Brussels, 17/05/2005 (Agence Europe) - With the investigation and informal consultation phase- of a maximum duration of 60 days- with Beijing underway, having been launched on 29 April (EUROPE 8935, 8936 and 8938) into the influx of Chinese textiles onto the Community market since quotas were lifted on 1 January, the European Commissioner for Trade, Peter Mandelson, announced on Tuesday that he would propose to the Commission the launch of formal negotiations with China for two of the nine categories of Chinese textiles for which import volumes from China have exceeded the alert levels laid down in guidelines adopted on 6 April (EUROPE 8922): T-shirts and flax yarn.
According to Mr Mandelson, for both of these categories of products, “signs of market disturbance appear to be sufficiently clear to warrant moving immediately to the phase of formal consultations with the Chinese authorities”. It is worth noting that the guidelines on the use of the specific textiles safeguard clause included in China's accession protocol to the WTO in 2001 allow the emergency proceedings to be activated if it is quite clear that the harmonious evolution of world trade is under threat and that the rapid increase in imports from China would cause considerable harm to the Community industry if no steps are taken. However, by pinpointing a considerable deterioration of the situation for the Community textile industry in terms of production, profitability and employment, the investigation shows that for the moment, there is a problem which will be hard to put right:
1) For T-shirts, import volumes of which from China increased by 187% from January to April 2005 compared to the same period in 2004. Initial statistics show a major slump in production in Greece (-12%), Portugal (-30% to -50%) and Slovenia (-8%). They also indicate that over the first four months of the year, Community imports of T-shirts from China reached 243 million pieces, an increase of 159 million compared to the same period in 2004, which represents an increase of over half of annual Community production of T-shirts. Initial results of the investigation also show that countries which traditionally supply the Community T-shirt market, such as Morocco, Tunisia and Romania, have lost some of their foothold, seeing their exports drop 8%, 22% and 29% respectively. The sudden explosion of imports of Chinese T-shirts has also affected the textiles sectors of various vulnerable developing countries: exports of T-shirts from Pakistan, Sri Lanka and Bangladesh have fallen 36%, 25% and 9% respectively since the beginning of the year. As a result, China's share of the Community market for T-shirts has grown from 7% in 2004 to 18% in 2005 so far, over a period of three months;
1) For flax yarn, imports of which from China increased 56% from January to April this year compared to the same period in 2004. The investigation also shows that between January and April, the Community production, turnover and employment for this category fell by 25%, 25% and 13% respectively compared to the same period in 2004, France and Italy being the worst-hit countries. Furthermore, China's share in the EU market has risen from 7% in 2004 to 13% in 2005 over a period of three months. Lastly, the investigation shows that having stood at 9924 tonnes in 2004 (or a market share of 27.5%), Chinese exports of flax yarn rose to 1788 tonnes by the end of February (or a share of the Community market of almost 45%) to the detriment of suppliers such as India and Morocco (-67% and -30% respectively of exports to the Community market during the first four months).
At the conclusion of an inter-service consultation within the Commission, Mr Mandelson's proposal will be put to the College of Commissioners. Once approved by the Commission, the request to open formal consultations with China at the WTO will be discussed by the Council of the EU's committee on textiles, then sent to the Beijing authorities. The whole of this procedure can be completed by the end of May.
In line with the provisions of the specific textile safeguard clause, China will then have to take measures to limit its imports on the basis of the level of export volumes over the top twelve of the fourteen months preceding the opening of formal consultations increased by 7.5%- measures which must still allow China “generous export growth”, Mr Mandelson stressed. If Beijing takes no steps within 15 days of the opening of the formal consultations (starting the day it receives the Community request), the Commission, in consultation with the Council's textile committee, will act to remedy the situation by imposing a temporary limit on exports to the same level. Lastly, if no satisfactory solution can be found after the period of formal consultations,
lasting 90 days, the Commission may take safeguard measures with the approval of the Member States. We also recall that, according to the terms of the specific textile safeguard clause, a measure on import restrictions to be taken before the month of October this year cannot be extended beyond 31 December. It may, however, be renewed each year but not beyond 31 December 2008. Safeguard measures are aimed at granting the industry of the most vulnerable European textile producer countries a period in which to draw breath and to adjust to face up to the new competitive environment, Mr Mandelson said. The Trade Commissioner also said that, for the seven other categories of products, emergency procedure was still possible at the Commission depending on how the investigation proceeds. Finally, Mr Mandelson said that, in the light of the analysis of data provided by Member States, the Commission inquiry could still be extended to categories of textile products other than the nine categories concerned.
In answer to press questions on how appropriate it is to reintroduce textile quotas after the fashion of the United States (Washington mainly brought in restrictions for three categories of Chinese textile imports), Mr Mandelson placed emphasis on the differences between the American and Community volumes of Chinese textile imports and between the market structures on either side of the Atlantic, to explain why it was not necessary for the EU to take such measures. The Trade Commissioner also said on several occasion how essential it was for the Union to safeguard cooperation with the Beijing authorities and to avoid any adverse effect on European-Chinese relations.