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Quota elimination
Feature: 3/12/2004



EU officially adopts EC Regulation proposal

This week the EU officially adopted the EC proposal for a Regulation that will eliminate from 1st January 2005 all quantitative restrictions on the import of textile and clothing products from WTO countries (News, Wednesday 15 December).

This Regulation implements one of the key commitments taken at the end of the last WTO Trade Round (the Uruguay Round) in 1994. “This definitively seals the disappearance of textiles quotas that have been in place for four decades and there is no going back”, said EU Trade Commissioner Peter Mandelson.

“The challenge now for the textiles industry world-wide is to compete in the new environment. But policy makers also need to ensure that the transition is as smooth as possible and managed in a way that does not wipe out the textiles industries of weak and vulnerable developing countries. They too should be able to benefit from liberalisation in due course”, he added.

The Council Regulation will abolish from 1 January 2005 all quotas on imports of textile and clothing products from WTO countries. It will also establish a transitional regime concerning the import in the first quarter of 2005 of products subject to the import quota regime in 2004.

The Regulation also sets up a statistical monitoring system for the imports to the EU of a number of textile and clothing products. This will give early intelligence on signs of serious market disruption and will allow the EU to follow closely the development of trade in the new environment.

Dialogue and consultation
The Commission will favour dialogue and consultation in averting and remedying possible problems. In this spirit a Sino-EU Textiles Trade dialogue was begun on 6 May 2004.

The Commission welcomes the announcement by China at the EU-China Summit of 8 December of a number of measures designed to ensure that the expansion of textile exports from China happens progressively.

“We hope that these Chinese policies enable other developing country exporters of textiles and garments to share the benefits from the expansion of trade”, said a spokesman.

In order to ensure predictability in dealing with possible future requests for safeguard measures, the Commission will shortly adopt guidelines for the transparent handling of such cases. They will cover in particular the use of the textiles-specific safeguard clause contained in the Protocol of Accession of China to the WTO.

Peter Mandelson said, “Such measures should be operated only if strictly necessary after monitoring the effects of quota removal, primarily on vulnerable developing countries”.

Background
The WTO Agreement on Textile and Clothing (ATC), which established a ten-year period for the elimination of the quotas, will expire on 31 December 2004. From 1st January 2005 trade in textile and clothing products will be subject to the general GATT rules, which proscribe the imposition of quantitative restrictions for imports.

The EU already eliminated 56 bilateral quotas in 2002 under the 3rd stage of integration of the ATC.

The new Council Regulation will:

  • Eliminate all quotas applied to the import of textile and clothing products from WTO countries, as of 1 January 2005. Currently the EU applies 210 quotas for the import of textiles and clothing products from 11 WTO countries or territories (Argentina, China, Hong Kong, India, Indonesia, Malaysia, Peru, Philippines, Taiwan, South Korea and Thailand), which have been in force under bilateral agreements concluded under the former GATT Multi-Fibre Arrangement in the 70s. In 2003, EU-25 imports world-wide of products for which quotas will be eliminated accounted for €41.7 billion or 63 percent of total textile and clothing imports, although only 20 percent of EU imports were imported under quotas.

  • To ensure the respect of the bilateral textile agreements, goods shipped before 1st January 2005 and subject to quotas in 2004 shall be subject to the import regime prevailing in 2004, even if they are presented for customs clearance after 1st January 2005. However, in order to avoid excessive burdens on trade and customs, from 1st April 2005 all such goods will be allowed to enter the EU freely.

  • A monitoring system will be set up from 1st January 2005 to follow imports of the most sensitive textile and clothing products. This scheme will involve: (a) a customs-based monitoring of imports of liberalised goods from all origins; and (b) a requirement for the issue of an import surveillance document for the import of certain products from China, which will be discontinued in 2005 as soon as the customs-based surveillance system is fully operational. This information will be made publicly available at least on a monthly basis.


Non-WTO countries
Imports quotas will, however, be maintained vis-à-vis some non-WTO countries, which include Belarus, North Korea, Serbia and Montenegro and Vietnam.

Agreements are being finalised with Vietnam and Serbia, which should lead to the elimination of quotas for them early in 2005.
Author: John Gibbon
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