EU may impose dumping duties on RI cotton

EU may impose dumping duties on RI cotton

BRUSSELS (Reuters): The European Union's executive body is likely next week to propose definitive anti-dumping duties on imports of unbleached cotton from five countries while sparing Turkey, EU sources said on Friday.

The proposal, expected to be discussed by the Commission at its Wednesday meeting, would seek definitive anti-dumping duties against China, Egypt, India, Indonesia and Pakistan.

The issue is explosive within the 15-nation EU, setting northern member states against southern cotton producers.

The European Commission in March imposed provisional anti- dumping duties averaging 15 percent on unbleached cotton imports from China, Egypt, India, Indonesia, Pakistan and Turkey. The provisional duties angered the targeted countries as well as a number of EU member states.

Eight EU governments, including Britain and Germany, said in a statement last week that the Commission had been wrong to overrule the majority of EU states which did not want duties on the cotton imports.

But, in a counter-declaration, Italy, France, Spain and Portugal expressed their support for the Commission move.

Under EU anti-dumping rules, the Commission may of its own accord impose provisional anti-dumping duties for six months on goods it concludes are sold at unfairly low prices in the EU.

After that, the Commission may ask for definitive anti-dumping duties for five years, but needs the approval of a majority of EU member states.

In the cotton case, the Commission must decide whether to seek definitive duties by Sept. 9, and EU ministers would have until Oct. 9 to approve them or not.

The Commission's new proposal is likely to call for definitive anti-dumping duties against the five countries while dropping Turkey, EU sources said. The proposed duties would average less than the 15 percent provisional duties.

The Commission would try to negotiate undertakings whereby affected producers could avoid duties by agreeing to charge a minimum price for exports to the EU.

The decision to spare Turkey follows a new Commission investigation which found that Turkey accounts for less than 3 percent of EU imports of unbleached cotton.

EuroCommerce, representing European retailers and wholesalers, condemned the proposed measures in a statement, saying they would severely hurt the European finishing industry.

It said the measures would create "a complex system of managed trade made up of a multitude of anti-dumping duties, minimum prices and quantitative ceilings."

By exempting Turkey from anti-dumping duties and making the other changes, the Commission may stand a better chance of winning support from EU governments. But EU sources say it is still on a "knife edge" whether member governments will support the new proposal in October.

Only six member states backed the new proposal at a meeting of the EU's advisory anti-dumping committee on Thursday, with Belgium and Luxembourg abstaining, EU sources said.

EuroCommerce said Austria, current EU president, came out in favor of the proposed measures. It said Austria was satisfied by Turkey's exclusion from anti-dumping measures and by a more lenient treatment of light fabrics used for embroidery.

Since a majority of member states is needed for the definitive duties to go through, the outcome in October is seen as hinging on the position of Belgium and Luxembourg.

The Commission previously adopted provisional anti-dumping measures against the same six cotton-producing countries in November 1996. But six months later it was effectively overruled when EU ministers rejected its request for definitive anti- dumping duties on a 9-6 vote.

European weavers have said that thousands of jobs were at risk from cheap imports. The European textile industry countered that thousands of jobs could also be jeopardized by the imposition of dumping duties on its raw materials.