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China and India will lose EU''s tariff reduction under the GSP treatment |
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2004-7-13
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Textile and apparel exporters from India and China will lose most of EU''s GSP treatment, effective from 1 January 2006. EU''s duties will be effectively raised, as a result, in order limiting the surge in imports in the post-quota period.
EU''s Commission announced a major reform of its GSP system, under the generalized system of preferences, granting tariff reductions to developing countries.
With the textile quotas being removed at the end of the year, EU''s trade officials expect a surge in shipments from China and India.
"Does China today need a tariff advantage of 3.5%? Very frankly, no !" said EU''s top trade official Pascal Lamy.
EU''s Commission will actually exclude from preferential treatment countries having gained a large share of EU''s market, and more precisely of preferential imports benefiting from duty reductions.
Since textiles and apparel from China account for a very large part of preferential imports, they will certainly lose the GSP treatment. The review will cover full sections of the so-called ‘combined nomenclature,’ more specifically section 11 together covering fabrics and apparel.
Other countries anticipate fall in their textile exports as a consequence of quotas'' removal.
EU''s executive arm will not only target the poorest countries such as Bangladesh, but also "small economies, land-locked, small islands and low income countries", it said in a press statement.
The GSP scheme is to be simplified with only three groups of benefits replacing the current five baskets.
One of them will grant duty-free access under the already existing EBA (everything but arms) provision.
A GSP+ mechanism will provide duty reductions to countries improving social rights or environmental protection.
"Cross-regional cumulation"
More importantly, GSP rules of origin will be modified. In addition to the current regional cumulation, a "cross-regional" cumulation would for instance allow Bangladeshi apparel producers to source materials from other regions than South Asia.
The Official Communication issued by EU''s Comission does not mention the temporary and limited suspension of the double stage requirement last week proposed by a high level group.
The group includes textile and apparel industry representatives, EU''s trade officials and members of EU parliament.
Under the double transformation rule, apparel must not only be sewn in the country of origin but must also be made from yarns or fabrics produced in the same country. Regional or inter-regional cumulation only offers a limited derogation to the rule, repeatedly denounced by non-governmental oganization Oxfam. |
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