The current regime of double checking surveillance system of imports for the product categories originating in China listed in Annex V to the Council Regulation (EEC) No 3030/93 of 12 October 1993 on common rules of imports of certain textile products from third countries will expire on 31 December 2008.

From 1 January 2009, the release into free circulation of textile and clothing products originating in China will no longer require any import licence or surveillance document regardless of their date of shipment.

Source: 11.12.2008 Official Journal of the European Union C 316/17

From January 1st 2009 all cargo bound for China will be subject to the 24 hours advance manifest rule.

The loss of  24 hours to the current manifest filling of 48 hours will have a significant impact on the way carriers handle their documentation and operations for shipments bound for China. The shipping lines and their clients will be forced to adjust their internal workflow in order to meet the different time scale required by this new rule.Only the US and Canada have enforced such rules so far in order to prevent arms and ammunition from entering through the sea route.

Today the European Commission has adopted by written procedure a regulation providing the legal grounds for Member States to begin issuing import licenses to Chinese exports currently blocked from entering the European Union. The regulation will be published in the Official Journal September 13 and will come into force on Wednesday September 14. At this time, Member states will have the legal grounds to issue import licences to the relevant products.

The Regulation will provide for the following:

• The import levels have been modified to provide sufficient amounts to enable the import of all the blocked quantities (estimated at 87 m pieces). Half of this amount will be unblocked through flexibilities agreed with China: transfer of agreed quantities from 2006 into 2005 in categories 6 (trousers) and 31 (brassieres) to clear totally the pending goods, as well as partially (up to 5 % of the 2006 level) for category 5 (pullovers); for the other categories and for the rest of the amounts needed for category 5, the amounts will be transferred from the 2005 quantities of category 2 (cotton fabrics).
• The other half of the quantities needed are being provided by a unilateral increase of the import levels on the European side through the provision of additional quantities.

In order to avoid any possible further problems of blockages this year a number of measures have been taken:

• the additional quantities provided by the EU have been rounded up in order to have an extra security margin
• a reserve of 2073 tons in category 2, which China agreed to provide from the 2005 levels will provide a reserve which can be used by the Commission to transfer from category 2 into other categories amounts that may be necessary
• flexibility provisions allowing 5 % of advance use, 7 % of carry over from previous years, and 4 % of inter-category transfer among certain product categories, have been introduced.
• These flexibility provisions will be available also in 2006 and 2007, thus enabling a better management of the agreed levels.
• The deadline for importers to request the issue of import licences for goods shipped from China before 20 July has been extended until 20 September. This should allow parties to have the clearest possible picture of the number of license applications pending. After that date, no such requests will be considered.
• A facility for Outward Processing Traffic - whereby part-finished clothing is finished in China and re-imported to Europe - has been introduced and will be immediately available for use by industry, in accordance with the normal rules in force within the EU.

The Commission and the Chinese authorities are in close contact. A Joint Administrative Arrangement to ensure a smooth management of the MoU of between the Commission and China’s Ministry of Commerce is also being finalised.

EU Member States have this afternoon backed EU Trade Commissioner Peter Mandelson’s reform of the EU’s Generalised System of Preferences (GSP). Agreement by Member States, led by the Luxembourg Presidency, breaks a three month deadlock in Council that has delayed the adoption of the new preferential access system. The reform of the GSP will make the EU’s system of preferential market access for developing countries both simpler and fairer. While the new GSP system as a whole will apply from 1 January 2006, application of the GSP Plus incentive system, which grants additional preferences to vulnerable developing countries that pursue good governance and sustainable development policies, will be fast tracked to apply from 1 July 2005.

Background

Through its Generalised System of Preferences the European Union extends preferential access to its markets to developing countries. The EU GSP is the most generous of all developed-country GSP systems. In 2003 EU imports under GSP totalled €52 billion. Under the EU GSP between 1999-2003 developing countries share in total EU imports grew from 33% to 40%.

The current GSP, in place since 1995, applies to imports from developing countries that pay duty on entering the EU market and that are not already duty-free under Most Favoured Nation agreements.

The reform proposed by Commissioner Mandelson simplifies the EU GSP scheme by reducing the number of GSP arrangements from five to three. The coverage of the general GSP scheme will be extended to 300 additional products mostly in the agriculture and fishery sectors. A new ‘GSP Plus’ incentive scheme will be targeted at especially vulnerable countries that have ratified and effectively implemented key international conventions on sustainable development, labour rights and good governance. It will cover around 7200 products which will enter the EU duty free. The GSP Plus incentive scheme will be fast-tracked to enter into force on a provisional basis on 1 July 2005.

The eligibility of countries placed in the GSP Plus incentive scheme will be confirmed by an assessment of their effective implementation of core human and labour rights, good governance and environmental conventions before the beginning of 2006. The ‘Everything but Arms’ arrangement which grants duty and quota free access for all imports except arms from least developed countries will remain unchanged.

The new system is made fairer by focusing preferential access on countries that have a lower share of EU imports. Groups of products from beneficiary countries which in a given sector account for more than 15% of EU imports from GSP countries are “graduated” and cease to benefit from preferential access. In the case of textiles the “graduation threshold” is set at 12.5%, as it is for clothing.

Under the new regime, China will be graduated for 80% of its exports, although it remains in the GSP. As in the previous regime, Indian textiles will not benefit from the GSP preferential access although its clothing exports will continue to do so.

As part of a wider review of its Rules of Origin, the EU is in the process of reforming the Rules of Origin that govern GSP eligibility. The objective is to simplify and, where appropriate, relax these rules to provide further access for developing countries.

The new GSP will remain unchanged until the end of 2008 hence providing stability and predictability for importers and exporters. At the end of this period, the allocation of preferences will be reviewed to better meet evolving development needs of each country.

Trade Commissioner Peter Mandelson today announced that he has decided to ask the European Commission to authorise him to launch investigations into nine categories of Chinese textile exports to the EU. This decision was made in the light of a sharp surge in imports from China during the first quarter of 2005. In all these categories, import volumes for Chinese textiles have risen above the ‘alert levels’ defined by the guidelines published by the commission on 6 April. The Commission will now conduct a rapid investigation (maximum two months) to determine if market disruption has occurred and whether the EU should impose special safeguard measures. In parallel, it will launch immediate consultations with China in an attempt to find a satisfactory solution.