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Dear Sirs,

Commercial Information Circular No. 122/2005

Notice to Exporters: Series 2 (EU) No. 5/2005

European Union (EU):
Guidelines Published by the EU for Application of the Textiles-Specific Safeguard
Clause on Textiles and Clothing Imports from the Mainland of China

The European Commission (EC) has announced a set of guidelines setting out the criteria and procedures for the application of the Textiles-Specific Safeguard Clause (TSSC) for textiles and clothing (T&C) imports from the Mainland of China (the Mainland) under the latter's Accession Protocol to the World Trade Organization (WTO). This circular informs the trade of the essential features of the guidelines.

Details

2. In the Mainland's Accession Protocol to the WTO, the Textiles-Specific Safeguard Clause (TSSC) enables WTO Members that believe imports of Chinese T&C products are, due to market disruption, threatening to impede the orderly development of trade in these products can request consultations with the Mainland with a view to easing or avoiding such market disruption. The EC announced on 6 April 2005 (Appendix (pdf format )) an abridged version of guidelines to establish the criteria and procedures for the application of safeguard actions against T&C imports from the Mainland. The EC emphasized that measures taken under the TSSC would only be taken as a last resort to prevent a sudden and sustained surge in Chinese textiles exports from impeding the orderly development of T&C trade, not only threatening EU textiles producers but also displacing textiles imports from highly vulnerable developing countries heavily dependent on trade in the EU market. The full guidelines are expected to be published in the Official Journal of the EU shortly. Some salient features of the guidelines are set out in ensuing paragraphs.

3. Assessments of the EC will be based on real import data collected by Member States. Such data include unit prices and import patterns averaged over a year, or on pro-rata basis over a period of not less than three months.

4. Alert zones are established with warning thresholds based on the annual growth rate of each category of Chinese textiles imports. The thresholds of the respective alert zones for the years 2005 to 2008 are set out in Table A at Annex of the memorandum (at Appendix (pdf format) ). A rapid surge in imports, or a sudden and precipitous drop in unit value in any product category over a defined period may place the product concerned within an alert zone. On the other hand, another set of thresholds are set out in Table B in the Annex, below which textiles safeguard actions should not be invoked in principle.

5. If the alert zones are triggered, the EC may, either act on its own initiative or at the request of a Member State, undertake an investigation and conduct informal consultations with the Mainland in parallel.

6. Investigations will allow 21 calendar days for interested parties to present their opinions, and 60 days for the completion of the investigation and informal consultations with the Mainland. Thereafter, the EC will decide, in consultation with Member States in the Textiles Committee, whether to request formal consultations with the Mainland.

7. In determining whether there exists market disruption, the EC will take into account factors including the potential threat to the domestic industry and possible damage done to textile exporters in vulnerable developing countries. The EC will also consider any positive effects of rising Chinese imports or falling unit prices that may benefit European consumers, or European companies with textiles investments in the Mainland.

8. Within 15 days upon the EU's request for formal consultations, the Mainland is expected to limit its textiles exports in the affected categories to the level of the first twelve of the fourteen months preceding the initial investigation ¹, plus 7.5% (or 6% in the case of woollen products). Should the Mainland not do so, the EC will put in place such quantitative restrictions on its own initiative.

9. In cases where a rise in imports of such magnitude is causing imminent and serious material injury to the EU industry, the EU may launch formal consultations with the Mainland without a preceding investigation.

Enquiries

10. For enquiries concerning the content of this circular, please contact the undersigned at 2398 5427.

Yours faithfully,

(Miss Sheree FU)

for Director-General of Trade and Industry 

¹This is different from the provision in the Mainland's Protocol of Accession to the WTO. According to paragraph 242 of the Report of the Working Party on the Accession of China and Article 10a of the EU Council Regulations (EEC) No. 3030/93, upon the receipt of the request for consultations, the Mainland shall hold its shipments of textile or textiles products in the category or categories subject to these consultations at a level no greater than 7.5% (6% for wool product categories) above the amount entered during the first 12 months of the most recent 14 months preceding the month in which the request for consultations was made.

Note : While every effort is made to ensure the accuracy of the above information, the Department cannot guarantee this to be so and will not be held liable for any reliance placed on the same.