EU TA Industry Measures

The European Commission has adopted measures aimed at strengthening the competitiveness of the EU textile and clothing sector in anticipation of the elimination, after almost of four decades, of WTO import quotas in January 2005. This profound change in trade in textiles will take place shortly after EU enlargement, which will add half a million direct employees to the EU textiles and clothing industry's 2.1 million workforce. The Commission has identified areas to enhance the EU industry’s dynamism and competitiveness, which will be translated into concrete measures after consulting with all stakeholders.

Areas of Action
Research and development and innovation: R&D in areas of specific relevance for the textile sector such as development of new materials (including technical textiles), new production processes and clean technologies to contribute to sustainable development. Innovation should focus on fostering creativity and fashion,

Education and training policy: improve SME’s access to existing funding opportunities by simplifying application procedures, disseminating information and co-ordinating actions to avoid duplication,

Regional policy: programmes and initiatives for regions particularly dependent on textiles both in the framework of the discussions on the future of structural funds after enlargement and in the discussions on the new Financial Perspectives for the EU 2007-2013.

Actions in External trade

-          in the context of the WTO Doha Development Agenda, promote the significant reduction and harmonisation of customs duties to enhance market access and the elimination of all non-tariff barriers

-          complete the Euro-Mediterranean area by 2005, to ensure free movement of textiles for those countries applying the same rules of origin and an agreed system of administrative cooperation

-          concentrate the EU’s trade preferences on the poorest countries, and provide these countries with the possibility to source intermediate inputs for the manufacture of garments which can be exported to the EU without losing trade preferences

-          explore the use of labelling to facilitate access to the EU of products made in respect of international labour or environmental standards

-          action to enforce intellectual property rights and to fight against fraud and counterfeiting

-          increased vigilance to counter unfair trading practices examine the use of a “Made in Europe” label of origin to promote European quality products and offer consumers better information.

Importance of EU Textiles and Clothing Industry 
It may look strange for a grouping of developed countries such as the EU to be worried about the future of the textiles and clothing industry but it indicates the importance of this industry:

-           The EU is the world’s largest trader of textiles and clothing (T&C) products which in 
             the year 2002 amounted to 113 billion Euro (71.4 billion Euro imports and 43.5 billion 
             Euro exports;

-           The EU is the biggest exporter of textiles products and the second largest exporter 
            of clothing products;

-           In 2002, the EU T&C sector comprised of 177,000 enterprises (mostly SME’s), directly employing 2.1 million people;

-           Total turnover of the EU T&C industry is estimated at 200 billion Euro;

-           The next EU enlargement in May 2004 will add another 0.6 million people who are directly employed in the industry;

-          The EU T&C industry has established strong links with Mediterranean countries through investments and subcontracting relationships. In 2002, 58 % of EU textile exports went to these countries, mostly for processing and transformation into garments (in 2002 the EU exported 16.6 billion Euro of textiles and imported 25 billion Euro of garments to and from these countries); and

-           EU investments and subcontractors also gain through the market access given to 
             the Mediterranean countries in other quota markets;

Background for formulation of an EU-wide policy
The EU is in particular having a re-look at the T&C industry at this time due to:

-          The expiry of the Agreement on Textiles and Clothing (ATC) on 31st December 2004 would free trade of all T&C products that are currently restricted by quantitative quota limits.

-          The impending EU enlargement in May 2004 will bring in 10 new member states that are economically backward as compared to its current 15 member states. (The combined GDP of the new member states is only the size of the GDP of Spain, one of the poorer of the current EU member states). These new member states are dependent more heavily on the T&C industry than the current EU, not only through domestic investments but through EU investments and sub-contracting relationship.

-          There is concern that the end of the ATC will benefit only a small number of exporters, particularly China. It is feared that competition from China may wipe out the T&C industry in most countries, including EU investment aboard.

-          There will be economic difficulties internationally if China dominates the T&C exports.  The share of T&C exports of total exports of selected countries worldwide, including neighbouring countries to the EU in the Mediterranean are : Bangladesh (95%), Laos (93%), Macao (89%), Cambodia (83%), Pakistan (73%), Sri Lanka (71%), Nepal (61%), Tunisia (46%), Morocco (43%), Turkey (38%),  India (30%), Romania (27%), China (12%).               

  Back to Index of January 2004