Economy & Trade, Europe, Headlines

TRADE-EU: Rich Countries ‘Untying’ Textile Deal

Stefania Bianchi

BRUSSELS, May 6 2004 (IPS) - Rich countries may backslide on commitments to open up their clothing and textile markets to developing country competition, according to the international agency Oxfam.

Quantitative restrictions on import of garments and textiles are due to end from January next year with the expiry of the World Trade Organisation (WTO) Agreement on Textiles and Clothing (ATC).

This would give all WTO members unrestricted access to European, U.S. and Canadian markets. But Oxfam is concerned that textile industry groups in these countries are now lobbying governments to extend the quota regime.

Textile firms in the EU, which provide around seven percent of manufacturing sector jobs, say they will face tough and unfair competition when the market is fully liberalised. China is expected to be the biggest winner.

Europe’s textiles lobby group Euratex urged the European Commission, the EU executive last month to protect the EU market from "a flood of Chinese clothing goods."

Director-general of Euratex William Lakin says the industry has long suffered from the "inexplicably" low prices of goods coming from China, and wants the EU to take a hard line.

European Trade Commissioner Pascal Lamy acknowledged that the EU textile industry was feeling the effect of increased competition.

"The European textiles and clothing industry is suffering," he said in a statement. "It is suffering because it faces very strong international competition. How can it be that one is the best and yet suffer from competition? This comes from the fact that one is suffering from unfair competition."

Oxfam is concerned that such fears will lead rich countries to impose excessive tariffs. This would undermine "one of the most significant victories ever won by developing countries in international trade negotiations," it says.

Half the world’s textile exports and 70 percent of garments exports come from developing countries. In some developing countries the textile industry accounts for 90 percent of exports.

Jo Leadbeater, head of Oxfam’s Brussels office, urged the EU to uphold reform. The ATC introduced in 1995 which will lead up to the end of quotas replaced the old Multifibre Agreement (MFA) which gave importing countries wide powers to raise tariffs.

"The MFA was one of the most pernicious weapons in the rich world’s arsenal of protections," she said in a statement. "For every job it protected in the rich world, 35 jobs were lost in the developing world."

Some officials argue that quotas should be maintained due to poor working conditions in many textile exporting countries. Oxfam says denying these countries access to rich markets will do nothing to improve their labour conditions and living standards.

But Oxfam says the EU would not be only market to feel the negative effects of a free market.

"Smaller exporters that did benefit from the MFA restrictions will face a sharp shock as quotas are removed," Oxfam said in its statement. "Bangladesh and Sri Lanka, for instance, might lose hundreds of thousands of jobs overnight and rich countries must help them with aid, retraining assistance and better deals on trade. Meanwhile, retailers and their suppliers must not ‘cut and run’ from them."

Textile quotas were introduced in the early 1960s to limit imports into countries whose domestic industries were facing serious damage from rapidly increasing imports. The industry has since been involved in a series of multilateral trade negotiations.