TRADE: European Union Announces Calculated Liberalisation

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Jul 14 2000 (IPS) - The European Union (EU) chose a significant moment, one that coincides with talks at the World Trade Organisation (WTO) on liberalising the European economy, to announce the further integration of its textile and clothing sector into the international system.

A report released this week in Brussels says the European Commission, the EU’s executive body, has proposed the elimination of all remaining restrictions on imports of 62 categories of textiles and clothing coming from other WTO member countries.

The announcement closed with a political statement that defines the proposal as “an important step” in the progressive trade liberalisation in this sector.

The initiative, says the European Commission text, demonstrates the EU’s determination to faithfully meet its commitments under the WTO accords.

The European decision indicates that the bloc’s bureaucracy is moving to complete – as all 137 WTO member countries should be doing – the third stage of integration of textile and clothing products according to the standards set by the General Agreement on Trade and Tariffs (GATT).

On Jan 1, 1995, GATT gave way to the newly created WTO, which took over the role of overseeing compliance with multilateral accords that regulate trade relations between nations.

The process of integrating the textile and clothing sector consists of four phases that began at the time of the GATT-WTO transition with 16 percent of the volume of imports at 1990 levels. In the second stage, begun in 1998, an additional 17 percent was added.

The third stage, which is approaching with another 18 percent integration, is the one the Europeans are ready to complete, though no comment was made on the Jan 1, 2002 deadline set by the trade agreement. The remaining 49 percent of the imports are to be governed by WTO norms beginning in 2005.

A report by the Geneva-based International Textiles and Clothing Bureau (ITCB) says that in the first two stages of integration the EU had barely beat the goals of 16 and 17 percent established by the agreement.

The integrated portions of its import volumes reached 16.38 percent in the first phase and 17.99 in the second, for a total of 34.38 percent, according to the study by ITCB executive director Munir Ahmad.

But from another perspective, the integrated imports in the two periods are the equivalent of just 28.88 percent of the products’ value, Ahmad pointed out.

The products the EU proposes to include in the next stage of liberalisation of textile and clothing imports are limited to clothing intended for children under 86 cm tall, observed Chakravarti Raghavan in the latest issue of the South North Development Monitor, a newsletter published in Geneva.

The timing of the European announcement is linked to the meeting of the WTO’s trade policy review board for the periodic evaluation of the international community’s compliance with the organisation’s neoliberal policies.

The Swiss news agency ATS reported that the announcement indicates the EU is offering a guarantee to the WTO.

Pascual Lamy, the EU trade commissioner, said the proposal to comply with multilateral norms sends a convincing signal to WTO members, particularly to developing countries, of Europe’s commitment to meeting its obligations.

Developing countries have consistently criticised the EU, the United States, Japan and other industrialised nations for pursuing the trade liberalisation only when it involves services and merchandise.

In addition, they charge, the same countries of the industrialised North block the opening of markets to textile, clothing and agricultural products, sectors in which the nations of the developing South have the comparative advantage.

ATS said the US delegate to the WTO, Rita Hayes, called on the EU to provide details on its agrarian policy, which requires annual subsidies totalling 50 billion dollars, or 45 percent of the European bloc’s budget.

A study by the Organisation for Economic Co-operation and Development (OECD), released last month simultaneously in Washington DC and Brussels, said its members – the world’s wealthiest countries – last year spent 361 billion dollars on subsidies for the agricultural sector.