COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 29.01.1997 
COM(97) 11 final 
2nd REPORT 
from the Commission 
on the quantitative quotas 
and 
surveillance measures 
applicable to certain non-textile 
products originating in the 
People's Republic of China 

Table of contents 
INTRODUCTION 1 
Page 
A. Historical background 
B. Objective of the Commission report 
C. Methodology P. 3 
p. 3 
p. 4 
CHAPTER 1 - Implementation of the quantitative restrictions 
I. Background and evolution since the previous report 
II. Management of the quotas 
III. Developments in the trade of the products subject to quantitative 
restrictions p. 6 
p. 6 
p. 8 
p. 10 
CHAPTER 2 - Should Community quotas be maintained? p. 14 
I. Approach adopted by the Commission 
II. Analysis of the sectors concerned 
1. Footwear 
2. Porcelain or china tableware and ceramic tableware 
3. Glassware 
4. Toys 
III. Conclusions 14 
15 
15 
20 
29 
36 
40 
CHAPTER 3 - Implementation and maintenance of surveillance measures p. 42 
I. Purpose of surveillance measures 
II. Implementation 
III. Trends in imports of products under surveillance 
IV. Should surveillance measures be maintained? p. 42 
p. 42 
p. 43 
p. 44 
CHAPTER 4 - Conclusions and proposals of the Commission p. 45 
INTRODUCTION 
A. Historical background 
By Regulation (EC) No 519/94 of 7 March 1994, the Council of the European Union 
introduced Community-wide quantitative restrictions on 7 categories of products 
originating in the People's Republic of China, namely gloves, footwear, porcelain 
tableware, ceramic tableware, glassware, car radios and toys, and certain surveillance 
measures. 
The introduction of such measures had been agreed, in principle, by the Council in 
December 1993 as part of a global package including acceptance of the Uruguay 
Round results, reinforcement of the trade policy instruments and completion of the 
common commercial policy. 
The latter aspect of the package involved the unilateral elimination of 6.417 national 
quantitative restrictions (of which some 4.700 concerning Chinese products) and the 
introduction of Community-wide quotas on imports from China of a limited number 
of sensitive products, whose imports were at that time subject to national restrictions. 
The introduction of such quotas was based on the following considerations : 
a) the sensitivity of the Community industries concerned; 
b) the increasing threat posed by imports from China to these industries, made 
more acute by the particular characteristics of the Chinese economy. 
B. Objective of the Commission report 
In the course of discussions in the Council on Regulation (EC) No 519/94, the 
Commission made the following statement which was included in the minutes : 
"The Commission will report to the Council before 31 December 1995 and before 
the 31 December of every year thereafter on the implementation of the surveillance 
measures and the quantitative restrictions provided for in Annexes II and III, the 
need to maintain such measures, and will propose, as the need arises, the 
appropriate adjustments. " 
Like the first report (doc COM(95) 614 final of 6 December 1995), this second 
report is in response to the above-mentioned commitment. 
C. Methodology 
1. The report first reviews the implementation of the quantitative restrictions, including 
the problems raised by their administration. 
In its second chapter, it addresses the question of the need to maintain the 
quantitative restrictions introduced by the Council. To this end, the Commission 
examined whether the conditions which justified the introduction of these measures 
in 1994 are still present, in particular: 
a) the sensitivity of the Community industries concerned, and 
b) the threat posed by imports from China to these industries. 
This examination was conducted sector by sector. 
The implementation of the surveillance measures and the need to maintain them is 
dealt with in the third chapter. 
The fourth chapter presents, on the basis of the above analysis, the Commission 
conclusions. 
2. As in 1995, the Commission faced considerable difficulties with regard to the 
collection of statistical and factual data on the industries concerned, as well as on the 
development of the Chinese export potential. In particular, it should be noted that 
obtaining reliable information on the prices of Chinese imports remains difficult. 
Extensive efforts were made to obtain information from Community producers and 
Community importers and traders, who were approached directly or through their 
representative organizations. The response was, however, incomplete and therefore 
again rather unsatisfactory. 
Regarding information on the state of the Community industry, these difficulties 
were amplified by the fact that producers generally produce a wide range of products, 
not just those subject to quota, and that nearly all these sectors are made up of many 
small and medium-sized enterprises, of which a significant proportion are not even 
known by the relevant national federations. 
On the importers' side, the Commission received answers of a general nature from 
only a small number of associations or individual importers. 
It should also be noted that only one Member State, the United Kingdom, submitted 
factual data and comments to the Commission for the purposes of this report. 
3. In general, the analysis is based on figures for 1995, as full statistics for 1996 were 
not available at the time of the drafting of this report. However, trends for 1996 have 
been used, where possible. 
CHAPTER! 
IMPLEMENTATION OF THE QUANTITATIVE RESTRICTIONS 
I. Background and evolution since the previous report 
1. Since their entry into force in March 1994, the quotas have been modified on 
four occasions: 
In July 1994, the Council decided to increase the 1994 level of the quota on 
stuffed toys since information obtained from the economic operators and the 
Member States indicated that the balance between the objective of ensuring 
an appropriate protection of the Community toy industry and that of 
maintaining an acceptable level of trade with the People's Republic of China 
had not been satisfactorily achieved for this product. 
In March 1995, the quotas were further modified. 
This was, in the main, to take account of the extension of the quantitative 
restrictions to Austria, Finland and Sweden. The adaptation was done on the 
basis of the actual imports of these countries from China in 1993; 
This modification was also aimed at solving problems which had arisen in 
the implementation of the quotas. Where it was compatible with the 
protection of the sectors concerned, the Council agreed a certain relaxation 
of the quotas (ceramic and porcelain tableware, glassware, car radios, toys, 
certain sport footwear through the reduction of the price break for hi-tech 
shoes from ECU 12 to ECU 9). In addition, three subdivisions of quotas 
were eliminated, two on shoes and one on working gloves. 
In April 1996, following the conclusions contained in the Commission's 
first report on the surveillance measures and quantitative quotas applicable 
to imports of non-textile products from China, the Council decided by 
Regulation (EC), No 752/96 to relax further the quota regime vis-à-vis 
China: 
- the quotas on 3 products (gloves, car radios and combined car radios) 
were removed; 
- the 3 toy quotas were merged into one quota* to give more flexibility 
to traders and allow them to react more rapidly to market changes; 
'••' •'•_"••:• ' "" "•.'•" *••"••'•'•'." '' . •- :."•••••- ' :. • 1 
••.-, the remaining quotas were increased (ceramic and porcelain 
tableware and glassware by 10% and shoes by 2'%). ' 
Finally, in October 1996, Council Regulation (EC) No 1897/96 excluded 
glass-fronted clip-frames from the quota applicable to glassware, since their 
inclusion was not considered necessary for the protection of the sectors of 
Community industry concerned. 
•:K-*y-
II. Management of the quotas 
a) Legal basis and objectives 
1. The management of Community quotas is based on Council Regulation (EC) No 
520/94 of 7 March 1994 establishing a Community procedure for administering 
quantitative quotas and Commission Regulation (EC) No 738/94 of 30 March 
1994 laying down certain rules for the implementation of Council Regulation 
(EC) No 520/94 (mostly concerning procedural aspects, including the common 
import licence form). 
It should be recalled that before the adoption of Regulation (EC) No 520/94, 
quotas were allocated among Member States, and not directly to importers. 
Since the reform of March 1994, uniform criteria, determined by the 
Commission after consultation of the Management Committee, apply to all 
Community importers, in conformity with the principles of the Single Market 
and the relevant case law of the European Court of Justice. 
2. In the management of the quotas, the Commission has been guided by the 
following principles : 
that administrative procedures would not add to the intended effect of the 
quotas on trade and that the available quantities would be fully used; and 
that non-discrimination among all Community importers, no matter where 
they are established and no matter where they submit a licence application 
would be ensured. 
b) Functioning of the quota management system 
1. In conformity with the above-mentioned principles, the Commission felt it 
appropriate to resort to the first allocation method provided for by Regulation 
(EC) No 520/94, i.e. the method based on traditional trade flows, which 
guarantees that "traditional" importers receive at least a part of their previous 
trade performance realized during a reference period, while ensuring a fair 
access to the quotas to non-traditional importers. 
This allocation method, while it would appear to have worked satisfactorily, did 
raise however certain practical problems in relation to the choice of the reference 
period and the determination of the relative shares set aside for traditional and 
for other importers respectively. 
In addition, the management of the part of the quotas set aside for the non-
traditional importers raises a problem. The chronological method ("first come, 
first served"), whose use for the management of the 1994 quotas did not prove 
practicable, has been replaced by the third method provided for by Regulation 
(EC) No 520/94, i.e. the method of proportional allocation to the quantities 
requested. The problem resulting from the unrestricted access to that part of the 
quota however remains. In 1994, 12.232 import licence applications were 
submitted by non-traditional importers; this figure grew to 21.926 applications 
for the first tranche of 1995, to 19.613 for the second tranche (with fewer 
product quantity to be allocated) and to 28.204 applications for the allocation of 
the 1996 quotas. This year the number of applicants for the 1997 allocation has 
decreased to 19.708, but considering that the number of products under quota 
has been further reduced, the problem remains. This extremely high number of 
applications results in those non-traditional importers being allocated more and 
more limited quantities, a fact which is likely to lead to underutilization of the 
quotas. The Commission considers that a guarantee set at an appropriate level 
would be the best option to eliminate speculative requests. This solution, 
however, has so far met with opposition of the } ember States. 
2. In the management of the quotas, the Commission made every effort to satisfy 
the wish of importers to receive information as early as possible on their 
allocation for the following period. To this end, the Commission opened the 
allocation procedures for the 1997 quotas well before the beginning of the quota 
year. 
10 
3. In the same spirit, the Commission modified the initial duration of the validity of 
the import licences in order to meet the importers' requests for flexibility. The 
"1997 management rules currently provide for a 12-month validity of the import 
licences, the Council having adopted the Commission proposal to allow the 
carry-over of unused quotas to the following quota year. 
4. Concerning the administrative procedures, the Community management system 
is based on a "single-stop" approach, whereby all Community importers, 
irrespective of where they are established in the Community, may submit a 
licence application to the competent authority of the Member State of their 
choice, and obtain an import licence which is valid throughout the Community. 
In addition, the application procedure has been made as simple as possible and 
the formalities reduced to a strict minimum; the licencing process is totally free 
of charge for the Community importers. 
c) Conclusion 
As is unavoidable when trade is subject to restrictions, the management of these 
quotas raised some problems. The Commission considers, however, that the system 
adopted has on the whole worked well, thanks to the cooperation of Member States. 
In particular, it is felt that any (legitimate) concerns that the management system 
should not add to the effect of the quotas, as decided by the Council, have been met. 
III. Developments in the trade of the products subject to quantitative restrictions 
The following two tables give a factual summary of the developments in the trade of 
each product subject to quantitative restrictions, both in terms of volume and value. 
a) Evolution in volume of the products concerned (imports and quotas) 11 
Products 
rubber and plastic 
uppers shoes 
(6402 99) 
leather shoes 
(6403 51 &59) 
leather shoes 
(6403 91 &99) 
textile shoes 
(6404 11) 
textile shoes 
(6404 19 10) 
total shoes Unit 
pairs 
pairs 
pairs 
pairs 
pairs 
pairs Imports 
1992 
33.498.463 
3.030.801 
24.860.632 
23.849.323 
34.789.708 
120.028.927 1993 
37.894.757 
3.942.271 
36.215.974 
20.853.012 
31.039.693 
129.945.707 1994 
37.259.535 
(9.989.423 hi-
tech incl.) 
2.614.453 
. 30.661.174 
(14.122.199 
hi-tech incl.) 
22.739.304 
(6.288.335 hi-
tech incl.) 
26.575.875 
119.850.341 
(33.361.807 
hi-tech incl.) Quotas 
1995 quotas 
(annual basis) 
39.151.481 
(+hi-tech 
exemption) 
2.740.116 
11.881.963 
(+hi-tech 
exemption) 
18.228.780 
(+hi-tech 
exemption) 
31.897.716 
103.900.056 
(+ hi-tech 
exemption) 1996 quotas 
(annual basis) 
39.151.481 
(+hi-tech exemption) 
2.795.000 
12.120.000 
(+hi-tech exemption) 
18.228.780 
(+hi-tech exemption 
31.897.716 
104.192.977 
(+ hi-tech 
exemption) unused 
quantities 
in 1995 
8.437.277 
924.173 
1.934.408 
5.721.246 
7.644.723 
24.661.827 
•figures on hi-tech shoes from Community surveillance are based on surveillance documents issued, which do not necessarily reflect actual levels of imports 
•figures on unused quanti tites based on import licences returned to the Member States (no data available for Portugal) 
12 
Products 
porcelain 
tableware 
(691110) 
ceramic 
tableware 
(691200) 
glassware (7013) 
stuffed toys 
(9503 41) 
toys (9503 49) 
toys (9503 90) 
total toys Unit 
tonnes 
tonnes 
tonnes 
ECU 
ECU 
ECU 
ECU Imports 
1992 
43.960 
33.247 
14.374 
260.117.000 
110.648.000 
621.200.000 
991.965.000 1993 
42.300 
36.681 
16.722 
302.919.000 
171.334.000 
678.864.000 
1.153.117.000 1994 
58.917 
46.851 
12.462 
247.764.000 
88.686.000 
478.069.000 
814.519.000 Quotas 
1995 quotas 
(annual basis) 
43.619 
33.000 
14.210 
274.764.243 
132.767.177 
649.465.212 
1.056.996.632 1996 quotas 
(annual basis) 
45.800 
34.650 
15.600 
NA(I) 
NA(1) 
NA(I) 
1.056.996.632 unused quantities 
in 1995 (,) 
7.686 
3.912 
3.714 
50.990.985 
34.034.572 
135.279.994 
220.305.551 
Source : - EUROSTAT 
(*) figures on unused quantitites based on import licences returned to the Member States (no data available for Portugal) 
(1 ) breakdown no longer available because of merger of the quotas 
b) Import prices of products originating in China 13 
Product Unit price in 1993 Unit price in 1994 Unit price in 1995 
Footwear : 
- 6402 99 
-6403 51 
- 6403 59 
-6403 91 
- 6403 99 
- 6404 11 
-6404 19 10 3,68 ECU/pair 
9,76 ECU/pair 
3,30 ECU/pair 
9,54 ECU/pair 
7,45 ECU/pair 
3,94 ECU/pair 
1,00 ECU/pair 3,68 ECU/pair 
11,86 ECU/pair 
3,31 ECU/pair 
10,17 ECU/pair 
8,02 ECU/pair 
4,33 ECU/pair 
0,90 ECU/pair 4,14 ECU/pair 
6,65 ECU/pair 
2,99 ECU/pair 
11,25 ECU/pair 
9,33 ECU/pair 
7,19 ECU/pair 
0,82 ECU/pair 
Porcelain tableware(*) : 
6911 10 1.105,25 ECU/tonne 1.011,58 ECU/tonne 1.049,20 ECU/tonne 
Ceramic tableware(*) : 
6912 00 1.060,06 ECU/tonne 1.054,41 ECU/tonne 1.112,21 ECU/tonne 
Glassware(*) : 
7013 1.961,07 ECU/tonne 2.227,57 ECU/tonne 2.547,29 ECU/tonne 
Toys: 
-9503 41 
- 9503 49 
- 9503 90 7.831 ECU/tonne 
6.013 ECU/tonne 
4.812 ECU/tonne 7.314 ECU/tonne 
6.106 ECU/tonne 
4.926 ECU/tonne 6.249 ECU/tonne 
5.983 ECU/tonne 
4.911 ECU/tonne 
Source : EUROSTAT; (*) 1995 Prices until September 
.. •.'. •'• V ' • -14 
CHAPTER2 
SHOULD COMMUNITY QUOTAS BE MAINTAINED? 
I. Approach adopted by the Commission 
To reply to this question the Commission sought to find out if the conditions that had 
provoked the introduction of quantitative restrictions in 1994, namely the sensitivity 
of the Community industries concerned and the threat posed by Chinese products to 
them, still prevailed. 
It did this by carrying out a sector-by-sector analysis on the basis of the following 
economic indicators: 
1. Structureof the industry 
2. Production 
3. Employment 
4. Import trends 
5. Import prices 
6. China's export potential 
15 
IL Analysis of the sectors concerned 
Situation of the Community footwear industry 
1. Structure of the industry 
There were no major changes in the structural features outlined in the first report. 
With more production unit closures, the number of producers again fell, by 1%. 
Similar trends obtain in the three new Member States. 
2. Community production 
Despite a sluggish consumer market, EU footwear manufacturers saw the erosion 
of their share of the Community market ease off in 1995, with sales stabilizing in a 
contracting market. Exports, up only 1.5%, did not increase as fast as in previous 
years. The drop in EU production was therefore quite small. 
1000 pairs 
Production 
Exports 
Consumption 
Sales/Community 
production on internal 
market 
Market share of 
Community production 1992 (x) 
1 081 568 
271 438 
1 549 124 
810 130 
52% 1993 (x) 
1 090 236 
291 889 
1 529 327 
798 347 
52% 1994 (x) 
1 108 143 
339 687 
1 525 128 
768 446 
50% 1994 (xx) 
1 125 575 
NA 
NA 
NA 
NA 1995 (x) 
1 099 119 
343 024 
1 482 125 
756 095 
51 % 1995 (xx) 
1 116 153 
306 331 
1 549 201 
809 822 
52% 
(x) EUR 12 
(xx) EUR 15; 
Full and comparable specific figures for products under quota are not available but the 
general trends outlined below should give a fairly representative idea of how they fared. 
Employment 
The rate of job losses mirrored the drop in production, falling steadily but more 
slowly. 
16 
Numbers directly 
employed Eur 12 
Eur 15 1991 
318 819 1992 
302 819 1993 
291465 1994 
295 717 
303 129 1995 
292 112 
299 426 
4. Current restructuring 
The industry's moves to increase competitiveness continued. Pressure from 
competitors eased as a result of Community quotas, enabling such moves to be 
brought to bear more quickly and thoroughly. Besides improvements to the range 
and quality of products, and the automation of most manufacturing stages, there 
was investment in the development of computerized data exchange systems, 
particularly with customers, so optimizing marketing. 
B. Sensitivity to Chinese imports 
1. Import trends 
Footwear imports into the Community fell 7% on the year to account for around 
50% of the total market, i.e. a slight drop on 1994. 
The table below gives an overview of import trends from the main supplier 
countries. 
1000 pairs 
Non-EC total 
China 
Indonesia 
Vietnam 
Thailand 
India 
South Korea 
Taiwan 
Brazil 1992 (x) 
738 994 
293 197 
85 960 
12 255 
69 981 
14 656 
54 999 
37 145 
24 570 1993 (x) 
731 580 
296 700 
86 673 
32 752 
61 118 
18 393 
30 410 
21538 
23 209 1994 (x) 
786 675 
316413 
105 461 
61 509 
55 541 
20 980 
20578 
18 102 
17 809 1995 (x) 
730 836 
280 491 
99 573 
74 834 
35 930 
19 294 
14 283 
19 452 
NA 1995 (xx) 
750 542 
294 990 
102 275 
76 516 
37 627 
19718 
15 237 
20 455 
NA 
(x) EUR 12 
(xx) EUR 15 
These trends reflect the general stagnation of the European market, where 
consumption is at a fivé-year low. 
Imports from China and from all the Community's main suppliers except Vietnam 
fell. In the case of China, this was mainly due to the cumulative effect of the market 
slump and the quotas. 
17 
The overall picture for imports from China is as follows: 
1000 pairs 
Quota footwear 
Non-quota 
footwear 
Total 1992 
131671 
161526 
293 197 1993 
137 679 
159 021 
296 700 1994 
103 908 
212 505 
316413 1995 (x) 
70911 
209 580 
280 491 1995 (xx) 
75 940 
219 050 
294 990 
(x) EUR 12 
(xx) EUR 15 
The biggest fall was in quota footwear, which accounted for a quarter of all imports 
from China. The likely explanation is that Chinese exporters diversified their 
production in part to avoid the quotas. As a result, they were still able to keep up 
market pressure. 
Chinese products still represented 38% of all footwear imports into the EU and 
took a fifth of the total market. Consequently, they continued to have a considerable 
influence on Community market conditions. 
In the specific case of the tariff headings subject to quotas, the slowdown was 
slightly more pronounced for leather footwear than for other types: 
pairs 
6402 99 
6403 51 and 59 
6403 91 and 99 
6404 11 
6404 19 10 1991 (x) 
24516513 
2 547 468 
12 066 280 
23 922 387 
34 466 034 1992 (x) 
33 498 463 
3 030 801 
24 860 632 
23 849 323 
34 789 708 1993 (x) 
37 894 757 
3 942 271 
36 215 974 
20 853 OP 
31039 693 1994 (x) 
37 259 535 
2 614 453 
30 661 174 
22 739 304 
26 575 875 1995 (x) 
23 591 101 
1 100 882 
14 848 403 
12 717 692 
18 653 036 1995 (xx) 
26 046 878 
1 241 836 
15 616 755 
14 148 760 
18 885 207 
(x) EUR 12 
(xx) EUR 15 
The 1995 fall-off in" quota imports from China does not appear to have continued 
into 1996: between January and April of this year, imports into the eight largest 
importing Member States rose 27% year on year. 
18 
Import prices 
For the reasons given in the first report to the Council, it is not generally possible to 
make direct comparisons between imports from China and Community footwear 
products. However, anti-dumping investigations now under way do show that 
prices have been very sharply undercut. 
A comparison between the average prices of Chinese imports and Community 
exports is also very telling: 
Product 
6402 99 
6403 51 
6403 59 
6403 91 
6403 99 
6404 11 
6404 19 10 China 
EU 
China 
EU 
China 
EU 
China 
EU 
China 
EU 
China 
EU 
China 
EU 1992 (x) 
3.17 
6.43 
8.66 
21.28 
3.56 
17.38 
8.63 
20.41 
6.72 
14.82 
3.14 
9.14 
0.94 
3.85 1993 (x) 
3.68 
5.98 
9.76 
21.19 
3.30 
16.64 
9.54 
18.71 
7.45 
14.12 
3.94 
8.80 
1.00 
4.12 1994 (x) 
3.68 
6.24 
11.86 
21.50 
3.31 
16.43 
10.17 
19.73 
8.02 
14.17 
4.33 
8.25 
0.90 
4.12 1995(x) 
4.14 
6.08 
6.65 
21.07 
2.99 
18.20 
11.25 
20.28 
9.33 
14.64 
7.19 
10.75 
0.82 
4.01 1995 (xx) 
4.09 
6.17 
6.74 
21.07 
3.16 
18.11 
11.15 
20.87 
NA 
14.68 
7.15 
10.74 
0.83 
4.03 
ECU 
(x) EUR 12 
(xx) EUR 15 
In most cases, too, the average unit prices of imports from China in 1995 were 
lower than those of any other main Community supplier. This is despite the fact 
that the prices of some products were on an upward trend (owing perhaps to a 
system of quotas per number of pairs and to more sophisticated, and therefore 
expensive, products which are now likely to be exported). For heading 6404 11, all 
imports rose sharply in price (e.g. Thailand up 43%), putting the Chinese figure in 
perspective. For 6403 51, however, there was a marked drop in price. 
19 
C. . Opinion of the importers 
The FTA (Foreign Trade Association) have argued that quantitative restrictions on 
footwear were not justified on the grounds that in the medium term they would 
threaten the export chances of the European shoe industry, as they would provoke 
similar actions from exporting countries. Furthermore, FTA maintains that import 
restrictions hinder the relocation of shoe production to locations with better factor 
endowments outside the EU. 
D. Conclusion 
The footwear industry remains highly sensitive to the sheer volume of imports 
from China, their share of the Community market, substantial undercutting and the 
export potential of Chinese exporters. Their market penetration was checked 
briefly in 1995 but this was due to quotas and, more generally, to weak demand 
overall. The expected upturn in the market along with improvements to the quota 
system will probably lead to further inroads into the Community market for the 
most sensitive products currently under quota, and this needs to be kept under 
control. 
20 
#K^H©-iii(iW^i^B . * * i liî* * 
In general terms, statistics on the ceramics industry are hard to come by, since producers 
are very reluctant to give what they consider to be commercially sensitive information to 
their federations. Moreover, in the tableware sector, there are many very small producers 
which are not members of any national federation. 
A. Structure of the EU ceramic tableware sector 
Output in the tableware sector in 1995 represented 12.5% of the total output of the 
ceramics industry in the European Union in value terms, but in terms of numbers 
employed, it accounts for about 30%. It is the most labour intensive of the six ceramics 
sub-sectors, and is therefore particularly vulnerable to the effects of low-priced imports. 
The sector is made up of some big producers, such as Villeroy & Boch of Germany, and 
Royal Doulton and Wedgwood of the UK, the three biggest producers in the world, but 
also a large number of very small and medium sized enterprises. The European 
federation estimates it has as its members 171 independent producers which may or may 
not have more than one plant. In addition, there are many small producers throughout 
Europe which are not members of any federation, and keeping track of them is very 
difficult. This is particularly the case in Spain and Italy. 
All producers have a vast range of products, which differ greatly between producers and 
depend to a large extent on public taste and disposable income. 
Originally, production of ceramic products was built up near to the source of raw 
materials, and energy, and where transport facilities were good. These are no longer the 
primary deciding factors, but the sector is still very concentrated geographically, with, for 
example, big concentrations in Staffordshire in the UK, the Limousin in France, northern 
Bavaria in Germany, and Maastricht in the Netherlands. When the industry was set up in 
Staffordshire (an area which became known as "The Potteries", as within a century of the 
first production there were estimated to be some 400 different producing units), there 
were vast deposits of clay and coal, and a well-established canal system. 
During the discussions in the Council Commercial Questions Group, it was suggested 
that that part of the quota on CN 6912.00 referring to stoneware could be abandoned 
since there was no longer any production of stoneware in the European Union. This 
statement appears to be incorrect: stoneware continues to be produced in the EU, notably 
in the UK, although precise production figures are not available, since stoneware (CN 
6912.00.30) and earthenware (CN 6912.00.50) are usually reported together. There is 
significant intra-EU and extra-EU trade in the product. 
21 
B. Trends in production and apparent consumption 
The European ceramic tableware sector is represented at European level by the 
Fédération européenne des Industries de Porcelaine et de Faïence de Table et 
d'Ornementation (FEPF), which in turn is a member of the general European ceramics 
federation, Cérame-Unie. Cérame-Unie estimates that it represents some 75% of 
tableware producers, given that some of the smaller producers in Spain and Italy may not 
be members of their national federations, and the figures given below are estimates of 
production, etc., for EUR 12. The figures directly below concern all ceramic products. 
Units: million ECU 
Production 22761.7 21216.2 22187.4 22581.3 
Exports 3301.9 3667.2 4217.4 4475.4 
Imports 1233.0 1259.4 1342.1 1360.5 
Apparent 
Consumption 20692.8 18808.4 19312.1 19466.4 
EU sales on 
domestic 
market 19457.4 17595.2 17981.5 18105.9 
EU market 
share 94.03% 93.55% 93.11% 93.01% 
Imports 
market share 5.97% 6.45% 6.89% 6.99% 
Direct 
employment 319899 292889 280586 279270 
N° companies c2500 NA NA c2000 
Import and export figures above are taken from COMEXT. Production and employment 
figures come from the DEB A database (Eurostat). 
In comparison, similar information on tableware 
22 
CN 6911 + 6912 + 6913 Units: million ECU 
Production 
Exports 
Imports 
Apparent 
Consumption 
EU sales on 
domestic 
market 
EU market 
share 
Imports 
market share 
Direct 
employment ^WWWPST**WK»^!SHBPWP WOwRR^^^Ç^wll^WI 
3600 
856.4 
501.6* 
668.2 
375.4* 
3411.8 
2743.6 
80.4% 
19.6% 
105 000 3400 
901.4 
544.7* 
659.0 
370.0* 
3157.6 
2498.6 
79.1% 
20.9% 
90 000 m^mmwm 
3000 
1002.6 
653.9* 
677.0 
399.3* 
2674.4 
1997.8 
74.7% 
25.3% 
81000 n/a 
(decreasing) 
1043.4 
705.6* 
651.7 
377.6* 
n/a 
n/a 
n/a 
n/a 
c75 000** 
Source: imports/exports from COMEXT 
production and employment from Cérame Unie 
*CN 6911.10+ 6912.00 
** rough estimate by Cérame-Unie 
As is evident from the figures above, import penetration for all ceramic products together 
is not significant, except that it must be borne in mind that Europe is a strong traditional 
exporter of ceramic products, and exports form an integral and indispensable part of 
many European companies' order books. v 
Conversely, figures for tableware only show a more marked penetration of imports 
(25.3% in 1994). 
It should be further noted that the Chinese share of imports of all ceramic products has 
been climbing steadily, and accounted for 14.9% in 1995 (in value terms). 
C. Trends in imports and exports 
As mentioned above, exports are very important for EU tableware producers, many of 
whom export up to 30% of their production, although the quantity of tableware exported 
is generally well below import levels. The tables below show EU trade in 1995 with its 
biggest importers, and its biggest export markets-. 
23 
EU Imports Source: COMEXT 
Origin 
China 
Poland 
Czech Rep. 
Romania 
Hong Kong 
Philippines 
Bulgaria 
Indonesia 
Total 28134 
16179 
11757 
7734 
4600 
3917 
3759 
3218 
101014 WÊBSBSBSÊ 
27.85 
16.02 
11.64 
7.66 
4.55 
3.88 
3.72 
3.19 
100.00 Kil^HHi 
•RHHHIi 
24845 
9667 
817 
5579 
885 
1191 
676 
5014 
98829 ÊBfÊBÊlf&ÊÈfëÈÊÊÊÊÈÊiÊ:-
25.14 
9.78 
0.83 
5.65 
0.90 
1.21 
0.68 
5.07 
100.00 
EU Exports Source: COMEXT 
$£k?Ùh^ 
Destination ;%Itfftal?fxportS: 
USA 11081 28.69 63004 61.38 
Czech Rep. 4608 1.93 423 0.41 
Switzerland 3520 9.11 3663 3.57 
Japan 3300 8.54 4371 4.26 
Israel 2189 5.67 4095 3.99 
Australia 1791 4.64 5364 5.23 
Canada 1696 4.39 3877 3.78 
China 0.02 0.00 
Total Extra EU 38624 100.00 102646 100.00 
So whilst the majority of imports into the EU of porcelain and china, and earthenware, 
are from China, EU exports to China remain virtually nil. The Chinese do not import, 
presumably for supply reasons, but are major exporters since their exports are priced not 
in accordance with production costs, but in accordance with foreign currency needs. 
The three biggest tableware producing countries of the EU are France, Germany, and the 
United Kingdom where producers consider great harm has been done to the main 
producing areas by cheap Chinese imports over the years. Developments over recent 
years, in French, German, and British consumption of porcelain and china tableware (CN 
6911) for instance, are shown below for the last three years for which figures are 
available. 
24 
FRANCE 
Source: COMEXT '000 ECU 
Domestic sales 
imports 
Of which, China 
China as % total imports 
Apparent consumption 
China as % of apparent 
consumption WMË9MÊÊÊ 
94440 
79167 
9757 
12.3 
173607 
5.6 WÊSBÊÊÊ-
110471 
73405 
15260 
20.8 
183876 
8.3 IH^^^SK 
111555 
85442 
11473 
13.4 
196997 
5.8 WË^ÈÈk 
102261 
82230 
6906 
8.4 
184491 
3.7 
* Imports are extra-EU plus imports from other Member States. 
GERMANY 
Domestic sales 
Imports 
Of which, China 
China as % total imports 
Apparent consumption 
China as % of apparent 
consumption 1992 
494948 
93363 
3773 
3.6 
588311 
0.6 1993 
610771 
106015 
4334 
4.1 
716786 
0.6 1994 
579813 
111979 
6358 
5.7 
691792 
0.9 1995 
n/a 
119284 
7976 
6.7 
n/a 
n/a 
UNITED KINGDOM 
Domestic sales 
Imports 
Of which, China 
China as % total imports 
Apparent consumption 
China as % of apparent 
consumption 1992 
109292 
44778 
1011 
2.2 
154070 
0.6 1993 
147764 
43344 
894 
2.1 
191108 
0.5 1994 
168197 
46387 
2943 
6.3 
214584 
1.4 1995 
174592 
44677. 
3728 
8.3 
219269 
1.7 
It should be noted that the figures relating to imports from China above, and the 
calculations resulting, are significantly different from the levels in last year's report. This 
is because when the report was being written last year, figures covering imports from 
China were supplied by Cérame-Unie members. Checking these in COMEXT now 
reveals a number of discrepancies, which means that the percentage share of Chinese 
imports in total imports into the three Member States above has been reduced. 
However, it must be stressed that total imports means imports not only from third 
countries, but also includes imports from all other Member States, and there is 
significant intra-EU trade in ceramics tableware. 
\ . . ._ 25 
Consumption in these countries in the three years mentioned above is down on previous 
years, as tableware producers consider that the recession is far from over for their 
products, and that the threat from Chinese imports is growing steadily. 
D. Prices 
Average prices of Chinese imports are well below European prices both for porcelain and 
chinaware and for earthenware. Below is a comparison of average prices charged for 
imported Chinese goods, with the average price of similar products manufactured in the 
EU. 
ECU/kg Source: Cérame-Unie members 
CN6911 
CN6912 Chinese 
EU 
Chinese 
EU 1991 
1.21 
5.65 
0.96 
2.43 1992 
1.06 
5.55 
1.04 
2.38 1993 
1.11 
4.15 
1.08 
2.21 1994 
1.04 
5.34 
1.19 
2.34 1995 
1.10 
3.39 
1.10 
2.06 
For the two specific products subject to quota, Chinese prices compared with the average 
Intra-EU levels in 1995 were: 
ECU/kg Source: COMEXT 
CN 691110 1.06 5.57 
CN 6912.00 1.08 2.46 
As can be seen from the above figures, whilst the existence of quotas may have limited 
the amount of Chinese imports, the prices of these have remained fairly stable. European 
prices have, however, come increasingly under pressure, not only because of the presence 
of low priced imports notably from south east Asia and central and eastern Europe, but 
also because there is significant production over-capacity in the European Union. 
E. Employment trends 
Numbers employed in the ceramics industry have been decreasing steadily in recent 
years, as can be seen from the table shown below. 
26 
1000 
Total ceramic Tableware 
industry* sector 
1992 320 105 
1993 293 103 , 
1994 281 81 
1995 279 75 Tableware as 
% of total 
32.8 • 
35.2 
28.8 
26.9 
* includes coarse ceramics - refractory products, building bricks 
and roof tiles. 1995 figures are estimates. 
Figures for the total industry employment come from the Panorama of European Industry; 
figures for the tableware sector are Cérame-Unie estimates. Cérame-Unie has also 
provided some estimates of the progression in employment levels in the tableware sector 
in certain Member States over the last two years: 
France 4005 3894 
Germany 24725 21424 
Portugal 12278 11898 
Spain 656 n/a 
United Kingdom 22085 22000 
Italy 6060 n/a 
Netherlands 640 605 
Austria 994 n/a 
It is not easy to determine how much of the decline in employment in this sector is a 
direct result of growing imports of low priced Chinese tableware, but there are a number 
of examples of closures or relocations where the existence of cheap imports have played 
a major role in the decision making process: 
1. 3 plants in the United Kingdom have closed down over recent years, and others 
are working at reduced capacity 
2. Royal Doulton (UK) has started to produce tableware in Indonesia in order to be 
able to take advantage of cheaper labour costs and better face low priced 
competition in its European markets 
3. Villeroy & Boch (D) has moved part of the production from its Mettlach plant 
in Germany, where employment and social costs make up some 35% of total 
cost, to plants in France and Hungary, where the corresponding figures are 25% 
and 11% respectively. The reason for this decision is specifically to better face 
competition from low priced imports. 
27 
Such a move is bound to have serious effects for the town, where, out of a 
population of around 8000, some 3500 are employed in Villeroy & Boch's 
plants producing tiles, sanitary ware, and tableware. The current numbers 
employed are already down from 5500 a few years ago, in an area where there is 
little in the way of alternative employment. In addition, unemployment in the 
Saarland is well above the German national average. 
N.B. Numbers employed in the ceramics industry as a whole went down by an 
estimated 12.7% between 1992 and 1995; ' numbers employed in the 
tableware sector went down by an estimated 28.6% over the same period. 
F. Counterfeiting problem 
An additional and increasing problem which EU tableware manufacturers have with 
Chinese imports is that they are often counterfeit. That is, Chinese producers have been 
known to send representatives to Europe where they copy European designs, which are 
produced in China and sold in Europe at much lower prices than the European products. 
Examples have been shown in the past of Chinese products being' sold in European 
markets, as virtually exact replicas of EU products (evidence provided by Cérame Unie is 
available if necessary). 
G. Chinese tableware sector 
Very little is known of the actual structure of the tableware sector in China, although it is 
known China exports around 25% of its total production. In 1995, a German magazine 
estimated that Chinese tableware production amounted to about 6 billion pieces, for a 
total value of DM 3 billion that year, coming from around 1000 production units with 
some 260 000 workers. 
As far as is known, no EU producers have any involvement in the production of ceramic 
tableware in China. It does not seem possible at this stage that there would be any big 
Chinese market for their products. There is a market for their products in other south east 
Asian countries, though, and production in China could prove attractive in the longer 
term. 
H. Opinion of the Community industry 
Cérame-Unie, which represents the major European ceramics producers remains firmly in 
favour of the continuation of the quotas. This position is endorsed by an important 
number of members of the European Parliament (Ceramic Intergroup). 
• : •* 28 
I. Opinion of the importers 
FTA (Importers association) believes that due to a suppressed demand the impact of the 
quota in the ceramics arid porcelain sector is less dramatic, than in other sectors 
concerned. However FTA. still maintains that any quantitative restriction should be 
abolished. 
J. Conclusion 
China continues to be à state-trading country in which it is thought that more than half of 
industrial output is still effected by state enterprises, and where the financial system, and 
the change of hard currencies, remains in the hands of the State. This means that Chinese 
exporters can go on selling tableware on European markets at prices which are not cost 
related, and this continues to damage the EU market. 
This situation exacerbates already difficult circumstances for a sector which is, as 
mentioned above, highly geographically concentrated, where demand is falling, and 
where there is a certain amount of overcapacity. 
In view of the above, the tableware sector remains sensitive because of the high volume 
of the Chinese imports, their considerable disruption potential and the substantial price 
undercutting. 
29 
A. Structure of the EU glass tableware industry 
In 1995, the glass tableware sector in the European Union accounted for 3.94% of all 
glass production in the EU, as opposed to container glass which is the largest glass 
sub-sector with 64.73%, and flat glass with 25.46%. 95% of all EU glass tableware is 
produced in France, Germany, Italy and the UK. 
France occupies a dominant position, accounting for over half EU output. Its largest 
producer, Verrerie Cristallerie d'Arques is a world leader, employs around 11 000 people, 
produces in the region of 5 million articles, and exports some 75% of its production. 
There are other large producers, such as Schott(D), Bormioli Rocco(I), and Durobor 
(B/UK), but the majority of producers are small and medium-sized enterprises. The 
principal competition comes from the USA and Japan, dominated by Corning and Asahi 
respectively, although competition from the far east is growing. 
Total production in 1995 was 944 351 tonnes, of which around 60% was in the form of 
drinking glasses. Although this accounted for about 3.94% of total glass production in 
tonnage terms, it is much more important than this share would indicate, considering its 
potential selling price, which can be very high. 
The glass tableware industry is represented at European level by European Domestic 
Glass (EDG) for crystal and hand made glass, and by the Fédération européenne du Verre 
d'Emballage (FEVE) for mechanically produced glass, although contacts with producers 
of the latter are limited. Both are in turn affiliated to the Comité Permanent des 
Industries du Verre de la CE (CPIV). 
The EDG has members in most Member States, although it has never managed to 
establish any links in Spain or Portugal, and there is no production in Luxembourg. 
Where it does have members, it estimates that it represents around 80% of the industry, 
i.e some 86 companies. The majority of these companies have just one producing plant, 
but there are some with more than one plant, sometimes in more than one Member State, 
such as Durobor (B/UK), Saint-Gobain(F/D). 
•'"•'•••'• V ,. •." .;", •• '.:: ••.•• ••'.' ,:' . •.•'- ": :• 30 
Developments in the sector are closely linked to changes in life style, disposable income, 
and personal taste. Other factors which have been important over recent years include: 
increasing mechanisation, which has brought with it a significant fall in prices and 
extended product ranges 
new forms of distribution, particularly mass distribution 
new technological needs linked to the rapid spread of dishwashers and microwave 
ovens . 
competition from metal, ceramics, and plastics, particularly in kitchenware. 
B. Trends in production and apparent consumption 
Although EDG estimates that it represents about 80% of glass tableware production, the 
statistics which it has available are very patchy - its members are often reluctant to give 
out what they consider to be commercially sensitive information. Therefore, the figures 
given for apparent consumption trends over recent years are CPIV estimates covering 
EUR 11 (without Spain, and, for the sake of historical comparison, without the three 
newest EU members). Production figures also refer to EUR 11 and also come from 
CPIV. 
In terms of production of glass tableware, after a high year in 1991, levels fell by 6% in 
both 1992 and 1993, picked up again in 1994 (+6%), and fell back by 2% in 1995. Much 
of the improvement seen in 1994 was export-led since apparent consumption in the EU 
continued to go down. In 1995, apparent consumption grew again by 1.5%, whereas 
exports fell back by 2,6%. 
Latest figures available on EU production and apparent consumption levels are given 
overleaf. 
Tonnes, except where otherwise stated 
nm WSÈÊ 31 
Production 1032000 967000 911000 963229 944351 
EU Exports 358074 299372 301979 368539 358643 
EU Imports 121509 135292 149851 149353 175507 
Apparent 
Consumption 795435 802920 758872 750043 761215 
EU sales on 
domestic 
market 673733 668029 609374 600784 585708 
EU market 
share 84.7% 83.2% 80.3% 80.1% 77.0% 
Imports 
market share 15.3% 16.8% 19.7% 19.9% 19.9% 
Direct 
employment 15428 15366 15212 15000 15000* 
Source: Imports/exports: COMEXT 
Production, employment and n° companies: CPIV 
Imports market share is calculated on apparent consumption. 
* estimate 
C. Trends in imports and exports 
Given that glass tableware* and crystal are products which can be transported over long 
distances viably under normal market conditions, EU producers are very dynamic on 
export markets, and have a traditional long term presence in a number of them. Exports 
regularly account for a third of all products produced in the EU. The main exports are in 
the top end of the quality and design range. Higher value-added products are, therefore, a 
significant part of the business. 
In 1995, EU producers exported over 38% of their total production, which constitutes a 
steady increase since 1987, when producers were exporting about 30% of their 
production. 
32 
Below is a breakdown of the principal sources of EU imports of glass tableware in 1995 
(EUR 12), as well as the main destination countries of EU glass tableware exports. 
Turkey 
Poland 
Czech Rep. 
Indonesia 
Slovenia. 
Romania 
China 
USA 
Total Extra EU HKRRH HRWWiSi 
36252 
25243 
24486 
13970 
11005 
8420 
6822 
6186 
166960 21.71 
15.12 
14.67 
8.37 
6.59 
5.04 
4.09 
3.71 
100.00 ^I^ÊÊÊÊI^^^mÊÊÊÊÊÊÊ 
10084 
18444 
3809 
268 
2518 
268 
668 
75865 
328299 #^/O3U0T31,^^SEB^EW^ 
3.07 
5.62 
1.16 
0.37 
0.77 
. 0.08 
0.20 
23.11 
100.00 
Whilst certain producers, such as in Turkey or in eastern Europe, increased their overall 
share of imports into the EU, the share from China was halved in 1995 from over 8% in 
1994. At the same time, EU glass tableware producers have increased their exports to 
China from 179 tonnes in 1994 to 668 tonnes in 1995, just 0.20% of all EU glass 
tableware exports. 
Chinese producers have long had a traditional presence on the EU market for glass 
tableware, with a period, between 1990 and 1993, of increasing tonnages coming in at 
low prices, but with a subsequent and steady decline from 1994 onwards. In addition, by 
far the largest share (approaching 100%) of all imports of glass tableware from China are 
plain, simple glass products, i.e. not glass ceramics, not lead crystal, and most of it is 
machine produced. That is, it is the most basic quality, bottom of the range, glassware 
products. 
D. Prices 
The principal point of concern to the EU glass tableware sector is the low prices being 
practised by Chinese exporters, which do not appear to be based on cost considerations, 
but on Chinese needs for foreign currency. In this case, it cannot be considered that 
normal market conditions prevail, China still being essentially a state-trading country. 
Having said that, it is extremely difficult to get details on prices of Chinese imports. For 
this, there, are two obvious sources: industry and COMEXT statistics. When a customer 
- . - > " ";••' ' '' ' - •' '';• 33 
is buying glass tableware, its source is not as immediately apparent, if at all, to the final 
customer as it is for ceramic tableware. Therefore numerous attempts have been made by 
industry representatives to get price-lists from importers of Chinese goods, and none has 
been successful. The traders approached have refused to give prices. 
As stated previously, prices obtained by a simple calculation on the basis of COMEXT 
statistics are unreliable, since for the CN code heading 7013 as a whole for 1995, Chinese 
selling prices in the EU were higher than the selling prices which European producers 
were able to obtain in other Member States. 
It is argued that Chinese selling prices are unlikely to be higher than EU ones, because: 
most of the glass products imported from China (97%) are mechanically produced, 
basic glass at the bottom end of the product range, commanding lower prices than 
higher value added products 
the average European price covers the whole range of chapter 7013, including 
higher value added products, such as crystal or engraved glassware, which 
commands a higher selling price; the average price can therefore be expected to be 
higher than the average for ordinary bottom-of-the-range glassware. 
It should be concluded, therefore, that EU and Chinese prices of glass tableware cannot 
be compared since the available figures are not reliable and their respective products are 
not in competition. 
E. Employment trends 
In the period from 1980 to 1994, when total glass production went up by 34%, actual 
numbers employed went down by 30%. Much of this may be attributable to restructuring 
efforts on the part of glass makers over recent years, although it is not possible to 
quantify this. The glass tableware sector is highly labour intensive, and it seems likely 
therefore that a limited fall in employment can be attributed, at least in part, to the growth 
in cheap imports. 
No figures are available to show employment by Member State and by sub-sector. The 
only figures where a split by Member State is available cover total glass production of 
all glass products. Over the last five years* trends in employment in the EU, and in the 
four main tableware producing countries (total production, all glass products), have been: 
34 
Year EUR 12 Germany France UK Italy 
1991 223 464 71736 37 309 45 094 21500* 
1992 219 458 69 737 36 601 44 904 21000* 
1993 221611 74 000 35 283 46 817 19 500* 
1994 208 770* 69 000 34 330 38 713 20 000 
1995 n/a n/a n/a n/a n/a 
* estimates 
Figures relating to glass tableware alone are available on an EU basis only, and here the 
recent evolution has been: 
1991 - 15 428 -1.1% 
1992 - 15 366 -0.4% 
1993 - 15 212 -1.0% 
1994 - 15 000 -1.4% 
Figures for 1995 are not available, but it is thought that there was very little change from 
the 1994 level of employment overall. 
As to the biggest glass tableware producing countries, France, Germany and the UK, very 
little detailed information is available, but it appears that after a period of job losses from 
1989 to 1994 due to structural adjustment, the employment situation has stabilised in the 
tableware sector. 
F. Opinion of the Community Industry 
The producers, represented by CPIV believe that the quota should be maintained on the 
grounds that additional cheap imports would mean further loss of market share, the loss 
of business, and in the end the loss of production capacity and subsequent loss of jobs. 
G. Opinion of the importers 
FTA believes that due to a suppressed demand the impact of the quota in the glassware 
sector is less dramatic than in other sectors concerned. However, FTA still maintains that 
any quantitative restriction should be abolished. 
y • • , • '35 
H. Conclusion 
The growing capacity of Chinese producers to export low-priced products in the EU 
remains a matter of concern for the glassware sector, which would still be sensitive to 
these imports. 
However, given the low and falling market share and volume of the Chinese glassware 
imports in the EU, the continuation of a quantitative restriction does not appear to be 
fully justified. 
A. Situation of the Community toy industry 
1. Structure of the industry 
The structural features outlined in the first report have changed little. More 
production units have closed, leading to a drop of around 1% in the number of 
firms. 
2. Community production 
On the back of stronger Community consumption, up 3% in 1995, the production 
of toys in the EU jumped 5%, enabling producers to maintain their EU market 
share at around 31% at a time of stagnating imports. Community toy 
manufacturers did, however, see their exports drop by over 10%. 
The overall picture for products under Codes CN 9501 to 9505 is as follows: 
ECU '000 
Production 
Exports 
Imports 
of which imports from 
China 
Apparent consumption 
Market share of imports 
Market share of imports 
from China 1992 
3 110412 
961 588 
4 954 520 
1 979 575 
7 103 344 
69.7 % 
27.9 % 1993 
3 033 146 
1 076 856 
4 828 483 
2 196 957 
6 784 773 
71.2% 
32.4 % 1994 
2 879 777 
1 220 209 
4 326 595 
2 069 550 
5 986 163 
72.2 % 
34.6% 1995(x) 
2 966 170 
1 071 486 
4 230 665 
2 109 307 
6 126 350 
69.1 % 
34.4 % 
(x) EUR 12 
Employment 
Against this backdrop, the rate of job losses slowed, with a fall of around 1% in 
the workforce between 1993 and 1994. 
37 
Workforce 
Direct employment 1990 
71065 1991 
68 336 1992 
65 012 1993 
61906 1994 
61300 
Current restructuring moves 
Alongside efforts to improve production facilities, the industry saw further 
consolidation. 
B. Sensitivity to Chinese imports 
1. Import trends 
Total toy imports from outside the EU fell back by 2.2% except for those from 
China, which rose 1.9%. However, non-quota toys from China, accounting for 
76% of total imports, were up 27%, while those under quota were down 37%. 
ECU '000 
Toys under quota 1994 
-9503 41 
- 9503 49 
- 9503 90 
Non-quota toys 
Total 1992 
991 965 
260 117 
110 648 
621 200 
987 610 
1 979 575 1993 
1 153 117 
302 919 
171 334 
678 864 
1 043 840 
2 196 957 1994 
814519 
247 764 
88 686 
478 069 
1255 031 
2 069 550 1995 (x) 
509 465 
171 348 
42 680 
295 436 
1 599 842 
2 109 307 
(x) Eur 12 
A comparison of quota and non-quota imports clearly shows how well Chinese 
producers have been able to boost their exports to the Community: with no 
^quantitative restrictions, imports have continued to rise very sharply, up 27% 
between 1994 and 1995. 
Import prices 
Compared to 1994, Chinese toys under headings 9503 41 and 9503 49 were 
cheaper in 1995 than those from other EU suppliers. For heading 9503 90, the 
prices of all the main suppliers were fairly similar. 
The figures below show the Chinese are undercutting Community export prices 
although there are no figures for the ex-works price of Community products. 
38 
Average price of imports from China and of Community exports 
(ECU/tonne) 
Product 
9503 41 
9503 49 
9503 90 EU 
China 
EU 
China 
EU 
China 1992 
14 179 
7 737 
9 172 
5 944 
7 724 
5 116 1993 
13 137 
7 831 
9 736 
6013 
7 248 
4812 1994 
13 400 
7 314 
9420 
6 106 
7 009 
4 926 1995 
12 963 
6 249 
9 137 
5 983 
6 199 
4911 
The price of imports from China again fell in 1995, with a drop of 15% on the 
year for toys under heading 9503 41. 
Another problem still faced by Community producers is counterfeiting: the 
Chinese seem to have done little to stamp out the practice and ways of tackling 
the problem have been slow to materialize. 
C. Opinion of the Community industry and of importers 
Toys Manufacturers of Europe (importers) and Fédération Européenne des 
industries du Jouet (producers), which represent almost the entire European toy 
industry have recently proposed the liberalisation of the importation of 
components for toys which fall within the quota. They believe this would be a 
means of stimulating employment in various EU countries based upon local 
assembly and other value-adding processes. 
However, it should be noted that the toy industry's proposal is intended to 
exclude from the coverage of the quota, specifically, only the "components of toys 
- which are meant to be subject to further industrial transformations (...) not to be 
sold as individual items to end customers". The Commission believes that such 
definition would entail management difficulties for the national customs 
authorities due to possible diverging interpretations, and therefore proposes the 
exclusion from the quota of "components of toys", with no further specification. 
• '••.'••" •'•• .•• ., :";.'- ''.,' ;--' "' 39 
D. Conclusion 
The toy sector remains sensitive to the absolute and relative volume of Chinese 
imports, their low prices and the export potential of Chinese producers. 
Improvements to the quota system will probably lead to further inroads for these 
imports, making continued controls all the more necessary. 
I. • . -I -V 
40 
III. Conclusions 
From the information it has gathered the Commission has drawn the following 
conclusions: 
1. The sectors covered by the quantitative restrictions have made efforts that have 
borne fruit in terms of restructuring production and improving the quality of the 
products under quota. However, while the European producers are continuing in 
this effort the sectors concerned remain sensitive. 
- The overall situation is precarious: all these industries are affected in varying 
degrees by stagnating production, declining sales and exports, closures and job 
shedding. 
- Most are labour-intensive, fragmented industries that are particularly vulnerable 
to competition from low-cost countries and have already lost a large share of the 
Community market to them. 
- Most are engaged in restructuring exercises which look promising but are costly 
and difficult to carry out - a waive of low-priced imports would condemn them to 
failure. 
- Some have relocated part of their production, are considering doing so, or have 
subcontracted work in low-cost countries in order to reduce costs and so compete 
with these low-cost countries. 
2. Chinese competition in these sectors remains a real threat: 
- China has enormous - and growing - production and export capacity in the 
sectors covered by quantitative restrictions and its exporters would, in their 
absence, soon be in a position to unleash huge quantities on the Community 
market. 
- Imports from China had already seized sizeable market share, or were in the 
process of doing so, when quantitative restrictions at Community level were 
introduced. 
- The prices of imported Chinese products remain much below those of 
comparable Community products. They are also well below those of other 
Community suppliers. The extent of this undercutting is such as to give Chinese 
producers the means of disrupting the Community market. 
- Frequent occurrences of counterfeiting in the case of some products further 
distort competition. 
- An additional consideration is the particular nature of the Chinese economy. 
China has been striving, over the last few years, to liberalize its trade regime and 
open its economy to the world. Although these measures represent important 
steps forward, they are still clearly insufficient to make the Chinese trade system 
compatible with internationally'accepted rules. The Chinese authorities still 
41 
exercise great influence on the operation of the Chinese industry: e.g. artificially 
low prices that do not reflect the real economic cost of the products concerned 
and export strategies that are governed by not strictly commercial considerations. 
On the import side, China maintains high tariffs on many consumer products, but 
the more prohibitive restrictions stem from non-tariff barriers such as quotas, 
licence requirements, restrictions on foreign currency and technical barriers. 
Products may be imported only by foreign trade corporations that are authorised, 
and essentially controlled, by the Central Government. 
There is thus reason to believe that the abolition of quantitative restrictions would lead to 
a renewed upsurge in imports from China and a further dangerous weakening of the 
market position of the Community industry concerned, with the exception of glassware 
for which such outcome is less likely. 
In light of the above, the Commission believes that the reasons that led the Council to 
introduce the quantitative restrictions covered in this report are, excluding glassware, 
overall, still valid. 
42 
CHAPTER 3 
IMPLEMENTATION AND MAINTENANCE OF SURVEILLANCE MEASURES 
I. Purpose of surveillance measures 
The Council introduced these measures to keep imports of a variety of products 
under closer observation in cases where the trend gave cause for concern but was of 
no immediate danger to the Community industry. 
II. Implementation 
Prior Community surveillance is carried out through a system whereby licences are 
automatically issued free-of-charge for any quantity requested within five days of the 
lodging of a request by a Community importer. 
Regulation (EC) No 519/94 brought in a standard simplified Community surveillance 
document which reduced to a minimum the formalities to be accomplished by 
importers and Member States in connection with imports under surveillance. 
In April 1996, following the conclusions contained in the Commission's first report, 
the Council decided by its Regulation (EC) No 752/96: 
- to remove a range of products of which the imports in 1994 were negligible or 
lower than in 1993, from the list of products subject to Community surveillance; 
- to insert certain products in respect of which quotas were abolished (gloves and 
combined car radios) in the list of products subject to prior Community 
surveillance. 
Unfortunately, despite repeated requests, many Member States still either do not 
provide the information they were supposed to give on the issue of surveillance 
documents or provide only partial information or give it too late (with the exception 
of footwear), so depriving the surveillance system of much of its usefulness. 
43 
III. Trends in imports of products under surveillance 
The table below gives import figures, in thousands of ecus, for products under 
surveillance in 1995, excluding footwear, and sets them against the 1994 figures. 
CN code 
190190 90 
2827 10.00 
2905 49 90 
2918 14 00 
2941 30 00 
294140 00 
3204 13 00 
3204 15 00 
3604 
3905 20 00* 
4203 29 91 
4203 29 99 
6913 10 
7004 90 
7901 12 
8527 21 
8712 00 
9503 30 
9503 60 
9504 40 
9603^29 
9603 30 
9603 40 
9603 90 Description 
Food preparations 
Ammonium chloride 
Other polyhydric alcohols 
Citric acid 
Tetracyclines and their 
derivatives 
Chloramphenicol 
Basic dyes.... 
Vat dyes ... 
Pyrotechnic articles 
Polyvinyl alcohols 
Gloves 
Gloves 
Ornamental articles of 
porcelain 
Other glass 
Zinc, not alloyed... 
Car radios 
Bicycles 
Construction sets 
Puzzles 
Playing cards 
Brooms and brushes 
Brooms and brushes 
Brooms and brushes 
Brooms and brushes 1994 
2.408 
1.083 
1.716 
28.380 
38.101 
9.736 
7.815 
5.034 
• 41.578 
15.748 
4.764 
4.992 
94.126 
3.485 
0 
63.696 
1.661 
33.687 
5.201 
2.318 
14.476 
5.068 
15.174 
12.267 1995 
1.897 
1.307 
3.463 
21.313 
48.402 
7.786 
7.773 
9.927 
67.210 
19.711 
5.513 
4.041 
75.303 
3.223 
0 
35.174 
2.001 
50.884 
6.163 
2.592 
20.235 
7.037 
17.895 
15.857 Imports 
China/Extra-
EC (1995) 
5,48% 
77,78% 
31,48% 
56,03% 
58,18% 
89,48% 
27,84% 
17,59% 
77,50% 
18,69% 
22,45% 
12,13% 
68,22% 
8,92% 
0% 
4,93% 
0.42% 
20,48% 
31,82% 
24,73% 
41,94% 
24,22% 
67,27% 
28,58% 
Source : EUROSTAT 
* formerly 3905 30 00 
44 
In the case of footwear imports Eurostat figures do not distinguish between those 
under surveillance and those not, so the Commission can only refer to the surveillance 
documents issued in 1995: 
ex 6402 99 1517 290 pairs 
ex 6403 91 et 99 10 331 353 pairs 
ex 6404 11 4 466 577 pairs 
total 1 35 781 669 pairs* 
(*) 1. including 19 466 44$.pair s for Italy, for which the breakdown by category is not 
known. 
2. Germany has not provided data from the end of July 1995 to December J 995. 
IV. Should surveillance measures be maintained? 
The figures provided here show that imports of a range of products have increased 
significantly. The Commission believes that prior surveillance should be maintained 
for these products. 
In the case of other products (CN codes 1901 90 90; 7004 90; 7901 12; 8527 21) 
where imports are insignificant or down on 1994, the Commission believes it 
unnecessary to maintain surveillance measures and so, with a view to reducing the 
administrative burden on both national administrations and importers, proposes that 
they be excluded from the list of products subject to such measures. 
•.:••. •''•'. V.'-' ••• „ V -••• •'••','•' ' •••'"-':.'-:1 • 45 
CHAPTER4 
CONCLUSIONS AND PROPOSALS OF THE COMMISSION 
In view of the above, the Commission believes that the system of quantitative restrictions 
and surveillance measures set up under Regulation (EC) No 519/94 should be maintained 
but with the following adjustments. 
1* Quantitative restrictions 
- Abolition of the quota on Glass tableware (CN 7013). 
- Exclusion of "components of toys" from the quota on toys. 
2. Surveillance measures 
The proposal is to end surveillance on products falling within CN codes 1901 90 90, 
7004 90, 7901 12, 8527 21 and to include Glass tableware (CN 7013) among the 
products under surveillance. 
£!§$i§:fe *':..;.. '.$?-'v/£V^# 

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