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EU Sets China Safeguard Guidelines

GENEVA — The European Union on Wednesday published the long-awaited guidelines it will use in determining whether to slap temporary safeguard quotas on rising Chinese imports, following the Jan. 1 abolition of textile and apparel...

GENEVA — The European Union on Wednesday published the long-awaited guidelines it will use in determining whether to slap temporary safeguard quotas on rising Chinese imports, following the Jan. 1 abolition of textile and apparel quotas.

The rules spell out how much Chinese imports would need to rise in any one category of goods to trigger a review and possible safeguard quotas. They also include a fast-track emergency procedure in the event of massive surges.

“The guidelines recognize the legitimate concerns of member-state governments and the textiles sector, while allowing China to benefit from the lifting of the quotas,” EU Trade Commissioner Peter Mandelson said in a statement. “They equip us to make a swift and effective response.”

The amount that Chinese imports would need to increase to trigger a safeguard review takes into account China’s share of the European market. For instance, in categories of goods where Chinese imports represent 7.5 percent or less of the European market, this year, those imports would need to double to trigger a review. Next year, a rise of 50 percent or more would cause a review.

In categories where Chinese imports represent 7.5 to 20 percent of the market, a 50 percent rise in imports would trigger a review. Where Chinese imports make up 20 to 35 percent of the market, a 30 percent hike would begin a review and in categories where China accounts for more than 35 percent of the market, an increase of 10 percent would set the review process in motion.

The EU also sketched out minimum growth rates below which it would try to avoid initiating a safeguard review, ranging from 10 to 25 percent, depending on China’s market share.

China agreed to the safeguard mechanism when it joined the World Trade Organization in 2001. The safeguards allow importing countries to cap the growth of Chinese imports in particular categories to no more than 7.5 percent from the previous year, or 6 percent for wool products, if those imports are causing market disruption.

The EU guidelines allow the commission to initiate a review of Chinese imports on its own, or at the request of any of its 25 member states. Unlike in the U.S., the rules do not allow private industry groups to file safeguard petitions.

The timeline includes a 21-day public comment period, followed by 60 days of investigation and informal talks with China. If the EU determines that safeguards are required, Brussels authorities then would ask China for formal consultations, and within 15 days of the request would expect China to set up a system for limiting its exports in the category in question.

In the case of extreme growth, the fast-track mechanism allows the EU to immediately ask China for formal consultations, without a 60-day investigation.

Both the regular and fast-track procedures allow the EU to impose safeguard limits on China without Beijing’s consent. The EU guidelines stipulate the investigation should consider the damage China’s growth may cause to textile exporters in vulnerable developing countries. Reviewers are also to take into account any positive effects of rising Chinese imports, such as falling unit prices for European consumers.

Meanwhile, the ruling council of the 24-member-country International Textiles and Clothing Bureau, which includes China, released a statement that said it hoped rich countries “would reject protectionist pressures and help strengthen confidence in the multilateral trading system.”