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General safeguards debut
Both Turkey and Indonesia launched general safeguard measures on imported textiles when the global economy has just recovered and textile and apparel imports and exports have increased. This reflects the urgency of the two countries to protect domestic industries.
On January 13, 2011, the Turkish government announced that it will implement safeguard measures for woven fabrics and apparel imported from the world to increase import tariffs. The case involved 2,258 Chinese companies. The amount involved was as much as 830 million U.S. dollars, which is the largest case of textile trade protection in China in recent years. This case has attracted the attention of the Fair Trade Bureau of the Ministry of Commerce of the People's Republic of China and the Chamber of Commerce of the Chinese Textile Importers and Exporters. The Textile Chamber of Commerce promptly notified the company to fill in the questionnaire and held an appeal meeting. With the support of the enterprise, the Textile Chamber of Commerce participated in the Turkish hearing on behalf of the industry and submitted defense opinions.
Under the pressure of both international and domestic opposition, the Turkish government issued a notice on the implementation of interim measures on March 24, reducing the initial taxation rate and leaving a buffer period, and decided to begin taxation after 120 days. At present, the case is still in progress.
On March 23 this year, the Indonesian government announced that it imposed a tariff on some woven cotton fabrics for a period of 3 years. The case involved that although my export amount was not high, with only USD 55.93 million and 226 companies involved, it still caused China's great attention. In 2010, the China-ASEAN Free Trade Area was formally established. The products involved in the project were all zero-tariff products. Just one year after the Free Trade Zone was in operation, Indonesia imposed a tariff, which was a bad start in ASEAN countries. The precedent.
It is worth mentioning that in both cases, general safeguard measures were adopted, and the protection of Chinaâ€™s textile trade has entered the third stage.
Looking back at history, it can be seen that China's textile exports experienced three stages of trade protectionism. The first stage: Implement quota management before 2005. According to the "Textile and Apparel Agreement (ATC)", the United States, the European Union, Canada, and Turkey implement quotas for China's major textile and apparel imports, and implement bilateral monitoring.
The second phase: From 2005 to 2008, developed countries implemented special safeguard measures and developing countries implemented unilateral import quantity management. After the global textile trade integration in 2005, the quota management was canceled. The developed countries such as the United States and the European Union initiated investigations based on the provisions of special safeguard measures in the "China's accession protocol". In order to resolve trade frictions, China and the United States and the European Union respectively signed "parts of textile and apparel." Agreement Memorandum of Understanding, China has implemented export quantity management for some textile and apparel products. Developing countries such as Turkey, Brazil and South Africa unilaterally implement imported quantity management for some textile and apparel imports from China.
The third stage: In 2011, developing countries implemented general safeguards. The biggest difference between the general safeguard measures and quota management and special safeguard measures initiated by Turkey and Indonesia for imported textiles is that: First, not only for China, but also for global suppliers; second, it is not limited to the use of quantitative restrictions, it is more inclined to adopt The method of increasing tariffs restricts imports. Third, the duration of the special safeguard measures in paragraph 242 of the â€œReport of the Working Group on Chinaâ€™s WTO Accessionâ€ and Article 16 of the â€œChina Accession Protocolâ€ expires at the end of 2008 and 2013 respectively. General safeguards do not have this restriction.
Case initiation reason
General safeguards are derived from the provisions of Article 19 of the â€œGATT 1994â€ and the â€œWTO Safeguards Agreementâ€. States initiate investigation procedures in accordance with their national safeguard measures. This measure is mainly initiated when the quantity of imported products is absolutely or relatively increased compared with domestic production, and serious harm or serious damage is caused to the domestic industries that produce similar or directly competing products.
Judging from the above two general safeguard measures initiated by Turkey and Indonesia, the products restricted by the two cases are mainly fabrics and some clothing products. The woven fabrics used in the restricted products proposed by Turkey involved 13 tax numbers, 20 garment tax numbers, and 11 taxation numbers for the woven cotton products in Indonesia. According to the statistics of China Customs, in 2010 China's exports to Turkey involved 8.3 billion U.S. dollars, of which woven fabrics exported 560 million U.S. dollars, garment exports 270 million U.S. dollars, and Indonesian woven cotton fabrics exported 55.93 million U.S. dollars.
Due to insufficient production capacity, developing countries such as Turkey and Indonesia are importing a large number of fabrics from around the world each year to meet the demand for domestic garment processing. China is its most important supplier of fabrics. However, the fast-growing imports have also caused dissatisfaction with the restrictions imposed on domestic textile manufacturers, coupled with their domestic and international political factors, the two countries have introduced measures to protect the interests of domestic companies.
The Indonesian tax time is 3 years. What Turkey is currently adopting is temporary security measures and has not yet set a time limit for implementation.
China is the largest supplier of textiles and clothing to Turkey and Indonesia, and is also the most affected by the aforementioned safeguard measures. According to authoritative data, in 2010 Turkey imported 2.395 billion US dollars of textiles and clothing from China, an increase of 58.02%, accounting for 25.79% of Turkey's market share, an increase of 3.73 percentage points from the 2009 share. During the same period, Turkeyâ€™s imports from Bangladesh, India, Vietnam, and South Korea also recorded rapid growth, up 59.01%, 43.83%, 57.63%, and 39.79% year-on-year respectively.
From January to November 2010, mainland China ranked first in Indonesian textile and apparel imports, reaching US$1.475 billion, an increase of 58.53%, accounting for 36.08%. During the same period, Indonesiaâ€™s imports from Korea, Hong Kong, and Vietnam increased by 45.19%, 36.73%, and 60.34%.
The data shows that precisely because of the rapid growth of imports from around the world, Turkey and Indonesia have imposed restrictions on not only China but also global suppliers.
How should Chinese companies respond?
In recent years, most of the surveys that initiated general safeguard measures were in developing countries. They were previously used in other products and were less targeted at textile and apparel products. Since 2010, the number of general safeguard measures against textiles has increased and the scale has been upgraded.
Judging from the form of general safeguard measures, quantitative restrictions can be adopted, and methods for raising tariffs can also be used; considering the implementation cost and other factors, most of the sponsoring countries have adopted a tariff increase law. In terms of implementation time, the implementation time of general safeguard measures shall not exceed 4 years. In special cases, it may be postponed, but the longest period may not exceed 8 years. The implementation period of developing countries may be up to 10 years.
General safeguards are a legal issue. Safeguards investigations include initiation, investigation procedures, interim measures, and final decisions. There are many irregularities in the investigation of safeguard measures in developing countries. However, if they can seriously and actively respond, submit defense opinions in a timely manner, convey Chinese opposition, and strengthen inter-governmental representation, they can also influence the final decision of the country that initiated the case. Therefore, giving full play to the respective advantages of the government, chambers of commerce, localities, and enterprises is the key to jointly responding to general safeguard measures.
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