The future of the textiles and clothing sector in the enlarged European Union
Within the framework of the sectoral application of its industrial policy, the European Union seeks to improve competitiveness and competitive conditions in the textiles and clothing sector. In putting forward a framework of measures and lines of action, this Communication sets out a strategy aimed at helping the textiles and clothing industry face the new challenges presented by an expanded and globalised market. The Commission places particular emphasis on the implications of the new issues and challenges in the field of trade policy
Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions, of 29 October 2003, on "The future of the textiles and clothing sector in the enlarged European Union" [COM(2003) 649 final - Not published in the Official Journal].
With an annual turnover of 200 billion and over 177 000 enterprises employing more than 2 million people, the textiles and clothing industry plays an important role in a number of regions in the European Union (EU). The sector's share of total manufacturing value added at EU level amounts to roughly 4%, and its share of total manufacturing employment to 7%.
By putting forward a framework of measures and lines of action, the Communication sets out a strategy to help the textiles and clothing industry face the new issues and challenges presented by an expanded market. The aim is to improve competitiveness and competitive conditions in the sector. The challenges facing the textiles and clothing sector are mainly linked to the enlargement of the EU, changes in international trade, and the influence of the industry's permanent restructuring and modernisation process on its competitiveness factors.
In the course of the last few years, textiles and clothing companies in the 15 EU Member States prior to enlargement on 1 May 2004 (EU-15) relocated their production facilities to the candidate countries and other non-EU countries and continued their sub-contracting activities. For these companies, enlargement offers further investment opportunities.
In general, the textiles and clothing sector plays a more important role in the economy of the candidate countries than in the EU-15. For the candidate countries, enlargement increases the pressure to restructure and modernise the sector, given that their markets risk being invaded by low-price competing products from third countries. They are also seeing relocation of mass production to third countries and experiencing additional costs in having to respect the Community acquis in the field of environmental protection and health and safety requirements.
On 1 January 2005, quantitative restrictions on imports will be abolished under the World Trade Organization (WTO) Agreement on Textiles and Clothing (ATC). This will lead to increased competitive pressure in the EU from the main non-EU producers, such as China. The impact of this increased pressure will be particularly acute in European regions with a very high concentration of textiles and clothing production. It will also be felt in some of the least developed countries (LDCs) and other countries which have preferential agreements with the EU.
Disparities will, however, remain between tariffs in the EU (9% on average) and tariffs in other countries (which can amount to over 30%). If the situation is not rectified, the European market will be very open, but the European textiles and clothing sector will not be able to expand into those countries where imports barriers are high.
The WTO 's Doha Development Agenda (DDA) offers an opportunity to set out the terms for the reduction and harmonisation of tariff levels to attain uniform market access conditions. The solution here should be compatible with the preferential access to the EU enjoyed by certain countries, such as such as African, Caribbean and Pacific (ACP) and Euro-Mediterranean countries.
In recent years, the textiles and clothing sector has experienced major changes linked to competitiveness sparked mainly by:
- technological changes;
- developments in different production costs;
- the emergence of major international competitors (such as China)
- a lengthy process of restructuring, modernisation and incorporating technological progress.
A number of policies have an impact on the business environment for companies in the textiles and clothing sector, and thus on their competitiveness:
- research, development and innovation: the production of new intelligent materials and highly specialised products, the development of new and more efficient processing methods and the marketing of creative products at competitive prices;
- information and communication technologies (ICT): the development of business-to-business (B2B) e-commerce among small and medium-sized enterprises (SMEs);
- vocational training: high-quality training that is relevant to the sector's new profile and environment, better training of the existing workforce;
- employment: the promotion of equal opportunities, managing change and the European Sectoral Social Dialogue;
- the environment: reduction in the amount of waste water discharged and the chemical load this waste water carries, adoption of a life-cycle approach to manufactured products which takes their environmental impact into account;
- chemicals: the EU's new chemicals policy (the future draft REACH Regulation);
- consumer affairs and public health;
- corporate social responsibility: to be fostered mainly among SMEs;
- intellectual property rights;
- regional aspects;
- competition policy; state aid and Internal Market issues.
STRENGTHENING THE SUSTAINABLE COMPETITIVENESS OF THE SECTOR
In order to strengthen the competitiveness of the textiles and clothing industry, this Communication suggests that the EU and Member States need to ensure a coherent policy mix and the adequate availability of instruments.
With the abolition of quotas on 1 January 2005, competitive pressure on EU firms will increase. It is therefore important that they in turn find outlets in international markets which are often still protected by trade barriers. The Communication emphasises the need to create identical market access conditions for all textiles and clothing producers.
Achieving the objective of a Euro-Mediterranean free trade zone will make it possible to bring the EU textiles and clothing sector together with that of the Mediterranean countries (including Turkey and, in the longer term, the Balkan countries).
The developing countries will not only face stiffer competition from 2005 onwards, but are also ineligible for tariff reductions on some of their garment exports to the EU, mainly because of certain current rules of origin. In order to at least partly remedy this situation, the Communication proposes either to concentrate trade preferences on the poorest countries (concentration of unilateral preferences), or to improve the use of preferences (cumulation of origin). The rules of origin should take into account the capacity of these countries to produce garments which are likely to be exported to the EU, without losing trade preferences.
In order to protect the intellectual property rights of the textiles industry (branding, fashion and design), protection in third countries needs to be improved, in accordance with the WTO Trade Related Intellectual Property Rights (TRIPs) Agreement.
The promotion of sustainable development in all its dimensions (economic, social, and environmental) will also help ensure increased competition and trade liberalisation should contribute to that objective.
Research, development and innovation policy
The 6th Framework programme for Research and Development contains funding possibilities for the textiles and clothing sector. The better coordination of actions by the Member States and the EU should also be envisaged in the field of innovation and research, as well as in education and training.
Education and training policy
New skills and training programmes are needed.
Regional and cohesion policy
Re-training and redeployment programmes need to be established in European regions which depend upon the textiles and clothing sector. The adoption of specific measures at regional level has already been taken into account in Objective 3 of the Structural Funds and in the European Social Fund. These aspects have also been considered within the framework of the new Financial Perspectives 2007-2013.
The Commission will examine the feasibility of promoting industrial cooperation initiatives between enterprises in the EU and in other major textiles and clothing producing countries.
Other measures - consumer issues
The overall objective of sustainable development should be pursued in all its dimensions (economic, social, and environmental). This objective should be promoted through specialised international institutions. At European level, one specific measure would be to bring in labelling schemes to better inform consumers. In this respect, the introduction of a 'Made in Europe' label or a label of origin for textiles and clothing products marketed in the EU shall be considered.
This Communication should be viewed in the context of the Commission Communication of December 2002 on industrial policy in an enlarged Europe. The Commission does, in effect, pursue a horizontal industrial policy that aims to improve conditions for all enterprises. This Communication on textiles and clothing is one of the sectoral applications of this horizontal industrial policy.
In connection with this Communication, the Commission has set up a high-level sectoral group for the period 2004-2006, whose task will be to translate the proposals into effective actions.