The European Unions top trade official proposed an overhaul of trade discounts to developing countries Wednesday, a move likely to anger China and India, both of which might no longer qualify for EU trade preferences for such products as clothing and textiles, reports the World Bank press review.
EU Trade Commissioner Pascal Lamy said the plan, which still needs approval from EU governments and the European Parliament, would bring the EUs trade rules in line with the World Trade Organization, which has called on the 25-nation bloc to reform its trade system.
The plan would replace five separate trade tariff systems with three, including one that would offer more market access, for up to 72.000 products, if those developing countries that qualify abide by international human rights, environment and labor standards. They will also have to combat the drug trade. The new system, if approved, would be in force from 2006-2008.
Countries that hold more than 15 percent of EU market share of any goods will lose their discounted tariffs. Tighter restrictions will apply in textiles, where a ceiling of 12.5 percent market share will be set.
India will keep its preferential status on clothing and textiles, but just barely. It currently has a 10-11 percent market share, which is likely to rise above the 12,5 percent marker soon.
Lamy said the system would exempt countries, which have breached the limit, but have not diversified their exports enough and remain dependent on the export of only a few products, says the news report.
Meanwhile, Lamy said Pakistan would now benefit again from the EUs Generalized System of Preferences (GSP) and that the EU had agreed to so-called “regional cumulation” within the Southeast Asian, South Asian and African, Caribbean and Pacific blocs.
Under accumulation of origin, a country can benefit from low tariffs even if the goods it exports are partly sourced from neighboring countries.
The Financial Times further adds that developing nations that qualify for the scheme must implement all conventions (human rights, environment, etc.) by 2008 but officials said there was a “huge incentive” to do so.
Countries will receive duty-free access for about 7.200 product lines, including many sensitive products such as agricultural goods. The normal preference scheme, in contrast, gives such access to only 40 percent of this list of goods.
Xinhua further explains that under the new proposals, countries with preferential access to the EU market under a bilateral agreement will be removed from the list of GSP beneficiaries since they already have better access to the EU market.
Aid agency Oxfam said the new proposal would end up being biased against some developing countries rather than being of benefit to them and described the basis on which the GSP would be applied as protectionist.
– The proposal looks at whether a developing country accounts for 15 percent of EU imports from the developing world, instead of from all EU imports, said Jo Leadbeater, Head of Oxfam EU Advocacy office adding: – The rule means that a developing country maybe graduating out of the GSP just as it begins to get its foot on the ladder, she added.
The Asian Wall Street Journal finally adds that Chinese clothing and textiles will lose their low-tariff support from the European Union under the change in the blocs preferential-tariff.
Pascal Lamy said Wednesday that for products like shirts, China would see a duty increase of about three percentage points. That will be a small cost for a country whose exports of textiles and clothing are expected to take off when a global-quota regime is wound up at the end of this year.
– Three percent is not going to make a whole heap of difference to them, the Chinese, but it will possibly allow Bangladesh or Pakistan or India … to get a foothold, Lamy said. – This will give them an advantage vis-à-vis the Chinese.
China is currently the biggest beneficiary of the EU system, accounting for about 33 percent of imports to the 25-nation bloc under the scheme, while India is in second place at 11 percent.
Some estimates reckon Chinas share of the worlds textile market will rise to about 50 percent when the Multifiber Agreement allowing countries to set import quotas disappears.
Kilde: www.worldbank.org
