Report from the Commission to the Council on the respect of market access commitments by WTO Members in the textiles and clothing sectors
COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 15. 05. 1997 COM(97) 219 final Report from the Commission to the Council on the respect of market access commitments by WTO Members in the textiles and clothing sectors 1. 0 Introduction In accordance with Article 1(7) of Council Regulation (EEC) No. 3030/93l the Commission presents its report on the respect by third countries of their commitments under the WTO rules and disciplines referred to in Article 7 of the WTO Agreement on Textiles and Clothing (ATC). Article 7 of the ATC stipulates that WTO Members shall take such necessary actions to abide by GATT 1994 rules and disciplines so as (a) to achieve improved market access, (b) to ensure the application of fair and equitable trading conditions in such areas as dumping, subsidies and intellectual property rights, and (c) to avoid discrimination against imports when taking measures for general trade policy reasons. According to the provisions of the article, and following authorisation by the Dispute Settlement Body, importing members have the possibility to cut back the increased growth rates provided for under Article 2. 14 of the ATC should any exporting member breach their Article 7 commitments. Article 7 provides that these obligations are to be fulfilled with reference to the specific commitments undertaken by Members as a result of the Uruguay Round. For this reason the present report concentrates on instances where WTO members have clearly infringed GATT 1994 rules and disciplines and where these infringements have been brought to the attention of the Commission. Finally, it should be remembered that three other reports have been prepared on similar subjects related to that being covered by this report. The Commission services have recently submitted a report to the Article 113 Committee on the overall implementation of GATT 1994 commitments by contracting parties. In addition, the Textiles Monitoring Body has prepared a report on implementation of the ATC2 and the Council on Trade in Goods has also prepared a report on the same subject3 - however, since these reports have largely relied upon notifications by WTO Members this aspect of implementation was not fully covered. 1 OJNoL275, 8. 11. 1993, p. 1. 2 WTO document, G/L/113 of 4 October 1996 3 WTO document, G/L/134 of 5 November 1996 2. 0 The achievement of improved market access 2. 1 Trade Annex I to this report provides historical details of trade with selected WTO members including all those whose textiles and clothing exports are subjected to Community quantitative restrictions for specific product categories. In global terms (including trade with non-WTO members) Community exports have increased steadily over recent years. If one looks at individual export markets this trend is, largely, repeated. In particular, exports to the ASEAN countries have increased significantly, in some cases doubling between 1993 and 1995. While in several cases the level of exports remain disappointingly low and while market access problems do remain with many third countries it can be reasonably assumed, from looking at the trade statistics, that market access conditions for Community exports of textiles and clothing products have been improving. 2. 2 Obstacles to Market Access In line with the principles elaborated in its recent Communication "The Global Challenge of International Trade: A Market Access Strategy for the European Union"4 the Commission has held comprehensive consultations with industry, Member State representatives and the Commission's own delegations in third countries in order to determine the extent to which WTO commitments are being honoured by our WTO partners. Based upon the information received the Commission has established a data base of market barriers existing in third countries which has been circulated to Member States and industry for their reference, use and comments. 2. 2. 1 Tariffs Argentina has recently adopted specific duties which are in violation of the tariff binding commitments given during the Uruguay Round negotiations. After consulting Member States the Commission entered into consultations with Argentina under Article XXII of GATT 1994 and has joined, as a third party, the US request for a dispute panel. Of additional concern is the fact that, as regards textiles and clothing products, some countries, notably Brazil, Mexico, South Africa and South Korea, have increased their applied tariff rates while staying within their bound rates. Although not incompatible with these countries respective WTO commitments, such actions can be criticised for reducing the level of effective market access. The Commission has made representations to each of these countries and has requested a return to the previous tariff rates. In the specific case of South Korea Member States supported a Commission decision to suspend GSP benefits on textile and clothing products. 4 COM (96) 53 final In contrast, other countries, such as India, Indonesia and Pakistan, have improved their tariff bindings compared to their commitments agreed at Marrakesh. This welcome development occurred as the result of continued encouragement from other WTO partners and followed exhaustive market access negotiations with major importing nations, including the European Community. This is of particular importance in relation to both India and Pakistan which were previously considered as closed markets. In addition, India has autonomously announced a further reduction in its applied tariff rates for selected textiles products. Other countries, most notably Thailand, have substantially reduced their applied tariff rates although no modifications have been made to the bound rates. It should be noted that the majority of third countries maintain applied tariff rates substantially below their WTO bound limits. 2. 2. 2 Non-Tariff Measures introduced As regards Argentina, the Commission Argentine measures regarding the labelling of textiles products and the requirements for having certificates of origin validated by the Argentine consulate in the country of export. The Commission has entered into consultations with Argentina under Article XXII of GATT 1994 subsequent to which Argentina has made certain changes to its legislation in order to comply with its WTO commitments. is also concerned over recently In the case of South Korea the Commission was notified of certain chemical testing procedures on carpets which complicated import and were therefore considered as technical barriers to trade. After consultations with the Korean authorities agreement was reached that they would adopt a testing system similar to that of the Community. The new Korean legislation entered into effect on 15 June 1996. The Community also has an ongoing dispute with the US over the implementation of new rules of origin for textiles products. Should a satisfactory outcome to this dispute not be found the Commission reserves its right to propose that a formal complaint be made to the Textiles Monitoring Body. At the same time, industry has submitted a complaint under the provisions of the Trade Barriers Regulation. The Commission has received complaints from European industry and from certain Member States regarding the difficulty of obtaining import licences for textiles and clothing products despite assurances given in the EC/India bilateral agreement on market access for textiles. Under the provisions of the agreement, the Commission intends to hold bilateral consultations with India on this matter as soon as possible. The Commission has also raised the more general issue of the import licencing measures maintained by India under balance of payments provisions in the review which is being conducted by the WTO/BoP Committee. H- 2. 3 Conclusion Other than the instances indicated above the Commission is not aware of instances where a WTO Member has not complied with its Uruguay Round commitments in relation to tariff reductions and bindings, non-tariff barriers or customs, administrative or licensing formalities, applying to textiles and clothing products. Nevertheless, should any such instances be brought to the Commission's attention all appropriate legal channels will be used in order to ensure that these obstacles to trade are removed. 3. 0 Fair and equitable trading practices In the areas of dumping and anti-dumping rules and procedures, subsidies and countervailing measures, and protection of intellectual property rights the Commission has not been informed by Member States, by industry or by any other sources of instances where WTO Members, in relation to the textiles and clothing sectors, have applied policies inconsistent with GATT 1994 commitments. This is not to say that the Commission has not encountered cases of unfair trading practices in the above mentioned areas and a number of procedures have been launched (details are provided in Annex II to this report). Should any such instances be brought to the Commission's attention all appropriate legal channels will be used in order to ensure that these obstacles to trade are removed. 4. 0 General discrimination The Commission has not been informed by Member States, by industry or by any other sources of instances where WTO Members have discriminated against imports in the textiles and clothing sector when taking measures for general trade policy reasons. Nevertheless, should any such instances be brought to the Commission's attention all appropriate legal channels will be used in order to ensure that these obstacles to trade are removed. 5. 0 Conclusion The Commission concludes that most WTO Members have generally abided by specific commitments on tariffs and non-tariff specific barriers made under the Uruguay Round. The Community has acted swiftly to deal with breaches of WTO commitments by Argentina and the US. These will be pursued in the appropriate WTO Bodies. Where countries have not abided by the spirit of Article 7 and have taken measures which effectively limit market access, notably Brazil, Mexico, South Africa and Korea, the Commission has also begun bilateral contacts. Problems relating to import licences in India will be dealt with both bilaterally under the EC/India market access agreement, and in the WTO/BoP Committee. The Commission considers that the Community should use all the various instruments of the WTO relating to market access systematically in order to raise these and any other issues that European industry and Member States consider important, so as to ensure that the TMB takes these matters fully into account in preparing its report to the Council for Trade in Goods on the first stage of the ATC. Annexes (2) fo European Commission ANNEX I Directorate General External Relations EC TEXTILES AND CLOTHING TRADE 1992-1995 WITH WTO COUNTRIES SUBJECT TO QUOTAS DOMINANT SUPPLIERS HS-CHAPTERS 50-63 TRADE V O L U M E ( M E C U) 1992 = 100 PARTNER SOUTH KOREA HONG KONG MACAO FLOW Imports Exports Balance Imports Exports Balance Imports Exports Balance 1392 1993 1994 1995 1992 1993 1994 1995 1,079 300 -779 2,590 772 -1,818 426 3 -422 931 345 -587 2,810 992 -1,819 453 4 -449 852 514 -338 2,623 1,267 -1,355 448 5 -444 828 673 -154 2,601 1,284 -1. 318 415 6 -408 100 100 100 100 100 100 100 100 100 86 115 75 109 128 100 106 130' 106J 79 171 43 101 164 75 105 151 105| 77 225 20 100 166 72 97 201 97 INDIAN SUB-CONTINENT HS-CHAPTERS 60-63 TRADE VOLUME (MECU ) 1992 = 1 00 PARTNER PAKISTAN INDIA SRI LANKA FLOW Imports Exports Balance Imports Exports Balance Imports Exports Balance 1992 1993 1994 1995 1992 1993 1994 1995 980 56 -924 1,870 42 -1,828 325 38 -286 1,074 58 -1,016 2,203 66 -2. 136 400 50 -350 1,171 46 -1,124 2,560 87 -2,472 457 64 -394 1,231 55 -1,176 2,947 105 -2,842 476 75 -401 100 100 100 100 100 100 100 100 100 110 102 110 118 158 117 123 131 122 119 82 122 137 208 135 141 166 137 126 97 127 158 249 155 147 195 140 HS-CHAPTERS 50-63 TRADE VOLUME (MECU ) 1992 = 100 ASEAN 1992 1993 1994 1995 1992 1993 1994 1995 PARTNER THAILAND INDONESIA MALAYSIA SINGAPORE PHILIPPINES FLOW Imports Exports Balance Imports Exports Balance Imports Exports Balance Imports Exports Balance Imports Exports Balance 912 60 -852 1,372 46 -1,326 483 40 -443 227 165 -62 357 45 -312 905 68 -837 1,466 58 901 91 -811 1. 559 92 866 109 -757 1,508 126 -1,409 -1. 466 -1,382 100 100 100 100 100 100 100 100 100 100 100 100 100 100 464 83 -381 9S 290 191 306 52 -254 \ 10G 99 113 98 107 124 106 104 122 103 76 127 -60 100 103 100 99 151 95 114 199 111 109 162 105 55 169 -248 96 113 94 95 182 89 110 271 104 96 207 86 44 176 -308 86 114 82 504 49 -455 173 210 37 359 47 -312 528 65 -463 125 279 154 343 51 -292 T- European C o m m i s s i on ANNEX I LATIN AMERICA D i r e c t o r a te General E x t e r n al Relations j | | 1 i S ! | 1 HS-CHAPTERS 50-63 TRADE VOLUME (MECU ) 1992 = = 100 PARTNER PERU BRAZIL ARGENTINA FLOW Imports Exports Balance Imports Exports Balance Imports Exports Balance 1992 1993 1994 1995 1992 1993 1994 1995 122 4 -117 322 82 -240 115 71 -44 104 9 -95 270 153 -117 130 108 -21 100 6 -94 279 150 -130 81 84 3 CEECs 104 13 -91 241 209 -32 178 80 -98 100 100 100 100 100 100 100 100 100 82 138 80 87 183 54 70 1Ï 8~ -7 85 204 81 84 187 48 113 153 48 86 299 78 75 256 13 155 113 223 HS-CHAPTERS 50-63 TRADE VOLUME (MECU ) 1992 = 100 PARTNER POLAND CZECH REP. (1992. estimated) SLOWAKIA (1992 estimated) HUNGARY ROMANIA BULGARIA FLOW Imports Exports Balance Imports Exports Balance Imports Exports Balance Imports Exports Balance Imports Exports Balance Imports Exports Balance 1992 1993 1994 1995 1992 1993 1994 1995 1,114 943 -170 489 320 -169 177 101 -75 658 554 -104 494 324 -170 198 136 -62 1,394 1,204 -190 565 448 -117 208 139 -69 700 602 -98 644 449 -195 213 155 -58 1,634 1,446 -188 710 584 -126 319 180 -138 749 683 -65 840 575 -265 250 214 -37 1,885 1,738 -147 853 748 -105 402 267 -135 900 832 -68 1,040 783 -257 317 278 -40 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 125 128 112 116 140 69 118 137 92 106 109 94 130 139 115 108 114 93 147 153 110 145 183 74 180 178 184 114 123 63 170 177 156 126 157 591 169 184 86 174 234 62 227 263 179 137 150 66 211 242 151 160 204 64 NOTES: Reporting countries 1992-1994 : EC12; 1995 : EC15 Ceuntries with MFA or MFA-type agreements not subject to restrictions excluded & ANTI-DUMPING AND ANTI-SUBSIDY MEASURES IN FORCE AGAINST WTO MEMBERS IN THE TEXTILE SECTOR AS AT 1st APRIL 1997 Annex II PRODUCT ORIGIN MEASURE PUBLICATION -Cotton yarn -Polyester fibres and yarns -Polyester fibres (synthetic) Brazil Turkey Turkey duties OJL 82,27. 3. 92, p. 1 undertaking (countervailing) OJ L 272, 28. 9. 91, p. 92 Turkey duties OJL347, 16. 12. 88, p. 10 -Polyester textured filament yarn Indonesia Thailand -Polyester yarns Indonesia Turkey duties duties OJ L 128, 25. 5. 96, p. 3 OJ L 178, 17. 7. 96 OJL88,3. 4. 92,p. l OJL141, 14. 6. 96. -Sisal twine (binder and baler) Brazil undertakings OJ L 251, 8. 10. 93 -Synthetic textile fibres of polyester Turkey Romania duties OJL 306, 22. 10. 92, p. 1 India South Korea duties OJL 9, 15. 01. 93, p. 2 <\ ONGOING ANTI-DUMPING PROCEEDINGS AGAINST WTO MEMBERS AS AT 1st APRIL 1997 PRODUCT -Bed linen -Cotton fabric (grey) ORIGIN Egypt India Pakistan Turkey Egypt India Indonesia Pakistan TYPE INITIATION AD initiation 13. 9. 96 AD initiation 21. 2. 96 -Polyester yarn (POY/PTY) India Indonesia AD initiation Review 11/4 29. 7. 94 23. 11. 96 -Polyester yarn (PTY) Malaysia AD initiation 19. 4. 95 -Polyester yarns Turkey review 11/4 4. 7. 96 -Polyolefin sacks (small) -Synthetic fibre ropes (small) -Synthetic fibres of polyester India Indonesia Thailand India India AD initiation 13. 4. 95 AD initiation 4. 4. 96 review 11/4 4. 7. 96 \o ISSN 0254-1475 COM(97) 219 final DOCUMENTS EN 11 02 10 Catalogue number : CB-CO-97-210-EN-C ISBN 92-78-19654-1 Office for Official Publications of the European Communities L-2985 Luxembourg U