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DEVELOPMENT: Textile Proposals Strip Poor Countries of Hope

Stefania Bianchi

BRUSSELS, Oct 13 2004 (IPS) - EU proposals to improve competitiveness in the clothing and textiles industry before trade quotas run out offer little comfort to developing countries, civil society groups say.

Quantitative restrictions on import of garments and textiles will cease Jan. 1, 2005 with the expiry of the World Trade Organisation (WTO) Agreement on Textiles and Clothing (ATC).

The elimination of national quotas under which industrialised countries import textiles and garments from developing countries will have a serious impact on millions of people in the business in developing countries. They will also affect the EU’s own textile industry.

Development and trade non-governmental organisations (NGOs) say proposals designed to protect the European textiles sector "offer no detail on what will be done for several very poor and vulnerable countries" that have built up their textiles industries on the basis of quota protection.

The European Commission, the European Union (EU) executive arm, announced measures Tuesday (Oct. 12) that include funding research and vocational training to support affected textile industry.

The commission says it will also strengthen its fight against counterfeiting and piracy, and that structural funds will be used to cover unforeseen crises during a restructuring period for the European textile industry. EU enterprise commissioner Olli Rehn said he hoped such proposals would ensure survival of the European industry.

"It is going through profound structural changes," he told journalists Tuesday. "At EU, national and regional levels we need to provide adequate conditions to help the sector strengthen its competitiveness and remain a key industry in the EU." The textiles and clothing trade is crucial for many developing countries because 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.

Small developing countries such as Bangladesh and Sri Lanka are especially concerned about the effect that the abolition of quotas will have on their textile industry, and fear China will push them out of the EU market.

Acknowledging that poorer nations need to be "cushioned" from Chinese dominance when the textile regime expires, incoming trade commissioner Peter Mandelson said last week he had seen "an estimate that China would expand textile exports by 150 percent" after the quotas disappeared, which meant that the country was "on target to assuming a 50 percent share" of the world’s textile market.

The outgoing European Commission has been considering exclusion of China, Brazil, India and Indonesia from a new generalised system of preferences (GSP) regime which would impose lower import duty on goods from poor nations.

The commission is due to take a decision on the new regime at the end of this month. Trade commissioner Pascal Lamy pledged Tuesday that the EU will take steps to protect the most vulnerable countries.

"We will not leave developing countries, in particular the poorest and more vulnerable out in the cold," he said. "We will re-focus our trade preferences so that they can continue to benefit from an open and fair access to the EU."

Lamy said measures will include rapid development of the Euro-Mediterranean zone and stronger cooperation with China to monitor Chinese imports.

But development groups say the EU has not been clear on what measures it will take to assist developing countries.

"We are already hearing reports of garment factories closing overnight, with hundreds of women coming to work as usual to find that their family’s only source of income has disappeared with no warning," Jo Leadbeater, head of Oxfam International’s EU advocacy office told IPS.

"The human cost of this transition for some countries will be heavy, and the EU has not yet set out how it intends to help these countries adjust," she said. The EU should "take responsibility" for the shock that will hit countries like Bangladesh and Sri Lanka by "providing them with financial assistance for adjustment and also making sure that these countries’ exports receive duty-free access," she said.

Barbara Kwateng, spokesperson for the International Confederation of Free Trade Unions (ICFTU), highlights the employment costs of the quota cuts. She says one of the main negative effects on developing countries will arise from China’s violation of workers’ rights.

"There is a general feeling that this will kickstart a race to the bottom with workers’ rights suffering most as countries attempt to increase their attractiveness for investment and reduce the costs of their clothing exports," she told IPS. "A climate of poor working conditions and low wages already exists in the textile sectors of many developing countries and this is expected to worsen."

ICFTU estimates that 27 million jobs will be lost in the textile sector in Asia, Central America and the Caribbean. It adds that a million of these stand to be lost in Bangladesh alone.

The union is calling for a "multi-institutional response" to potential negative effects when the regime ends.

"We believe it is necessary that, as a minimum, the WTO should enter into a discussion process together with the International Labour Organisation, Organisation for Economic Cooperation and Development, World Bank, International Monetary Fund and relevant UN agencies, to anticipate the social impact of the textiles sector developments and to propose counter-measures, backed by international assistance," Kwateng said.

Textile quotas were introduced in the early 1960s to limit imports into European countries whose domestic industries were threatened by rapidly increasing imports.