While the EC has asked India to fulfill its commitments under a EU-India memorandum of understanding (MoU) on market access for textile products, New Delhi in turn has said it would await the outcome of Portugal questioning EC's locus standi in giving assurances on member-countries' behalf. "We would like the European Court of Justice to first decide on the case filed by Portugal on challenging a similar MoU with Indonesia. Whatever commitment we make to EC as per the MoU, it will be extended to other countries also. If the court strikes down the MoU, we will end as losers," Apparel Export Promotion Council vice-chairman Rakesh Vaid said.

The embargo on nearly five lakh pieces of T-shirts, 1.6 lakh pieces of trousers and over 7 lakh pieces of dresses, totally worth Rs 30 crore,has led to these goods being held up in various ports of Europe since November 1998.

The shipments have been held up on the grounds that India had over-utilised the imports quota in the EU for these garments under category 4, 6 and 26 in 1998.

Though such an embargo should have lapsed automatically from the new year, the dispute over market access has led to the goods not being cleared.As per the bilateral market access agreement with EU, India should relax curbs on certain textile items and reduce customs duty on these shipments.India has, in fact, done more than what has been proposed in the agreement. The curbs have been relaxed and duty fixed lower than the prescribed limit.However, what is not acceptable to the EC is that India has not notified it to the World Trade Organisation (WTO).

"India will have to notify it to the WTO. The (Portugal) case has nothing to do with India. In fact, what has been challenged is the procedure of the agreement and not the substance," EC sources said. "We havealready given a written assurance to the EC that we will honour the MoU. But the EC is not willing to agree to our view point," Vaid said.

"India has repeatedly been violating the MoU," EC sources said.'' However, India had sought the flexibility only until the European Court of Justice, where Portugal's case is pending, settled the issue. Indian garment exporters say EC members wanted them to take away the held-up goods and then export again under the fresh quota for 1999. It was a sort of punitive measure to ask Indian exporters to take back the goods and then re-export, they feel.

Portugal is interested in blocking the proposal as its textile shipments comprise one-third of its total exports, Vaid said. India had faced a similar problem in 1996 but it was settled through negotiations with the EU relaxing the import quota curbs. Even in 1997, India was allowed some flexibility in export to EU.

For 1998 also AEPC began allocating export quotas on the assumption that flexibility would be allowed again.However, the allocation was stopped in June when AEPC felt that there could be some difficulties. Following discussions with EC, AEPC began allocating quotas in September 1998 but in December, EC imposed the embargo for over-utilisation.