8/4/2005
European Commission publishes guidelines governing use of textiles safeguards

The European Commission agreed this week to publish guidelines that will clarify under what circumstances it would consider safeguard action against textile and clothing imports from China. The guidelines relate to the textiles-specific safeguard clause written into China’s Protocol of Accession to the WTO in 2001 which was incorporated into EU law in 2003. The guidelines establish procedures and criteria for the objective and transparent use of safeguard proceedings. By establishing when, and on what basis, action could be taken, the guidelines provide clarity and predictability for both China and European textile producers.

European Commissioner for Trade Peter Mandelson said: “China, and its dramatic potential to increase exports following the lifting of quotas from 1 January this year, has become a key concern for a number of European Union Member States and European textiles producers. My aim is to ensure a smooth transition to a post quota world without incurring avoidable damage to our industry and vulnerable developing countries. It is important for both China and European industry that t he use of any safeguard measures is objective, transparent and based on credible data. The guidelines recognise the legitimate concerns of Member State governments and textiles sector, while allowing China to benefit from the lifting of quotas. They equip us to make a swift and effective response.”

The guidelines, like the safeguard clause itself, respond to the potential market disruption that could be caused by a sudden and sustained surge in Chinese textile exports to the EU. As well as threatening EU textile producers, such a surge could displace textile imports from highly vulnerable developing countries with an historic dependence on trade with the EU market. This problem is of particular concern for textile producers in Europe’s Mediterranean partners.

The guidelines establish alert zones for each category of Chinese textiles imports allowing for increases in China’s current market share. To reach these alert zones Chinese exports will need to show a rapid and sustained rise over a defined period.

If these thresholds are reached, the Commission, acting on its own initiative or at the request of a Member State, will undertake an investigation. Informal consultations with the Chinese will allow China to act to provide sufficient remedy. If no remedy is achieved, formal WTO consultations with the Chinese authorities would require them to act to limit textiles exports in the affected categories.

If this is still insufficient, safeguards can be invoked. Safeguards would take the form of quantitative import restrictions applicable for a year, but extendable on reapplication. These measures can only be used until 2008.

The guidelines also allow for emergency procedures in the case of a rise in imports of such magnitude that serious material injury to EU industry is imminent. In this case formal consultation with the Chinese could be launched without a preceding investigation.