WRITTEN QUESTION E-0588/96 by José García-Margallo y Marfil (PPE) to the Commission (11 March 1996)

Subject: Imports of ceramics from China

In December 1995 the Commission recommended that the current quotas on imports of ceramics from China be increased by 10%. The Council's special committee on trade has as yet failed to accept this proposal, which it is to reconsider on 28 February 1996.

Chinese ceramics compete on extremely unfair terms for three reasons:

(1) they are sold at below cost price when the country is in urgent need of foreign exchange;

(2) costs (particularly labour costs) are artificially low;

(3) many undertakings have copied European designs and marketed the resulting products at a price much lower than that charged for the real thing.

In view of this situation, far from being a protectionist measure, maintaining the current import quotas is simply a means of ensuring respect for 'the principle of an open market economy with free trade' (Article 3 of the TEU).

Is the Commission aware of the situation regarding production costs in the Chinese ceramics industry?

Is it aware of the existence of piracy of original designs of European undertakings?

Would it agree that, in this instance, raising or abolishing import quotas would distort competition?

Has it assessed the adverse impact which raising or abolishing import quotas on the above products would have on jobs in the European ceramics industry, owing to the distortion of competition to which such action would give rise?

Answer given by Sir Leon Brittan on behalf of the Commission (29 March 1996)

The Commission's report on the surveillance measures and quantitative quotas applicable to certain non-textile products originating in the People's Republic of China ((COM(95)614. )) was made at the request of the Council. Its aim

was to examine the sensitivity of the Community industries concerned, and the threat posed by imports from China to these industries, to see whether the economic considerations which formed the basis of the Council decision of 1994 are still valid. The Commission's report contains a sector-by-sector analysis, using six economic indicators including the development of import prices and the situation of employment in the Community in the sectors in question.

The Commission concludes that the ceramic and porcelain tableware sector remains sensitive due to the increasing volume of Chinese imports, their disruption potential and the substantial price undercutting. The Commission therefore advocates the quota system be continued to avoid a renewed upsurge in imports from China and a further weakening of the position of the Community industry concerned. However, in order to strike a balance between all interests and taking in consideration and past experience in managing the quota system, the Commission proposes a moderate increase in the level of the quotas in this sectore which it believes is not likely to disrupt the Community market.

The existence of substantial price undercutting by China in the ceramic and porcelain tableware sector has inter alia led to the Commission's conclusion that the sector in question remains sensitive. However, an analysis of the cost structure of Chinese production was not the subject of the report.

The Commission is aware of the existence of counterfeiting and refers in its report to the aggravation of the disruptive effects of the imports. The appropriate instrument to combat counterfeiting is, however, not the system of quantitative restrictions and surveillance measures but the trade barrier regulation (Council Regulation (EC) n° 3286/94 ((OJ L 349, 31.12.1994. ))) which gives the Commission the necessary tools against these practices within the Community and in outside markets, and Council Regulation n° 3295/94 ((OJ L 341, 30.12.1994. )) on customs procedures against counterfeiting and pirated goods.