WRITTEN QUESTION E-3079/01

by Ilda Figueiredo (GUE/NGL) to the Commission

(13 November 2001)

Subject: Trade package with Pakistan and its impact on the textile and clothing sector

On 16 October the Commission presented a trade package aimed at improving access for Pakistani exports to the EU market, making them eligible for the new arrangements under the special Generalised System of Preferences. The proposal aims to remove all customs duties on clothing and to increase quotas for Pakistani textiles and clothing by 15 %. In return the Commission reached agreement on a gradual reduction in duty to improve access for European exports. The EU already has a trade deficit of around EUR 1,9 billion in the textile and clothing sector and European exports to Pakistan are insignificant, accounting for barely EUR 23 m.

In this context can the Commission say whether it has assessed the socio-economic impact of this proposal for the European textile and clothing industry? If so, what conclusions did it reach, in particular as regards Portugal? Does it not consider that this proposal and the wave of bilateral trade agreements involving the sector are jeopardising the timetable for liberalisation laid down in the Agreement on Textiles and Clothing?

Answer given by Mr Lamy on behalf of the Commission

(21 December 2001)

The quota increase proposed for Pakistan in the Memorandum of Understanding, initialled on 16 October 2001, will give opportunities to Pakistan. However, in terms of the total EU imports of textiles and clothing of around 70 billion/year, the amounts of the increased quotas (around 0,5 to 0,6 % of increased imports in practical terms over the period to 1 January 2005) are unlikely to have a major overall impact.

The duty reduction, by way of changes to the Community's generalised system of preferences for the period 2002/2004, applies to clothing and made-up products but not to textiles. In 2000, the share of imports from Pakistan amounted to approximately 2 % of total imports for these products. This holds for the 15 Member States as a whole as well as for imports to Portugal in particular. The reduction of duty is unlikely to be fully reflected in price reductions for Pakistan's exports in the near future because ancillary costs such as insurance have recently risen following the crisis in that country.

Given that the textiles and clothing industry is distributed throughout the Community, the Commission does not anticipate particular difficulties for Portugal with 4 % of Community production, and 12 % of employment in the sector.

In reaching bilateral agreements concerning market access in the sector to date there are two, with Sri Lanka and now Pakistan the Commission is working to fulfil the negotiating directives given by the Council on 9 November 2000, by obtaining market access concessions in the textiles and clothing sector from our trading partners (e.g. tariff reductions, binding in the World Trade Organisation (WTO) and commitments on non-tariff barriers) in return for which the Community can offer improvements in their quota regimes.

The Commission does not consider that these agreements will jeopardise the timetable for full liberalisation and the removal of all quotas, which will take place on 1 January 2005 pursuant to the WTO agreement on Textiles and Clothing. Indeed, the Commission considers that further agreements pursuant to the above mandate would benefit the European textiles and clothing industry and therefore contribute positively to full liberalisation in 36 months time. It does not, however, consider that the agreement with Pakistan serves as a model to be followed for other countries as further agreements will have to be negotiated on a case-by-case basis.