Asian countries face EU protectionism

Asian countries face EU protectionism

The new wave of protectionist measures in Europe has Asian governments all riled up. Yojana Sharma of Inter Press Service reports.

HONG KONG (IPS): After a lull of several years, Asian countries are once again finding themselves the victims of what they say are new restrictions their exports to the European Union (EU).

But Asian economists say such a move may rebound on Europe, coming at a time when East Asia is one of the fastest growing regions of the world and tipped to continue swift export-led growth.

"The protectionist policies as set out by the EU to help protect its workers will actually end up destroying more jobs (in Europe)," says Joseph Lee, director of the Hong Kong Trade Development Council's Europe operations.

"In Europe, the service sector is a much large employer than the manufacturing sector," he adds. "Any slowdown in the supply of toys and other imported goods will affect Europe's importers distributors and retailers who employ many thousands of people in turn."

A recent study by the Organization for Economic Cooperation and Development (OECD) on the European labor market confirms that cheap imports from Asia are not responsible for Europe's unemployment. It says the region's growing jobless rate stemmed rather from technological and structural change in European markets.

But during the last few weeks, the EU has imposed anti-dumping duties on videotapes and floppy discs made in Hong Kong and discs from South Korea. Duties are expected to be levied on small television sets from eight Asian nations, including Malaysia, Singapore and Thailand.

Earlier this year, the EU slapped new restrictive import quotas on toys and textiles from China. It also placed 26 items under surveillance, including footwear, microwave ovens and bedlinen from China and other Asian countries.

Investigations into dumping of synthetic fibers from India, Indonesia, Pakistan and Thailand and cotton fabric from China, India, Indonesia, Pakistan, and Turkey are also underway.

The moves have angered Asian governments who had believed the EU's tendency to use anti-dumping measures to keep out competitive imports was waning.

The EU's Brussels Commission investigated only 21 dumping cases in 1993, compared to 39 in 1992. But Commission officials admit this year's total will be a significant increase on last year.

The quotas on toys and textiles particularly met such a storm of protest from the British colony of Hong Kong and some Asian nations that it threatened to sour relations on other issues.

According to the Hong Kong General Chamber of Commerce, some 2,500 toy factories in China are owned by Hong Kong businessmen. Virtually all of Hong Kong's toys and textile manufacturing industry have moved across the border to China in recent years.

The EU action against China-made goods prompted a number of Hong Kong manufacturers to shift part of its production to other Asian countries, particularly Thailand and Indonesia-- but not before incurring huge losses in canceled orders and additional costs.

Meanwhile, the EU investigation over television sets from Asia has also made manufacturers from the region livid.

The move had been prompted by complaints from two of Europe's biggest consumer electronic firms, Thomson of France and Philips of the Netherlands, which had said Asian television manufacturers have elbowed their way into the European market by pricing their goods below their asking price in Asia.

These days, there are intensified calls by a number of peeved Asian countries to reduce dependence on the EU and the United States, and focus more on developing Asia as a market.

Asian economists point to the example of Japan, which is attempting to move away from dependence on trade with the United States to developing its Asian markets. Tokyo has increasingly viewed Washington's trade practices as unfair.

By 1992, Asia became Japan's largest trading partner taking almost 39 percent of Japanese exports and 45 percent of imports. In contrast, the United States took only 29 percent of Japanese goods and accounted for just 22 percent of Japanese imports.

One Asian economist here noted that unless the EU freed up its trade, it could find itself at a disadvantage with "the fastest growing region in the world"-- the same position the United States seems to have ended up in. Washington has now launched an aggressive drive to win back business in Asia.

But British Trade Minister Richard Needham explained here recently that while Europe is now emerging from recession, the spate of quotas and anti-dumping duties was actually launched when European producers were still struggling contracted markets and were thus more eager to fight off competition from lower-cost Asian countries.

During a speech in Hong Kong, Needham blamed the delayed effect on the snail-paced EU bureaucracy. Britain is among the harshest critics of the EU's protectionist policies against Asia.

EU representative in Hong Kong Etienne Reuter, however, is adamantly against any suggestions that the Union is behaving in a protectionist manner.

He says the EU's Brussels Commission is more of a "free trader" than the individual industries and some EU countries--as evidenced by the 40-50 percent of complaints filed by industry against low cost importers that are thrown out by the Commission.

Reuter describes the quotas and anti-dumping measures as "precise needlework measures" against very specific industries in particular countries that "should not be seen amounting to a protectionist policy".