European Textile Firms Protest Pakistan Deal

European Union trade concessions for flood-ravaged Pakistan have triggered a backlash among European manufacturers, led by an EU textile sector already imperiled by Chinese imports.The tensions show how the economic downturn is increasing anxieties over trade to the point where even targeted humanitarian efforts to lower tariff barriers are called into question.The European Commission, the EU’s executive, Wednesday approved tariff waivers on 75 categories of imports from Pakistan for up to three years. The gesture followed an order by EU leaders eager to show they’re helping some 10 million Pakistanis left without shelter after violent flooding this summer.
Pakistan isn’t a big exporter to the EU, shipping only $4.2 billion worth of goods to the bloc last year. It ranked a distant 46th among EU trading partners, between the United Arab Emirates and Serbia.However, more than 75% of those exports are textiles, clothing, leather or related products, and those goods will make up a majority of the roughly $140 million in total extra trade the EU says the deal will generate from eliminating the EU tariffs.That’s a problem for European textile manufacturers, mostly located in Europe’s southern rim, from Portugal to Italy to Romania. Thousands of small shops and their workers have been getting crushed ever since China joined the World Trade Organization in 2001, partially opening up European textile markets. Some of these European economies are suffering slow growth because of the euro zone’s debt problems.
China’s rise has also made it difficult for the EU to compete on global markets. Total exports of clothing by the EU’s 27 current members to buyers outside the EU have shrunk to 144,202 tons in 2009, from 170,644 tons in 2000.Euratex, the lobby group that represents the continent’s textile industry, says Pakistani imports could potentially destroy 120,000 jobs in the EU over the next three years.In a letter to EU leaders, Euratex President Peter Pfneisl said the Pakistani textile industry “is located outside the flooded areas” and that it doesn’t need the help. Many companies, he said, have turnovers of several hundred million dollars a year, high by EU standards.
Mirza Ikhtiar Baig, adviser to the federal government on textiles and owner of Pak-Denim Ltd., a large Karachi-based textile producer, said hundreds of thousands of displaced people have made their way to textile-producing centers such as Karachi and Faisalabad, which although unaffected by the floods themselves are big cities that offer hope to refugees from their hinterlands. “If exports increase, then more jobs can be created for people who are suffering.”Pakistan’s government says total Pakistan textile exports to the EU account for less than 1.4% of Europe’s total annual textile purchases, meaning the country’s output doesn’t pose a major threat to local producers. “China’s share is much larger,” Mr. Baig said.Karel De Gucht, the EU trade commissioner, also dismissed fears within the EU. “This is a courageous proposal we are making that is of considerable help to the Pakistani economy – Online