COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(91)399 final 
Brussels, 25 October 1991 
IMPROVING THE COMPETITIVENESS OF THE 
COMMUNITY'S TEXTILE AND CLOTHING INDUSTRY 
(Communication from the Commission to the Council 
and the European Parliament) 
- 1 -
SUMMARY 
This communication follows on from the annual report on the 
textile and clothing industry presented by the Commission in 
April 1991. In accordance with the principles set out in 
the Commission communication on industrial policy, it 
attempts to give a better definition of the challenges the 
industry is facing and to outline action which the Community 
could take to help with the structural adjustment of textile 
and c loth i ng f i rms. 
Structural adjustment of the industry will depend primarily 
on proper integration of the various links in the textile 
and clothing chain throughout the Community, emphasizing the 
strong points (specialization) and making production more 
compIementary. 
This will require a large-scale information and 
communication campaign, improvements in quality and 
widespread technological innovation. 
If this restructuring is to be successful, a special effort 
will have to be made to encourage unprofitable companies to 
reconvert. They will require support in the form of 
complementary national and Community measures to create new 
jobs in other industries and to retrain workers employed in 
firms in those sectors of the industry being restructured. 
InternationaM y, there is a move towards greater 
deregulation and the formation of a large market. This will 
bring opportunities but also constraints. 
In order to support structural adjustment and to provide 
opportunities for its industry, the Community, in 
multilateral GATT negotiations, will continue with its 
attempts to open up the markets which provide important 
export potential for the Community industry. Another 
feature of commercial policy for the next century is to set 
up effective machinery to deal with Jthe unfair and illegal 
practices which are typical of the textile and clothing 
industry. 
- 2 -
INTRODUCTION 
In November 1990 the Commission proposed to the Council and 
to the European Parliament a Community approach to 
industrial policy in the present competitive environment.1 
This communication applies the same approach to the textile 
and clothing industry, which is currently facing some major 
challenges and is forced to come to terms with structural 
change, which in some cases will be radical. 
The aims of this communication are: 
to give a brief description of the structure of the 
industry and the problems it is facing; 
to propose a coherent set of measures which the 
Community and the Member States could adopt to improve 
the competitiveness of firms, particularly in the long 
term. 
A structured Community-wide approach to the textile and 
clothing industry makes even more sense at a time when many 
Member States have recently started thinking about or 
preparing national action plans to cope with all the current 
problems and developments expected in the future. It is 
also important to ensure that the measures which will have 
to be taken by industry and, at various levels, by the 
public authorities are mutually compatible, and to avoid a 
situation where failure to establish clear guidelines 
produces results which will cause problems at Community 
levé I . 
To this end, and in order to demonstrate its concern for the 
socio-economic problems which arise from changes to the 
industry, the Commission, at the General Affairs Council on 
30 September, undertook to present structural measures to 
modernize and improve the competitiveness of the industry in 
Portugal and the other regions of the Community affected by 
the changes. t 
In general terms, most of the factual information referred 
to in this communication is in the annual report on the 
textile and clothing industry.2 This document must be read 
in conjunction with that report. 
Communication of the Commission to the Council and to 
the European Parliament on industrial policy in an open 
and competitive environment - C0M(90)556 final of 16 
November 1990. 
SEC(91)405 final of 5 April 1991. 
- 3 -
A. THE EUROPEAN TEXTILE AND CLOTHING INDUSTRY 
The Commission's latest annua! report on **• ^°"Je™ 
textile and clothing industry paid particular attent'on . ™ 
recent structural changes in the industry up to tne 
beg i nn i ng of 1991. 
The purpose of this chapter therefore is to give a br^ 
update and to describe the main features of the sector from 
an industrial point of view. 
1 . Recent developments 
The current economic position of the European textile and 
clothing industry is not very promising, and recently has 
suffered from structurai deterioration. 
The slowdown in activity which affected the whole industry 
in the second half of 1990 has worsened in recent months. 
Apart from sluggish final consumption and loss of their 
share of the Community market because of a recent increase 
in imports, European firms are increasingly obliged to sell 
their products at unprofitable prices in order to maintain 
leveis of production. This has prompted many of them to 
rethink their strategies, and in some cases even to close 
'down'product ion units or file for bankruptcy. Even in those 
areas where the industry nas been extensively restructured 
and modernized, it is not certain that firms will be able to 
improve their competitiveness in view of the serious 
implications of the present situation. 
2. The importance of the industry 
The textile and clothing Industry is of cons Iderable 
economic and socf al Importance in many areas of the 
Commun/ty and st111 has a highly complex and I ntegrated 
structure. The various textile areas have their own 
dIstI net ive features. 
There is a vast market for textile and clothing products in 
the Community. In 1989 househo I ds tl devoted 6% of their 
expenditure - some ECU 300 000 million -. to the purchase of 
clothing and finished textile products for household use. 
In addition to household expenditure, industry and services 
purchased some 25% of all the fibres produced by the 
industry in Europe. 
The textile and clothing industry is also important in terms 
of production. More than 3 million people work in the 
industry itself and its production accounts for 9% of value 
added by manufacturing industry. It is still absolutely 
vital In some of the less developed regions of the 
Community, particularly in those countries which joined the 
Community more recently. 
- 4 -
It is a very diverse and very dynamic industry consisting 
largely of small firms, each with their own special 
features. Its organization is extremely complex, both 
because of the large number of different production stages 
and the variety of links which can exist between them. 
Moreover, within the Community, there are marked structural 
differences between the nature and size of firms, their 
market niches, their commercial strategies (outward 
processing, shifting production abroad, etc.) or the volume 
of investment per employee. 
These differences have not prevented increasing integration, 
which has resulted in rapid development of Community trade 
from the initial stages of production and an increasing 
number of takeovers and mergers in recent years. 
3. Business strategies 
In order to meet the chat Ienge to improve its 
compet 11 iveness, the Industry is in a state of flux 
throughout Europe. 
Europe's textile and clothing firms are increasing their 
efforts to cut costs and improve productivity. They are 
attempting to respond to changes in demand more swiftly and 
are constantly upgrading the fashion and style content of 
their products. They are striving to maintain a presence on 
world markets by adopting complementary production and 
logistics strategies (decentralization, subcontracting, 
shifting production abroad, etc.). These efforts at 
modernization and restructuring are taking place all the 
time and have led to extensive reductions in the workforce, 
a trend which will continue. 
5 -
B OUTLOOK FOR THE FUTURE: CHALLENGES AHEAD 
As with any sector of the economy, there are a number of 
different factors which affect development of the textile 
and clothing industry and the way it adjusts to other 
aspects of its environment. 
1 The gradual opening up of markets 
Although on its market the average increase in demand is 
below the general average, growth on the textile and 
clothing market has been significant, and considerably 
higher than growth on the world goods market in general.3 
This trend is likely to continue, and Community products 
will face more competition on the European market. 
Moreover, the opening up of new markets outside the 
Community should encourage the Community industry to do more 
to exploit those markets where the nature of its production 
i s an asset. 
For its part, the Community has worked hard to expedite 
moves to open up its market to textiles from Hungary, Poland 
and Czechoslovakia. This should not affect the process of 
adjusting industrial competitiveness to market conditions, 
particularly in those areas of the Community most dependent 
on the textile industry. A preliminary attempt to assess the 
impact on Portugal of this new openness is given in Annex. 
2. The internal market: an important factor 
The internal market will play an important role in improving 
industrial competitiveness. In future, diversity and 
competition on the internal market in Europe will encourage 
the sale of fashion designer goods typical of the textile 
and clothing industry. To offset this advantage, the 
disappearance of regional quotas is likely to increase the 
pressure of competition from countries outside the 
Commun i ty. 
With the establishment of the single market in textiles in 
1993, any appl icat i on of the safeguard clause will have to 
be Community-wide.Work is still under way to devise 
solutions for situations of excessive concentration at 
reg i onaI I eve I . 
Between 1980 and 1989, the figures were 101% 
former compared with only 53% for the latter. for the 
6 -
3• Encouraging more integration with the Mediterranean 
countries and the countries of Eastern Europe 
Intensification of industrial links and economic relations 
along the north-south and east-west axes constitutes both an 
opportunity and a challenge. European firms are interested 
in these countries, to varying degrees, in terms both of 
markets and of subcontracting and relocating some of their 
product ion. 
Although their political, administrative 
situations differ considerably, all these 
certainly provide opportunities - although 
different degrees - for the development 
cooperation, which will improve the overall 
of these firms on the European and world 
allowing the industry to retain its advantages in terms of 
industrial tradition, entrepreneurial initiative and 
commercial experience. and econom i c 
count ries will 
aga in to very 
of i ndust rial 
compet i t i veness 
markets, while 
The national and Commun!ty public authori11es must provide 
firms with a stable framework In which to develop this 
coopérât Ion. 
7 -
C. PRINCIPLES. OBJECTIVES AND POSSIBLE LINES OF COMMUNITY 
ACTION 
Because the textile and clothing industry plays very 
different economic roles in the various Member States, its 
social importance varies. It is essential that these 
different situations should be properly reflected in a joint 
Community framework when the industry is being reorganized 
on a Community scale. 
The best balance between structural change and adjustment in 
terms of employment in the industry, and the type and scale 
of the associated measures, will also depend on the specific 
local circumstances and on the priority given by national 
and regional public authorities to structural change in the 
i ndustry. 
Any changes should also comply with the Community's approach 
to industrial policy. This approach is based in particular 
on the need to: 
(I) maintain a favourable business climate in the form 
of an eff icient market economy where it is prI mar Ily 
up to economic operators to take initiative or 
responsIbi11ty In respect of structural change; 
(II) ensure proper applicat(on of internal compet111 on 
rules ; 
(ill) encourage a positive approach to change in order to 
avoid firms resorting to defensive protect I on Ist 
measures ; 
(lv) maintain an open approach to markets and respect for 
rights and obi i gat i ons when applying compet111 on and 
commercial rules at International level. 
The following paragraphs will outline proposals complying 
with these principles for the various areas of Community 
action. 
1• Commerc i a I DO I i cy 
The textile industry has always been extremely international 
and in the last few decades has played a major role in 
developing international trade. Consequently, optimum 
distribution of resources and guaranteeing conditions of 
fair competition are problems which are not confined only to 
national or Community markets but have to be tackled on a 
worId sea Ie. 
in order to create an optimum business climate which will 
allow economic operators to modernize so as to adjust to new 
markets and new technologies, certain aspects of commercial 
policy will have to become major features of the textile 
i ndust ry. 
- 8 -
Only if there is a climate of competition at world level 
will policies to shift all or some of production abroad or 
to establish international networks finally achieve their 
object i ves . 
1 • 1 MÊlûing 1Q -P_E>.e.n_.__ujP__ J_h_e__jiLa_r_kjS.Ls_ o_f_ ngji-C^ammnlt y_ 
c_o_imir_iÊS_ (jjLdjjJLUlfl 131111 D_e_a_k_s_ JUUi QQ_ELi:iâLlll 
b_âLLie_L£l 
Many countries still protect their textile and clothing 
market by setting extremely high unbound tariffs and by 
erecting non-tariff barriers (like quantity restrictions, 
administrative formalities and import deposits). In many 
cases, such excessively protective measures are not 
justified by the level of development of the local industry. 
In the Uruguay Round, the Community therefore made its offer 
of gradual integration of the textile industry into GATT 
contingent upon all the contracting parties gradually 
opening up their domestic markets. 
The Communi ty will take every opportuni ty in ongoing and 
future mui111ateral and biIateral negotI at Ions to reaffirm 
this linkage and will strive to obtain effective reductI on 
of tariff barriers (eli mlnat ion of peaks, substantial 
reduction and harmonization of tariffs) and non-tariff 
barriers which limit the scope for exporting Community 
textile and clothing products. 
1 . 2 Ex_CQLi_p_r_Q_mo_iio_n 
Stagnation of internal demand and increasing competition 
from imports make it desirable to step up exports, 
particularly to those countries with large and rapidly 
growing markets. It is Important to maintain and indeed to 
increase the support given in 1991 to attempts by those in 
the industry to find out about and survey markets outside 
the Community in general, to Identify specific and permanent 
obstacles to trade, where the Commission has means of 
pinpointing them, with a view to their removal, and finally 
to organize trade fairs and exhibition^. 
t 
The support given by the European Parliament In granting 
resources for the promotion of exports by the textile and 
clothing industry has reinforced the approach taken by the 
Comm i ssI on . 
To the same end, the Commission and the Member States should 
also attempt to find ways of improving and integrating 
existing information systems and support measures already in 
progress, with particular attention being given to the needs 
of smaII f I rms. 
- 9 -
1 .3 M.akiQa_iiLms__inie_LQâii°-n.âi 
For some years now an increasing number of European firms 
have been following strategies designed to make their 
production international so as to improve their 
competitiveness on all world markets and to maintain 
activity within the Community based on creativity and 
"short-circuiting". These strategies are made more 
difficult by the conditions and restrictions which are often 
imposed on Community investors in many non-Community 
countries and by cumbersome administrative procedures which 
can prevent the expansion of contract processing. 
The CommissI on must continue with Its attempts to find 
pragmatIc solutIons to these problems , particular I y in the 
negotiat Ions on Trade Related Investment Measures (TRIMS) in 
the Uruguay Round. 
The Commission has Insisted repeatedly that Member States 
harmonize their application of outward processing rules and 
is prepared to discuss any useful ways of improving 
administrative procedures. 
Developing policies for cooperation with the countries of 
EFTA and Eastern Europe would also provide the Community 
Industry with a more favourable framework for developing 
these international strategies than In the past. 
1.4 tde.as.ur Ê£_âgâiû£i_d_umaIng_âQd__£u.k£ldie_s_ 
As markets become more open and as partners become more 
competitive, the practices of dumping and granting subsidies 
tend to become increasingly harmful. The textile and 
clothing industry is even more vulnerable in that its 
procedures are generally ill-suited to the specific needs of 
a sector consisting of large numbers of often very small 
firms, while the volatile nature of the textile market 
requires in particular procedures which can be implemented 
very rapidly. 
In the Uruguay Round negotiations the Commission requested a 
number of amendements to GATT rules tto meet the specific 
needs of the textile and clothing1 industry, like the 
possible use of sampling. The effectiveness of measures 
against dumping and subsidies also depends on the quality of 
the complaints which the industry makes to the Commission 
and the speed with which the whole procedure can be 
Implemented. It is Important therefore that the professional 
organizations help undertakings, particularly small firms, 
to carry out the procedures required. 
The Commi ssIon also expects the Council to give active 
support in terms of the resources alIocated to anti-dumping 
departments and in terms of the changes to be made to the 
regulations in the context of the Uruguay Round. 
- 10 -
1 • 5 _o_o__e_Lâ_ iQn_JbjLt_we_e_n ____ __ _____Lhj__LtJj_s^„_a_ ii__iâ_i_ 
in_j?j:_d_e_r LQ__ _c.0jmb.3J ^Lr_ajiaLu_LejLL_d££l_a£5li-2n^„_o„f QLigin 
aQ___L____i_d_e_s__ri__iQra_ 
Although it seems inevitable that trade in textiles will 
ultimately be included in GATT, it is essential that 
national and Community authorities apply existing 
comm i tments. 
With a policy which has to make a distinction between 
non-member countries in terms of their ability to produce 
and export very cheaply, it is essential that rules 
concerning the origin of products are compiled with. 
The volume of imports covered by falsified certificates of 
origin Is tending to increase despite attempts at 
prevent ion. 
The Commission therefore proposes to intensify cooperation 
between the Community's custom authorities in an attempt to 
put a stop to fraudulent practices concerning the origin or 
textiles. Following the US example, it will be necessary to 
carry out more frequent and more searching investigations in 
the non-Community countries concerned. 
In this connection, the support given by the European 
Parliament for the Textile Anti-Fraud Initiative (TAFI) has 
provided the resources to step up action against fraud in 
the textile Indust ry. 
1 • 6 P__!___ iQn_Ql_dES.igQS._an d_mo_de_i_ 
One of the principal ways in which Europe's textile and 
clothing industry can stand up to competition from low-wage 
countries is to keep coming up with new designs and models, 
and new labels. This can be very expensive, whereas 
technical progress means that designs can be copied very 
eas i I y and qu i ckI y. 
Because there is currently no effective legal protection in 
some countries against pirating, collections, the 
profitability of European firms Is suffering more and more. 
For this reason, In the framework of the Uruguay Round TRIPS 
negotI at Ions, the Commun Ity is pushing for better legal 
protectfon of labels, designs and models, not only by 
tightening up the rules but also by Improving their 
implementation In all countries. 
11 -
At Community level, the Commission has started a legal 
process which should Improve the current situation by 
publishing a Green Paper on the legal protection of 
industrial designs4 which Member States have been asked to 
comment on as soon as possible. 
1 . 7 _anag_oie.Qt _oj__c_p_mjiej:_cj__^ 
___t___mfea___E__a_aiia_i_l 
Under the MFA and the bilateral agreements signed with 
supplier countries, it Is permissible to Introduce 
commercial policy measures, particularly further 
restrictions, when Justified by the market situation. 
In recent years, when difficult management problems arise, 
like application of the safeguard clause, the Member States 
have always tended to divide Into two opposing blocs, which 
means that there can be no qualified majority. This has made 
it difficult to maintain a coherent commercial policy for 
the textile industry. 
In future, the CommIssI on would ask the Member States to 
demonst rate more Community sol IdarIty In applying safeguard 
measures in the framework of commerc/al policy In the 
textile sector In order to help meet the specific needs of 
certain areas where the new st ructural changes are more 
critically Important. 
2. SUPPORT FOR STRUCTURAL CHANGE 
2 .1 EL_du_iive__Jjiyje_3jun^__L: tjiajii5j___3jic^ 
ai__m_â___e-_ 
Public support for productive Investment by firms is 
sometimes seen by national authorities as a necessary 
contribution to their structural change. Nevertheless, it 
Is important to ensure that public expenditure does not have 
the effect of restricting competition, which will make 
structural change more difficult rather than actually help 
to improve the competitiveness of the regions (cf. 
communication on industrial policy). 
t 
The relatively integrated structure of the industry 
(particular in those sectors towards the beginning of the 
production chain) and the large volume of trade within the 
Community (more than ECU 40 000 million) nevertheless 
require that particular care should be taken In respect of 
state aid policy, particularly with regard to the effects 
this may have on competition within the Community. 
I I l/F/5131/91 of June 1991. 
-12-
Such aid is usually granted in accordance with authorized 
systems which meet the specifications approved by the 
Commission. Thus the textile industry benefits from schemes 
designed to promote R&D, innovation, SMEs, etc. In 
addition, in areas which are eligible for national regional 
aid, where the industry is largely concentrated, textile 
companies are eligible for a wide range of aids including 
aid for investment. However, in some cases, aid for 
productive investment may affect trade between Member States 
to an extent which is not compatible with the proper 
functioning of the common market. 
2.2 Creating a more favourable env i ronmen t for st ructuraI 
modernization and staff training 
2.2.1 Prerequisites: vertical integration, specialization 
and networks. 
These three concepts are models of industrial relations 
which the European textile and clothing industry has adopted 
to different degrees to improve its competitiveness in terms 
of price, quality and performance. 
In particular, the "network" concept (which is the key to 
the success of a large number of production centres) is both 
an avant-garde industrial solution and a reference for the 
less developed textile areas because it allows an excellent 
combination of flexibility and swift response to market 
conditions and helps to make know-how more widely available. 
Apart from production centres which are highly 
geographically, another important concept 
production to other areas. concentrated 
is shifting 
This applies, first and foremost, to subcontracting. Some 
less developed areas of the Community often carry out 
subcontracting work for parent companies which are several 
hundred kilometres away. 
Improving quality and adjusting production facilities are 
the main challenges facing small subcontracting firms in the 
medium term. t 
As structures change, it is necessary to encourage closer 
relat Ions between firms (by improving communications) and to 
develop technologI es better suited to enhanced flexibility 
In product I on processes. This has to be supported by 
progress towards harmoni z i ng spec i f i cat i ons and quality 
standards of intermediate products. 
To this end, it is essential to provide the best possible 
environment for widespread industrial reorganization. This 
can be helped in many cases by public support measures 
(particularly relating to business services and small 
firms), provided that these measures are properly targeted 
and tailored to the real needs of the firms concerned. 
- 13 -
Public instruments are now available at . CoJm™'f*™' 
national level to provide the framework required to *Pr°ve 
business competitiveness. The experience gained foMow'n9 
reform of the Structural Funds has enabled the localand 
national authorities and the Commission gradually to refine 
their approach in order better to target the objectives to 
be achieved in the future. 
In addition to these measures, and in order to take better 
account of the specific needs of the textile and clothing 
Industry and the regions heavily dependent on the Industry, 
the Commission Intends to give special priority to measures 
which It proposes to carry out in specific areas, as 
descrI bed In the fol I owlng paragraphs . 
2.2.2 Better information 
If measures to improve the business environment are to be 
effective in meeting needs and providing real help for the 
sectors targeted, \* is essential to provide as much 
information as possible and to improve communications 
between economic operators throughout the industry (i.e. all 
those involved in the economic and social decision-making 
processes, thus including both sides of industry). This 
information will be both economic and social (analysis of 
lfe.iffi --•'•• ——-.snip I oyment trends and structure). 
This is why the Commi ss i on has provided help with the 
Iaunchlng and operatI on of the European Textile and Clothing 
v ,„ Observatory set up by industry and commerce represent at Ives . 
This project is based on what is already being done at 
national and Community level on exchange of and access to 
information, the pooling of experience and cooperation in 
compiling and analysing information. 
At the same time, it is Just as important for public 
authorities to improve official statistics on the textile 
and clothing industry. 
The Commission therefore expects the Council to support the 
proposals made by Eurostat to speed $ip the rate of progress 
In complIIng Industrfal and commercial stat i st ics. 
2.2.3 Better training for workers 
The competitiveness and development of any industry depends 
principally on the competence of its staff. Nowadays the 
textile and clothing industry includes a wide variety of 
skilled jobs (ranging from designers to computerized 
production specialists) but has great difficulty in 
recruiting skilled personnel, principally because of its 
poor image. 
- 14 -
In some areas too, the current level of vocational training 
in the industry is still inadequate, and large numbers of 
staff have never received any proper training. 
There is an urgent need therefore for a vigorous training 
campaign in the textile industry in order to keep abreast of 
and even to move ahead of technological progress. 
Measures are particularly required in the following areas: 
(i) advertising and public awareness campaigns to make 
the industry more attractive-, 
(II-) publishing the results of reference pilot schemes 
across national borders; 
(iii) encouraging mobility between Member States (e.g. of 
commercial executives); 
(iv) intensive and more effective efforts to promote 
continuing vocational training. 
If these measures are to be properly targeted, it is 
important to obtain a clear picture of the industry's needs, 
particularly by means of better dialogue between the various 
parties concerned (public authorities, workforce and 
management). There are to be meetings between these various 
parties in order to obtain a clearer idea of the industry's 
needs (taking into account the specific needs of regions and 
sub-sectors). 
The setting up of two new Communi ty programmes, FORCE& and 
EUR0F0RM6 could now provide new opportunities in this area. 
The CommissIon proposes to use these programmes to encourage 
the development of transnational measures and to give a 
Community dI mens Ion to measures under the Social Fund. 
2.2.4 Intensification and better targeting of research 
As links between firms multiply and become more complex 
there is an increasing need for extensive technological 
support in order in particular: 
FORCE: Community action programme designed to improve 
the quality and avai I abIiIity of continuous vocational 
training in the Community and, in particular, to 
improve the competitiveness of firms by improving the 
skills of their employees. Council Decision 90/267/EEC 
- OJ L 156 of 21 June 1990. 
EUROFORM: Community initiative concerning new 
qualifications, new skills and new employment 
opportunities induced by the completion of the internal 
market and technological change through the Structural 
Funds. Commission Decision - OJ C 327 of 29 December 
1990. 
(i) 
<M> 
(i i i) 
( iv) 
(v) - 15 
to automate and use robots for certain highly 
labour-intensive tasks; 
to make industrial processes more flexible; 
to make full use of technology to improve quality 
(e.g. automatic fault detection); 
to develop basic methods of improving logistics; 
to protect the environment. 
In many cases it is a question of developing technologies 
which could be applied by a wide range of users. in 
addition, therefore, it is essential to ensure ****/!? ir! 
of research and know-how are disseminated and that staff are 
trained in the new techniques. The Commission should 
consider measures to take full advantage of research 
designed to achieve these aims. This will require full 
cooperation between the different links in the product chain 
and suppliers of equipment and technology. 
Th hs\cooperat ion could lead to a common definition of 
interestvand strategy in terms of demand for technology and 
operational aspectsv. The success of this common effort will 
depend to à\ large extent on the gradual concentration and 
intensification*., of R&D on a limited number of projects 
selected by users, industrialists and suppliers. 
Recent Implementation of the third framework research and 
dèvei opment programme provides a more up-to-date basis In 
terms of research topics and methods of participation (e.g. 
mul 11 sectoral consort i a in the form of EElGs). One of the 
"targeted projects" which could receive Communi ty support is 
a project on texti Ies/clothing/distribut ion. 
The Commi ss ion also intends 
spec/fIc measures to increase to pursue its efforts to use 
(I) the level of part I ci pat I on 
research programmes ; 
(II) InteractI on between the various 
particularly users, producers 
Inst I tut es ; of smal I fIrms In 
groups 
and 
(III) cooperation between research inst i tutes 
the textile and clothing indu$try. i nvolved, 
research 
working In 
Priority topics and research objectives will be identified 
by a continuous process 
results between industry 
universities) and through 
Community R&D programmes 
EUREKA, etc.). of exchange of information and 
and research centres (including 
cooperation between national and 
(Brite/Euram, ESPRIT, SPRINT, 
- 16 
2.2.5 A basic requirement: to encourage and improve 
commun i cat ion 
For optimum organization of transfers of materials between 
the different links in the production chain, logistical 
systems have to be tailored to ensure prompt delivery, and 
to cope with frequent changes and short deadlines. This 
means that communication will be increasingly important. 
Improving communications is not a matter solely of 
developing physical networks but also of developing a 
language for data exchange and of standardizing this 
Ianguage. 
In its efforts to promote an effective business services 
policy, the Commission has in the past used the Structural 
Funds, particularly for the STAR and TELEMATIQUE programmes, 
and other specific programmes to support projects in this 
area and will be providing even more support in the future. 
A good way of making subcontracting more efficient would be 
to have an integrated communication system between 
principals and processing firms designed to break down 
barriers between Member States and to encourage more 
contact. 
The Commi ss ion will continue with its preparatory work to 
consider the potential for such schemes. 
2.3 Using diversification to help with reconversion 
2.3.1 Creating new opportunities 
The industry's efforts to adjust to the new commercial and 
structural conditions are bound to have major social 
repercussions, particularly in those areas which are most 
heavily dependent on the industry and most exposed to 
international competition. The textile and clothing 
industry currently employs some 3 million workers, since 
losing 40% of its workforce °vQtr tne last 15 years 
(particularly in Northern Europe). Tthe impact on employment 
of measures to revive the industry will be even greater 
where the industry is concentrated in specific regions of 
the Community which tend to be dominated by a single 
industry. A high proportion of the industry's workforce 
consists of women, who will be disadvantaged by the 
employment opportunities mentioned above. They are also 
unlikely to benefit from retraining measures aimed 
principally at the skilled labour force. 
Modernizlng undertakIngs is the first step in meeting these 
chal I enges, but It will also be necessary to diversify to 
provide Job opportunities for surplus manpower. 
17 -
Because of the special nature of the labour force and the 
specific categories (women and old people) which will be 
affected by the changes, there will have to be more 
extensive social dialogue to come up with the most 
acceptable solutions and those best suited to local 
circumstances, and to encourage forms of investment which 
take the best possible account of the special skills of the 
labour force and local training facilities. 
These concerns should not however lead to the long-term 
support of non-profitable undertakings. Various examples 
have shown that this can only cause very serious disruption 
at local level between supply and demand. On the other 
hand, encouraging these undertakings to leave the market 
will provide better commercial opportunities for healthy 
firms and encourage them to make the necessary investment. 
2.3.2 A new Community initiative for textile areas 
As a first sign of its commitment of 30 September (see 
introduction), the Commission is proposing at the same time 
to submit a number of practical measures. In fact, because 
the problems of sectoral adjustment and their regional 
implications are so considerable, the Commission is 
proposing to reinforce Structural Fund measures to help with 
the adjustment of industrial structures in those regions 
which are heavily dependent on the textile and clothing 
industry. Studies still in progress indicate that this 
could be done in three ways: 
(a) for those Member States who so wish, by adjusting their 
Community support frameworks (CSFs) in accordance with 
the current rules on flexibility, by increasing 
financial resources for diversification of activities 
in the region and by restructuring their textile and 
c loth i ng i ndust ry ; 
(b) by funding pilot schemes in preparation for 
initiative; a Commun i ty 
(c) by launching, as soon as 
initiative to help regions 
textile and clothing industry which 
financing of operational programmes in poss i bIe , 
hea.v i I y dependent 
will 
1993. Commun i ty 
on the 
a I low the 
The specific aims of this initiative will be: 
(i) to encourage rapid diversification of economic 
activities to make them less dependent on the textile 
and clothing industry; 
(ii) to help with the adjustment of profitable firms in the 
industry by adopting across-the-board measures aimed at 
SMEs. 
- 18 -
It is the Commission's intention that in 1993 the RETEX 
programme resources in the existing overall budgets should 
be added to the amounts at present available under the CSFs. 
These financial measures should make small firms in regions 
heavily dependent on the textile and clothing industry more 
dynamic, principally as a result of measures to improve the 
industrial environment in which they operate. Measures 
might include, for example, improving design skills; 
pursuing a policy of quality; computer-aided production, 
marketing and internal company organization; help with the 
setting up of local business groupings and cooperation 
schemes; vocational training programmes; and aid to improve 
the physical environment of firms. 
- 19 
CONCLUSIONS 
The textile and clothing industry plays an essential role in 
the Community's industrial structure in terms of market 
potential, production and employment, and also in terms of 
experience and creativity. 
The industry is now facing challenges which will force it to 
make changes that are likely to be considerable and will 
require real solidarity within the Community. 
This solidarity will be evident in gradual planned changes 
to commercial policy which will allow the Community industry 
to make the most of its strong points. 
Systematic and complementary efforts by national and 
Community public authorities will be required to establish 
and reinforce a business climate which will facilitate 
structural changes and provide reassurance for companies 
undergoing these changes. 
The Commission intends to coordinate its various instruments 
and policies to provide support for industrial development 
and structural change in the Community textile and clothing 
industry and to speed up the economic diversification of 
those regions which are heavily dependent on the textile and 
c loth i ng i ndust ry. 
- 20 
ANNEXE 
First assessment of the effects on_J he Portuguese tex t i le 
industry of the progressive opening of the Community market 
to certain textile products from Hungary, Poland and 
Czechos iovak i a 
The Community's new policies with regard to Central European 
countries will lead to European agreements. In this context 
specific arrangements are being negotiated for textile 
products from Hungary, Poland and Czechoslovakia. 
The negotiating mandate approved by the General Affairs 
Council on 30 September foresees particular arrangements 
for : 
a progressive elimination, in 6 years starting from 1 
January 1992, of customs duties applied by the EC; 
an elimination of non-tariff measures within a time­
frame which would be half of the schedule to be agreed 
in the Uruguay Round negotiations. Nevertheless, this 
time-frame will not be less than a period of 5 years 
starting from 1 January 1993. 
Following the decision of the General Affairs Council on 30 
September 1991, the Commission now presents a first 
appreciation of the consequences for the Portuguese industry 
of this increased access. 
First Assessment 
1. The negotiating mandate recently adopted by the Council 
will guarantee increasingly progressive access to the 
Community market. So far, independently of the results 
of future negotiations, the opening of the Community 
market vis-à-vis Hungary, Poland and Czechoslovakia 
cons i sts: 
for 1990/1991 
mod i f i cat i ons of 
PHARE exercise of quota 
customs dut i£s increases without 
in the frame of the 
for 1992 of further quota increases and 
liberalisation of restrictions in the frame of 
renegotiated bilateral textile agreements. 
- 21 -
Regulation as from 1993 will very much depend on the 
results of the textile negotiations in the Uruguay 
Round. In this context not only the time frame (that 
will in fact be more favorable for the above-mentioned 
three countries) but also the economic content of the 
stages have yet to be formulated for the phasing-out of 
trade restrictions. The progressive integration of 
textile products into the GATT and the increase of 
export possibilities to the EC market for the three 
Eastern European countries in question will be linked 
to the degree of market access also provided for 
textile exporting developing countries according to 
their various stages of development. 
By now any effects of higher export possibilities for 
the three countries could only be broadly identified in 
a quantitative way for 1990 and the first 6 months 
1991, for which certain statistical data are already 
available. Any further effects could only be analysed 
later, taking into account: 
the evoI ut i on of 
i ndust ry ; the competitiveness of the textile 
the development of Outward Processing Traffic (OPT) 
and the greater facilities given in the frame of the 
agreements negotiated with those 3 countries; 
the progressive speeding-up of the elimination of 
quantitative limits which could result from the 
Uruguay Round. 
As a matter of fact, imports into the EC of textiles 
and clothing originating in Poland, Hungary and 
Czechoslovakia in 1990 and in the first 6 months 1991 
increased much more than comparable imports from all 
third countries taken together. However, most of the 
three countries' quotas 1990 were not utilised more 
than 60-70% and the quota utilisation in the first half 
of 1991 for most products has been much less than 50%. 
This clearly indicates that these countries were not 
yet in a position fully tojutilise their export 
possibilities into the EC. Very much will depend on 
the capability of these countries to reorganise and 
modernise their economies to fulfil OPT operations to 
improve their competitiveness on the European market 
and to find markets for their products before it can 
definitely be assessed to what extent the additional 
market access will result in a measurable effect on 
the European industry as a whole. 
- 22 -
Regarding any particular effects of increased imports 
from those three countries on Portugal, the following 
aspects have to be considered: 
The share of the three countries in total EC imports 
of textiles and clothing is only 4,6% and in 
Portugal's total imports even marginal (0,5%). 
It is therefore likely that future development will 
not take effect through direct exports to Portugal, 
but rather will have an indirect effect through 
increased exports to the other Member States thereby 
creating a potential for increased competition for 
Portuguese exports. 
As all this would mainly happen after the 
implementation of the Internal Market in 1992, it 
may be rather difficult to trace and quantify the 
particular impact of textile products from among the 
three countries separately from textile products 
originating all over the world and being traded in 
free c i rcuI at ion. 
Moreover, it will be necessary to analyse in more 
detail to what extent imported textile products are 
in direct competition with those products being 
exported from Portugal to other Member States. It 
appears in fact that these countries would have to 
develop similar means of production to the 
Portuguese production base (above all for the middle 
and lower ranges of products). 
However, all this does not exclude possible measurable 
effects on certain products or regional markets within 
the Community. The Commission will carefully observe 
future developments and accomplish its findings. Only 
later can a more pertinent and complete appreciation be 
given in the light of the Portuguese plan. 

ISSN 0254-1475 
COM(91) 399 final 
DOCUMENTS 
EN 10 
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