EUROPEAN CONSUMER UNION ARGUES FOR FREER TRADE IN TEXTILES-

Nov 24, 1984

EUROPEAN CONSUMER UNION ARGUES FOR FREER TRADE IN TEXTILES-

BRUSSELS, NOVEMBER 22 (IPS-IFDA/YOJANA SHARMA) -- The Multifibre Arrangement (MFA), which governs trade in textiles, brings hidden costs to consumers and favours industrialised country producers, the major European consumers organisation declared Thursday.-

The European Bureau of Consumers Unions (BEUC), which groups consumers unions in the 10 European Economic Community counties, said in a report that the MFA should be phased out.-

"The European public is being fooled by the myth that developing country imports of textiles are a threat", BEUC chairman Tony Venebles declared here, as he introduced the report to journalists.-

Setting out the consumer case for ending MFA-III when it expires in July 1986, Venebles said quotas restricting developing country imports of clothes has created a "scarcity value", pushing up prices and reducing choice for consumers in Europe.-

The BEUC report, "textile and clothing imports into the European Community: a consumer view", says the MFA penalises lower-income people who depend on cheap, imported clothing and families buying clothing for children.-

Industrialised countries pushed for a derogation of the rules of the General Agreement on Tariffs and Trade in the early 1970’s, when it became apparent that the comparative advantage in textile and clothing had shifted to countries with low labour cost.-

It allows the restriction of imports from such countries, most of which are in Asia.-

But meantime, says the report, the place of those goods is taken by higher-priced imports from industrialised countries, which are unrestricted by the MFA.-

Arguing against the increasingly protectionist MFA measures – which, while introduced over a decade ago on a "temporary" basis, are still in force - the BEUC says the MFA has achieved the opposite of what it was supposed to do.-

The report says that the developing countries are forced by the MFA into higher value-added production, making designer clothes of higher quality, and thus competing more with industrialised-country products, rather than less, as the MFA intended.-

For the consumer, says BEUC, this means "the supply of basic cheap imported clothing threatens to dry up".-

According to the consumers group, European public opinion is led to believe in a need for protection against a flood of cheap Third World imports.-

But in reality, says the report, it is was already apparent under MFA-II, which ran from 1978-1982, that the arrangement mostly benefited other industrialised countries.-

In particular, it says, the United States nearly trebled its exports to the EEC for some textile goods while those from India increased by only 1.3 percent in the same period.-

Statistics show that the EEC textiles market is still largely in the hands of EEC suppliers, although an intensive lobbying campaign by European industries make a different case.-

China has the highest share of any developing country of the EEC market, with just two percent.-

Even in the more competitive clothing sector, seven EEC countries have a tight hold of over 46 percent of the EEC market.-

Under MFA rules first drawn up under the aegis of GATT in 1974, the United States, the EEC, Canada, Austria, Sweden, Norway, Finland, Switzerland and may restrict imports from low-cost Third World countries, mainly in Asia.-

Only exports from countries with low labour costs are restricted. Thus imports from the United States are treated more favourably by the EEC than those from, say, Hong Kong.-

Although exports from the United States have dropped back considerably under MFA-III because of the strength of the dollar, other industrialised countries, like Portugal, have benefited, BEUC says.-

Meantime, exports from Hong Kong, South Korea and Taiwan have fallen in volume.-

Quotas have also led to a shortage of childrens clothing since childrens wear is lumped with adults clothing under MFA quotas. Exporters now prefer to make only adult clothes for export.-

"This evidence would add weight to the belief that the price of MFA protectionism hits the poor, including those with large families harder than the better off", says the BEUC report.-

According to Teresa Smallbone, an expert with BEUC, the MFA costs the EEC consumer anywhere from 15 to 30 percent of their free-trade textile and clothing bill.-

In West Germany a comparative study of a basket of "sensitive" clothes showed up a 30-35 percent difference over free-market values. In other words, the MFA costs the German consumer some one billion dollars a year, according to BEUC._