of Brazil because of economic downturn.
These performances amply justify an ongoing effort by the European Commission and by Member-States to achieve across-the-board and genuine market access for EU exports of textiles and clothing. Euratex believes that the companies in the European textiles and clothing industry have every right to export their products, provided that they are of the right quality and the right price for the export market concerned.
THE PRESENT POSITION
The graph below illustrates and compares current average levels of bound tariffs applied on the EU by some 20 countries around the world on imports of textiles and clothing.
It demonstrates that the EU, together with Japan, has over the years made the greatest efforts to reduce its tariffs and to bind them in WTO, and that others have chosen to make very limited efforts in this context.
In addition, the average figures hide to some extent tariff peaks applied to specific products (e.g. duties of 25% on wool fabrics into the USA, unbound tariffs for clothing products in India, etc.).
Where non-tariff barriers are concerned, the Commission’s market access data base and a recent study conducted by the consortium MAIA/IFM on behalf of DG Trade/Textile unit (see below) demonstrate the enormous variety of such barriers (additional taxes, customs valuation, certification, etc.) which cumulatively on occasions exceed the level of the customs duty itself and make exports to countries such as India virtually impossible. The juxtaposition of customs duties and non-tariff barriers illustrates in graphic form the nature of the problem.
It is against the above background that EURATEX would urge the Commission and Member-States to pursue and intensify their current market access policy where textiles and clothing are concerned:
THE DOHA DEVELOPMENT AGENDA
The textiles and clothing industry is entirely supportive of the statement set out in paragraph 4.1.1.1. of the Communication of the Commission to the Council dated 29th October 2003 declaring:
“…The current EU proposal in the negotiations on market access calls on all WTO members – with the exception only of the least developed countries – to cut their customs duties to the lowest possible common level and to eliminate non tariff barriers. This should enable EU industry to compete in other countries under conditions that are similar to those the EU offers to third countries. All countries would have to contribute, including of course those which have very competitive textile and clothing exports. The EU will not make further reductions in its already fairly low customs duties if they are not matched by equivalent access to external markets. To take proper account of development concerns – affecting both non-preferential and preferential countries – which have been expressed by developing countries and the impact on EU industry, the application of new, lower levels should be phased in, with transition periods to allow time to adjust..
It is the belief of the European industry that this objective can be best fulfilled by a sectoral approach to tariff negotiations in respect of textiles and clothing within the Doha development Agenda NAMA Group, the possibility for which is set out in Article 7 of the modalities agreed by the above Group in July 2004.
“7. We recognize that a sectorial tariff component, aiming at elimination or harmonization is another key element to achieving the objectives of paragraph 16 of the Doha Ministerial Declaration with regard to the reduction or elimination of tariffs, in particular on products of export interest to developing countries. We recognize that participation by all participants will be important to that effect. We therefore instruct the Negotiating Group to pursue its discussions on such a component, with a view to defining product coverage, participation, and adequate provisions of flexibility for developing-country participants. “ .
In this respect too, EURATEX wishes to stress that all participants in the DDA should play their part in the process of tariff reduction. In other words, we believe that in our sector it would be a serious mistake to approach such a process on the basis of a critical mass. This would quite clearly allow certain countries whose markets offer great potential for EU exports to slip through the net (India?) and could well render the whole process, including that of encouraging multilateral South-South trade, null and void. The objective which the industry wishes to achieve is that of ensuring that as a result of the Doha Round no country should have customs duties in excess of 15% for finished products and those duties for yarn and fabric should be broadly comparable to current EU duties .
NON-TARIFF BARRIERS
Euratex has been very active in identifying unfair trade practices and acting in particular against non tariff barriers that have flourished since the signature of the Marrakech Agreement. This has been repeatedly demonstrated by Euratex and confirmed by several Commission service studies. This has been translated into the “market access strategy for textile and clothing products” implemented since 2000 by the Commission that led to improved bilateral market access in some countries, among which Sri Lanka, Brazil or more recently Serbia. A central element of this strategy being the acceptance by the partner country that “…non-tariff barriers are related to all forms of hindrance to trade in the sector are not to be applied by any of the Parties.” This statement is followed by a non-exhaustive list of non-tariff barriers (see page 7 & 8 of the present memorandum).
Unfortunately, this type of agreement remains the exception or is badly implemented and therefore, it was felt that in the follow-up of the 2003 “Communication on the future of the textiles and clothing sectors” and with the support of the High Level Group for textiles and clothing implemented in 2004, the European Commission should produce a study to update the existing information on trade barriers in 18 third countries affecting EU exports of textile and clothing, footwear and leather and the supply of raw materials from these countries
The results have confirmed the importance of non tariff barriers such as additional taxes (Brazil, India), excessive documentary requirements (Argentina, Egypt, Mexico, the USA), technical barriers to trade such as certification (India, China, Russia, etc.), labelling requirements (Argentina, India, Mexico, Russia, the USA). In this respect Euratex supports the setting up of a Task Force bringing together the Commission and industry to act on those obstacles.
THE BILATERAL APPROACH
Although a number of the abovementioned non-tariff barriers require in themselves a bilateral approach, EURATEX believes that the same policy of tariff reductions and elimination of non-tariff barriers should be pursued at such times as the EU enters bilateral negotiations with third countries, whether that be in relation to the conclusion of Free Trade Agreements (e.g. Mercosur) or the accession of new members to WTO (e.g. Russia). In the former case tariff reductions should be symmetrical for both sides and lead to zero for zero duties on the same day. The FTA with Chile is an excellent example of such a negotiation, whereas that reached with South Africa has seriously hampered potential European exporters on that market.
CONCLUSION
This brief outline of the Euratex position in relation to Market Access seeks merely to underline the industry’s belief that it can continue to expand its exports outside the enlarged EU as and when the opportunity to do so arises. A successful outcome to the Doha Development Agenda is central to this ambition in tariff terms, provided that it is accompanied by a determination on the part of the authorities to eliminate non-tariff barriers. Euratex looks forward to work with the Commission’s services in the coming months to achieve this objective, and will be happy to provide more detailed information at any time.
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Abstract of Euratex contribution to Commission Conference scheduled on 5 & 6th May 2003 (http://trade-info.cec.eu.int/textiles/conf_index.cfm under ‘”documents” and under “forum”).
Brussels, 29th April 2003
THE DOHA DEVELOPMENT AGENDA
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS.
The Position of the European Textile and Clothing Industries.
Executive Summary
Europe’s textile and clothing industry has sought proper access to world markets for many years and would have had more impressive performances if high tariffs and a wide range of non-tariff barriers erected by numerous trading partners had not hamstrung companies’ efforts. In the Doha Development Agenda context, Euratex has outlined a number of essential elements to ensure greater coherence in the overall market access approach. It is our considered opinion that the EU and all WTO members, need to find an answer to these points before making any commitments.
Textile and clothing trade is characterised by massive and flagrant imbalances in market access as between the industrial and developing world. Tariff cuts by the EU have been taken as a due, making the EU one of the most open markets worldwide; few return gestures of substance have been made. European industry has every right to seek to develop its export trade. Euratex wishes to present specific proposals as to how the EU should tackle trade barriers within the Doha Development Agenda. Euratex’s objectives are:
Tariff negotiations in textiles and clothing should be on a sectoral basis, i.e. aimed at a substantial harmonisation of tariffs within the sector worldwide.
All WTO members should reduce their bound duties on textiles and clothing to a maximum of 15%.
At that same time, the Commission should take the offensive in respect of non-tariff barriers. It is indispensable that non-tariff barriers form an integral part of any “tariff” reduction programme. In that context, the Euratex suggestion is that WTO begin by:
a. Imposing a freeze on existing non-tariff barriers.
b. Outlawing in WTO those NTBs as agreed by number of EU trading partners while signing bilateral deals in textiles with the EU.
c. This would then be followed by an item-by-item discussion of any remaining non-tariff barriers based on a proportionality test in those areas where public health and/or environmental issues need to be taken into consideration, and hence removing barriers set up on spurious grounds.
WTO should ensure that trade instruments such as anti-dumping be capable of effective implementation in the event of genuine cases of unfair trade practises.
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Abstract of Euratex contribution to Commission Conference scheduled on 5 & 6th May 2003 (http://trade-info.cec.eu.int/textiles/conf_index.cfm under ‘”documents” and under “forum”).
Brussels 29th April 2003
Annex 1
NON-TARIFF BARRIER LIST
After careful analysis of the changes in the non-tariff barriers used by WTO members to restrain trade over the period 1995-2000 and protect their own industries, EURATEX considers that there should be agreement within WTO that all forms of non-tariff barrier should be outlawed. Those barriers include but are not confined to the following:
Any additional duties on the import or sale of products of EU origin in excess of the custom duties set out in the Agreement, or any other taxes of equivalent effect, which are higher than any such duties or taxes imposed on the production or sale of equivalent domestic goods
Technical regulations or standards, or conformity assessment or certification rules, procedures or practices going beyond the purposes for which they are required
Any formal or informal minimum import price requirement, or other customs valuation rules, procedures or practices giving rise to barriers to trade
Rules, procedures or practices for pre-shipment inspection that are discriminatory, non-transparent, excessively lengthy or the imposition of customs controls for the clearance of goods to shipments that have been subject of pre-shipment inspection
Excessively burdensome, costly or arbitrary rules, procedures or practices concerning the certification of the origin of products or requiring direct shipment of goods from the country of origin to the country of destination
Any non-automatic or discretionary licensing requirements, or any automatic licensing rules, procedures or practices imposing disproportionate burdens or having restrictive effects on imports
Requirements or practices concerning marking, labelling, the description or composition of the product or the description of the manufacturing of products which, either in their formulation of in their application, are in any form discriminatory as compared with domestic products
Unduly long customs clearance delays or excessively burdensome, excessive or costly customs procedures, including inspection requirements, which have an unnecessary restrictive effect on imports
Subsidies causing injury to the EU textiles and clothing industry.
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