EU imposes 13.1% duty on Pakistani bed linen

6 YEARS AGO
Estranged Twins

Reported from an editorial article contributed by Mazhar Yusuf in Pakistan Textile Journal issue of January 1998.

India and Pakistan, or for that matter the people of India and Pakistan, have been living their lives as estranged twins, so close yet so far. Over the years the two have developed a queer sort of hate/love relationship, which is patently against and far from the cordial relationship between the two neighbouring States, as was visualised and promised by the founding fathers of both the states, particularly Mr. Mohammad Ali Jinnah, who is on record to have said that the relations between India and Pakistan would be very cordial, like USA and Canada.

The European Union imposed anti-dumping duties of 13.1% on bed linen imports from Pakistan for a five-year period, effective March 18 2004. With quotas being removed from next year, Pakistani exporters will face more difficulties in expanding their share of EU's market while Turkish competitors will be granted some relief. EU's Council of Ministers voted by a short majority (eight against seven) a definitive anti-dumping duty of 13.1% on imports of woven bed linen from Pakistan.

The EU had levied anti-dumping duty on Pakistan's bedlinen in 1997, which was withdrawn in January 2002, as the investigation conducted into the matter did not determine the dumping element in Pakistan's exports of bedlinen to the EU.

In December 2002, however, the EU again started investigation but the investigation team did not complete the process and left the country half way through, without completing its job.

Pakistan had suffered a serious blow in 2002, when the EU withdrew the duty concession for Pakistan without mentioning any reason. It was a new situation for the Government, which had already issued quota to the exporters on the basis of exceptional flexibility quota for 2002. In 2003 European Union has released 4,000 tonnes exceptional flexibility textile quota for 2003 in categories 6, 9 and 20-bedlinen, towels and readymade garments.

The European Union is one of the major markets for the export of Pakistan's bed-wear, which has won preference of the consumers in terms of quality and design over similar items exported by other competitors to the European market. The export of bed linen, one of the fast growing industry of the country, crossed $ 1.0 billion mark recently and is will poised to exceed $ 2.0 billion after December 2004, when quota restrictions under MFA (Multi Fibre Agreement) expire.

At present around 200 bed linen exporters are engaged in trade with EU member states and have a total quota volume of 200,000 tons, earning around $400 million per annum. Pakistan exports around 60,000 tonnes of bed linen to the EU. The quantity may go beyond 100,000 tonnes or even more after the quota restrictions are lifted.

The threat of anti-dumping duty from the European Union poses a new challenge for the country's textile industry, which has been looking forward to rapid export growth particularly after the expiry of the restrictive quota system for textile exports by the end of 2004.

Effective from 1 January 2005, Pakistani exporters of bed linen will also lose GSP benefits on EU's markets. Under the GSP treatment, they were enjoying a duty-free access into EU's territory, instead of a 12% import duty. As a result of EU's decision now Pakistani exporters will face direct competition from other suppliers in the post-quota era.
Pakistan's main competitor is Turkey with duty-free and quota-free access to the European Union. Turkish exporters mainly work with EU's domestic industry and brands, which had filed the complaint with EU's Commission at the end of 2002.

Indian suppliers were confronted with anti-dumping duties in the past years. At the end of a very long WTO dispute, the European Union removed its anti-dumping duties before imposing anti-subsidy duties a few weeks ago. In sharp contrast with Indian and Pakistani shipments, China's exports are not subject to quotas, ranking fourth on EU's market. New EU members from 1 May 2004, Poland, Czech Republic, Estonia and Latvia will also emerge as important suppliers of bed linen to EU.