The European Union (EU) has disappointed Pakistan and other Third World countries by giving a meagre raise in textile exports quota.
Developing countries have demanded increase in quota after the expansion of EU. Pakistan and India were expecting 15 and 39 percent increment respectively.
Although, EU has increased the quota, but it is far less than the expectations of the developing countries. The increased quota will be applicable from May 1st.
Ten states, which will join EU in May, would follow textile quota restrictions on all the textile export commodities from developing countries under the Union rules.
According to Official Journal of the EU the Union has increased the quota of 14 textile products exported from Pakistan categories. Category 1, Cotton yarn quota has been increased to 513 tonnes, which is hardly 3 percent. Category 2 which is for Cotton Fabric was increased 1775 tonnes, (5.4 percent).
Similarly, quota of cotton fabric other than unbleached of category 2-A was up by 936 tonnes or 7.6 percent, and bleached fabric (category 3) 1971 tonnes or 5.4 percent.
Knitted shirts quota falling under category 4 was enhanced to 218,000 pieces which is 0.7 percent of the already prescribed quota. Knitted jersies (category 5) were up by 0.8 percent and the number was up to 78,000 pieces.
Quota of shorts, trousers, blouses, shirts, and dresses (categories 6, 7, 8 and 26) was increased to 218,000, 13,000, 14,000 and 15,000 pieces which is 0.6 percent, 0.1 percent, 0.3 and 0.1 percent respectively.
The increase in bed linen and towels which are in the categories 9 and 20 is 447 tonnes and 1216 tonnes that is 4.5 and 3.1 percent higher than the already fixed quota.
According to sources was no quota for textile products in these states before 1995 and under the WTO rules these states can not impose quota restrictions but they are doing so in violation of rules, the sources maintained.
After joining the EU these new member states including Czech Republic, Estonia, Cyprus, Lithuania, Latvia, Hungary, Malta, Poland, Slovenia and Slovakia will impose quota on textile import from the developing countries and the EU had to enhance quota for the developing countries in order to compensate the developing nations.
In the case of India the increase is very meagre, according to the Official Journal. For India, the increase is only 8,000 tonnes in category 1. For category 4 it is less than 5 percent increase for category 5, it is as low as 42,000 dozen.
According to the sources, these minor increases for India will benefit Pakistani exporters and the export will rise at least in 2004, as Islamabad will continue to benefit from the 0 percent duty in the EU.
However, these are threatened in 2005 due to India challenging the EU's GSP schemes and possible graduation of Pakistan's clothing sector in 2005 against Pakistan 1250 tonnes increment for bed-sheet of category 20 and India got only 650 tonnes increment.
According to the sources, this will give a fillip to Pakistani exporters particularly at a time that the 13.1 percent anti-dumping duty on bed linen has been more than the offset by 10.4 percent countervailing duty levied on Indian bed linen by the EU at the same time.
In effect duty on India's bed linen will be around 20 percent as India do not enjoy zero percent customs duty like Pakistan which is giving an edge of around 7 percent in duty to Pakistani exporters despite the anti-dumping duty.
Pakistani exporters can take equal relief from the fact that that increment for China is also "totally negligible", according to the sources. Increment for China in cotton yarn is less than 25 tonnes and for fabric it is 1200 tonnes.
He said that EU had increased Pakistan quota 15 percent in 2001, which resulted in increase of textile export by $140 million and the new increase in quota would increase the textile export by $52 million.
Source said that so far only Turkey has imposed quota on the import of Textile in violation of WTO rules which was challenged by India and Hong Kong in the WTO and Turkey lost that case and had paid heavy compensation to both the countries.
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