COMVIISSION OF THE EUROPEAN COMMUNITIES 
COM(93)525 final 
Brussels, 27 October 1993 
«sa 
ÉlÉ REPORT ON THE COMPETITIVENESS OF THE EUROPEAN 
TEXTILE AND CLOTHING INDUSTRY 
«Eft11 fCommunIcat Ion from the Commission to tho 
Council and the European Parliament) 
SUMMARY 
In response to the request made by the Council in its resolution of 
17 June 1992, the Commission has drafted a report on the competitiveness of 
the European textile and clothing industry. It consists of: 
- a foreword and conclusions summing up the competitive position of the 
industry and the measures taken by the Community to strengthen It. This 
could be the policy paper intended primarily for the Ministers. It is 
followed by six chapters: 
- an introduction describing the background to the report; 
- an account of the underlying developments in the industry from 1988 to 
1992, i.e. falling production and (since 1991) consumption, an extremely 
marked decline in employment and investment at its lowest level since 
1982. Imports rising almost twice as fast as exports (to the detriment 
of intra-Community production). Turnover increasing and then stabilizing 
and value added remaining stable (two trends reflecting the industrial 
strategies based on subcontracting and relocation); 
- an assessment of the international competitiveness of the textile and 
clothing industry, which is deteriorating, as confirmed by the loss of 
market share taken by exports from the Community in the industrialized 
countries and the sharp increase in the trade deficit in clothing; on 
the other hand, the Community still has a trade surplus in textiles. One 
point to note is the severe imbalance with the leading Asian exporters, 
most of whose markets remain closed; 
- an analysis of the factors determining international competitiveness. 
The adverse impact of the depreciation of the dollar has been partly 
offset by the devaluations since September 1992. Labour costs are a 
decisive factor, particularly in the downstream sectors. They are 
extremely high in most Member States and the gap with the Community's 
competitors, apart from the NICs, is widening. Capital productivity, 
labour productivity, job skills and the complex factors affecting 
competitiveness (particularly quality and flexibility) are some of the 
strengths of the Community industry. However, it still suffers from 
various distortions of international competition; 
- a description of the industrial strategies adopted in response to these 
problems. Four main trends can be Identified: modernization, 
relocation, specialization and flexibility. Some businesses have been 
restructured, others are lagging behind-, 
- a description of the measures taken by the Community, both internally and 
externally. These must be continued and stepped up. 
Finally, an addendum examines the impact of the openlng-up of trade with the 
countries of Central and Eastern Europe on the Portuguese textile industry. 
2) " /A 
CONTENTS 
Summary 
Overview and conclusions 
1. Introduction 
2. Recent developments in industrial structures 
2.1 General context 
2.2 Basic developments from 1988 to 1992 
2.3 Trends in 1993 
3. Assessment of international competitiveness 
3.1 General context 
3.2 Exports 
3.3 Imports 
3.4 Balance of trade 
3.5 Differences between product categories 
4. Analysis of the factors determining international competitiveness 
4.1 Exchange rates 
4.2 Labour costs 
4.3 Capital productivity 
4.4 Labour productivity 
4.5 Human resources 
4.6 Raw material, energy and environmental costs 
4.7 Complex factors affecting competitiveness 
4.8 Distortion of international competition 
5. Industrial strategies 
6. Community measures 
6.1 Commercial policy 
6.1.1 MFA 
6.1.2 Fraud prevention 
6.1.3 Uruguay Round 
6.1.4 Generalized System of Preferences 
6.1.5 Export promotion 
6.2 Single market 
6.2.1 Community rules on outward processing traffic 
6.2.2 Protection of intellectual property rights 
6.2.3 Protection of the environment 
6.3 Competition policy 
6.4 Support for modernization and conversion 
6.4.1 Research and technological development 
6.4.2 Training 
6.4.3 Diversification and conversion 
6.4.4 Information and communication 
Addendum Repercussions of the openlng-up to Central and Eastern Europe 
for the Portuguese textile industry 
/it 
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Overview and conclusions 
In response to the request made by the Council in Its resolution of 
17 June 1992 (OJ No C 178, 15.7.1992), the Commission Is submitting this 
report on the competitiveness of the European textile and clothing industry, 
which will be updated in 1993 once the data are available. 
The Commission is convinced that the efforts to bolster the competitiveness 
of the industry must be continued to support the adjustment process. It 
expects the Council to give its political assessment of the problems facing 
the industry and to send a clear signal as regards the directions to be 
taken. 
1. The situation of the Industry 
With a turnover of ECU 180 billion and a workforce of some 2.7 million, the 
textile and clothing industry occupies a key position in the Community's 
industrial base. In the 1990s the industry has been hit hard by the general 
economic recession, falling production and lower consumption. Certain 
regions heavily dependent on the industry have been particularly affected. 
These difficulties have forced the industry to shut down production capacity 
and to relocate it to non-Community countries. These decisions have resulted 
in lower production, fewer Jobs, reduced investment and the replacement of 
products made in the Community by low-price imports. 
Particularly heavy Job losses have ensued (434 000 in four years or almost 
70% of all job losses in manufacturing industry) and the rate grew faster 
still in 1991 and 1992, as a result of falling production, increased 
imports, improved labour productivity in the wake of restructuring and 
automation, and industrial strategies geared towards greater 
internat ionalizat ion. 
The recent decline in consumption is attributable partly to the downturn in 
household demand but also partly to the contraction of certain industrial 
users, such as the car and building industries. In response to the 
saturated European clothing market, consumers have also become much more 
demanding as regards value for money. 
This slowdown in activity and investment continued and even intensified in 
the first half of 1993. 
/It 
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In this gloomy climate within the Community, the balance of trade has 
deteriorated relentlessly since 1985, the last year of trade surplus. 
Between 1988 and 1991 the deficit doubled to ECU 12.4 billion. Only a very 
slight improvement followed in 1992, triggered by more favourable export 
trends and the stabilization of imports. However, the textile sector - which 
is one of the early stages in the chain, is highly capital intensive and 
requires considerable know-how - still made a surplus of ECU 2.1 billion In 
1992. 
Amongst the positive indicators which partly offset these generally negative 
trends, attention should be drawn to the increase in turnover between 1988 
and 1992 (up by 6.8% at constant prices), although this too has levelled off 
over the last two years, plus the productivity improvements of 3% a year 
since 1985 and the stability in value added, which is attributable primarily 
to the growth on the clothing side. These trends reflect the development of 
industrial strategies based on relocation and a shift to high value added 
activit ies. 
Of course, these general trends mask big differences from one branch of the 
industry to another and between the Member States. 
2. Assessment of International competitiveness 
On a world market in textiles and clothing marked by frequent distortions of 
competition of all kinds, analysis of International trade trends suggests a 
loss of competitiveness throughout the Community industry, albeit with 
differences from one branch to another. Two trends are particularly 
revealing: 
- the poor performance of the Community's exports on the markets In 
industrialized countries, where they have lost market share; 
- imports have grown almost twice as fast as exports. Imports now account 
for 40% of intra-Community demand in the clothing industry In volume 
terms. 
As subcontracting in non-Community countries has gained ground, exports of 
textile products from the Community have been redirected, primarily towards 
the Mediterranean countries (which took approximately one quarter of the 
Community's exports in 1992), Central and Eastern Europe and a number of 
countries in the Far East. On the import side, China took first place, with 
8.3% of imports of textile and clothing products from outside the EC In 
1992. Turkey, Morocco, Tunisia, India, Poland and Indonesia saw their share 
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of imports into the Community decline, while Hong Kong, South Korea and 
Taiwan increased theirs. Looking at the various blocs of countries, imports 
from Central and Eastern Europe rose by 15.6% per year in volume terms 
between 1988 and 1992, while imports from the MFA countries grew by 8.5%. 
Another point to note is the Community's particularly large deficits, 
especially with the leading Asian exporters which are often unfettered by 
free competition and resort to dubious practices such as dumping, double 
pricing, subsidization, copying designs and models and non-compliance with 
international labour standards. 
3. Factors determining competitiveness 
While analysis of trade patterns reveals the general weaknesses of the 
Community textile and clothing industry, evaluation of the factors 
determining competitiveness can pinpoint the causes of firms' performances. 
However, any diagnosis of this industry must take account not only of the 
extremely varied product range, with the level and intensity of competition 
depending on the sophistication of the product and on the value for money, 
but also of the fact that the industry is made up of firms of all kinds. 
One factor with a definite impact on the international competitiveness of 
the industry is the exchange rate for European currencies, particularly 
against the US dollar. The falling dollar eroded the competitiveness of the 
European textile and clothing industry, notably in the form of loss of 
market share and imports, as illustrated by the flow of exports to countries 
in the dollar zone. The slight recovery of the dollar since 1992 combined 
with recent fluctuations in the exchange rate could, however, provide some 
compensation for part of the Community industry. 
Of ail the individual factors determining competitiveness, labour costs 
remain a decisive factor for a large proportion of the industry, 
particularly the clothing sector, where they can account for up to 40% of 
production costs. In the most modern spinning and weaving firms, however, 
wage costs play a far smaller part. Although relatively low compared with 
other sectors of industry, most European countries now have the highest 
labour costs and they are still rising. The gap between total wage costs 
(including social security contributions) in the Community and In its main 
rivals, including the industrialized countries, has widened considerably 
since 1988. In 1993 the average hourly wage cost in the spinning and 
weaving sector in the Community was $14 (with a range from 1 to 6 between 
the Member States) compared with not more than $11.6 in the USA for the same 
types of task. 
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Labour productivity has risen constantly in recent years, strengthening the 
Community's superiority in this area. The Important part played by small 
firms in the Community's industrial base is one factor which contributes to 
high productivity levels and flexibility. However, the productivity gaps in 
favour of Community producers are not enough to compensate for the higher 
wage costs which lead to unit labour costs far greater than their 
compet itors'. 
Although, on the whole, Europe still has amongst the most modern production 
plant in the world, it must be stressed that there are big differences 
between the Member States, as some have made more progress with 
restructuring than others. However, the sharp reduction in capital 
investment over the last two years could, if it continues, threaten this 
relatively stronger position. Also, the low capacity utilization rate 
compared with the Community's competitors (e.g. 76% in the EC compared with 
97% in Taiwan and 84% in the USA for spinning and weaving) is a considerable 
competitive disadvantage. 
A large proportion of the European industry already has a series of key 
assets which largely compensate for its disadvantages on the cost front. In 
particular, it has the capacity to provide a rapid, flexible response to 
needs on the market, plus creativity and the full range of services 
associated with production. Also, the costs of extra-Community transactions 
and the added risks posed by the distance from suppliers set limits to 
internationalization of production. Since the completion of the single 
European market, the gap has widened further. 
Finally, the quality of the human resources available in the Community is 
high compared with its rivals, although considerable differences remain 
between the Member States and some aspects could be improved. This applies 
not only to activities involving new technologies and the reorganization of 
production systems but also to fields where management plays a vital role. 
Workforce skills must be considered a key factor in the adjustment process 
and call for continuous training geared to changes in the industry. 
4. Industrial strategies 
In response to the difficult economic climate and to their structural 
weaknesses, firms have been restructuring on four main fronts: relocation 
of some production to countries with more attractive production costs or 
better general conditions; new methods of organization, both of production 
and of relations with suppliers and distributors; automation and 
technological development; shift to new top-of-the-range products which are 
less sensitive to price. 
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Each firm's strategy depends on its position in the chain and its size, 
competitiveness and markets. However, some general trends can be 
identified, for example a preference for automation and flexible production 
In the upstream sectors and for relocation of highly labour-intensive 
downstream activities, particularly making-up operations. Relocation has 
been a rapidly growing phenomenon in recent years and is likely to continue. 
It started in very high-wage countries such as Germany and the Netherlands 
and subsequently spread to Belgium and France followed, more recently, by 
Italy. According to a recent survey, approximately L 40%, by value, OF 
production under the control of large and medium-sized enterprises had been 
relocated by 1992. Imports generated by outward processing traffic 
accounted for just 9% of all imports, but this figure is underestimated 
because some of the imports from subcontractors take the form of direct 
imports. Most high value added activities such as Invention, design, 
logistics, marketing and sales, of course, remain in the Community. 
5. Community measures 
In line with the Commission communication of 25 October 1991 and the Council 
resolution of 17 June 1992, the Commission has promoted a series of measures 
to make the textile and clothing industry more competitive. They can be 
divided into two pakages: 
(a) External measures 
- On commercial policy, in addition to the extension of MFA IV for one year 
and of the bilateral agreements for two years with the option of a 
further one-year extension by tacit agreement, virtually without granting 
any new advantages but replacing the national quotas by new Community 
limits, the new integrated computerized licence management system (SIGL) 
introduced with the cooperation of the Member States and the task force 
set up, with the support of the industry, to ensure more effective fraud 
prevention (TAFI) are particularly noteworthy. Amongst the measures taken 
on joint management and monitoring of the agreements, it must be possible 
to draw on effective national statistical systems for the fundamentally 
important question of application of the safeguard clause. Despite the 
difficulties, it is essential that the Member states submit the 
statistics by the dates set. 
Results have been achieved by the measures to combat dumping and unlawful 
subsidization (with 21 measures in force and 7 Investigations In progress 
to prevent dumping and one measure in force against subsidization). In 
this context, the procedures must be speeded up (the Commission will 
submit a proposal to this end in the near future), the requisite 
resources must be allocated to this task and the council must find a 
compromise on the decision-making process without delay. 
The action taken by the Community in the future will depend heavily on 
the decisions taken in the Uruguay Round, which is now in the final stage 
of the negotiations. The results of the Uruguay Round must include 
gradual opening-up of the markets in non-Community countries, based on 
stricter rules and discipline. The Commission considers that this could 
provide a lasting framework to help the European Industry to adjust. 
These Uruguay Round negotiations will also influence the decisions to be 
taken on revision of the Generalized System of Preferences, particularly 
the discussions on the social clause. 
(b) internal measures 
- The textile and clothing industry will benefit from completion of the 
internal market, in the form of lower costs, shorter delays for Intra-
Communlty transactions, closer relations between producers and 
distributors and more uniform conditions of competition. Greater 
transparency and stricter control of State aid should in turn consolidate 
the competitiveness of European firms. Of course, steps will have to be 
taken to ensure that non-Community rivals apply the same rules. 
To support European creativity, the Commission has proposed legal 
protection for industrial designs and greater protection against 
counterfeiting. On counterfeiting in particular, the Commission's 
proposal directly empowers the customs authorities to decide on requests 
to Impound suspected counterfeit goods, which will simplify and speed up 
the procedures. It also extends the range of rights protected and 
encourages the Member States to Impose severe penalties. This reform 
incorporates all the suggestions made by the industry on this subject. 
Completion of the internal market has created a need to replace the 
national quotas by Community quotas. This also applies to products 
manufactured in non-Community countries from semi-fini shed products made 
in Europe and subsequently re-Imported into the Community (outward 
processing). The Commission has proposed a review of the current 
discipline on this subject In order to adapt it to the new situation and 
to create common conditions for all producers in the Community benefiting 
from it. 
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Support for modernization and conversion by the European industry is 
provided primarily by the Structural Funds and the research and 
development programmes. 
Although textiles and clothing, as processing industries, are normally 
downstream from the innovation process, they have successfully fitted in 
with the objectives of the Community's RTD programmes. In the next 
Framework Programme too the generic multi-sectoral approach will enable 
them to benefit from a series of activities to make industry more 
competitive (on generic technologies, information and communication 
technologies, materials, etc.), from a new mechanism planned to improve 
the take-up of the Community's research results by small firms and from 
the specific measures to Improve dissemination of research findings. 
In 1993 the Commission approved the national programmes to implement the 
diversification and conversion measures provided for by the RETEX scheme 
in regions depending heavily on the textile industry (for which the 
Community budget for 1993-97 will be ECU 500 million). Projects 
receiving support under this programme have already been completed in 
most Member States. 
As regards training, the two sides of industry regularly exchange views 
with the Commission on various aspects of the employment problems facing 
the industry. In addition to the development of basic programmes such as 
FORCE, EUROFORM and NOW, it must also be remembered that an initiative is 
being prepared under the new Objective 4 for the Structural Funds with a 
view to providing training tailored to the new requirements and to 
softening the impact of industrial change, in terms of job losses. 
Under the European growth initiative, on 14 June 1993 the council of 
Ministers adopted a programme of Community measures to intensify and 
ensure the continuity of enterprise policy, in particular SMEs, in the 
Community. 
To promote subcontracting, the Commission is promoting a series of 
measures to optimize the production capacity and structures of small 
firms in Europe and of main contractors in this field. These include 
improving the confidential (BCC) and non-confidential (DC-net) partner-
search networks. These are in addition to programmes encouraging direct 
contacts between businesses, such as the Interprise scheme, which allow 
transnational inter-firm contacts on a sectoral basis. 
3) 
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The European Textile and Clothing Observatory proposed by the Commission 
to keep closer track of the situation in the Community, in close 
cooperation with the Industry, is fulfilling its mandate to conduct 
economic analyses, to validate data and to provide information for 
decision-makers in the private sector and public authorities. A report 
on the situation of the industry in 1992 was submitted to the Council 
meeting on industry on 4 May. To form a clearer picture of the prospects 
for the industry, the Observatory recently completed on an extensive 
forward analysis, taking account of the changes in relations between 
producers and distributors and of the relocation phenomenon. The results 
will be known In 1994. The Commission will keep the Council informed of 
developments. 
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6. Conclusions 
The analysis in this report highlights the differences in competitive 
performance between the various branches of the textile and clothing 
industry. 
However, the entire industry has become less competitive over the last few 
years, mainly due to: 
- the deterioration in the cost factors affecting competitiveness, 
particularly labour costs; 
- unfair competition on the international market; 
- the difficulties with the modernization process and adaptation to 
technical change and new methods of organization in certain regions and 
branches of the industry. 
However, it is not inevitable that the industry will lose direction. The 
European textile and clothing industry has a future provided It succeeds in 
exploiting its competitive advantages, with the backing of the support 
measures adopted by the public authorities. Consequently, a lasting 
recovery in the textile and clothing sector calls for a package of measures 
built around a global approach to international competitiveness. 
The priority must be to create conditions favouring economic recovery in the 
Community and stabilization of the financial and foreign exchange markets, 
particularly by attaining the objectives of economic and monetary union by 
the deadlines set in Maastricht. 
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Although the recent revaluation of the dollar has had a positive Impact on 
short-term competitiveness, targeted exchange rate policies will not be 
enough to attain a sound long-term competitive base. Structural policies to 
improve production conditions play a decisive role In this context. 
Employment policies are now being reviewed in the light of the decline in 
competitiveness and the persistent structural unemployment. The Commission 
will set out its ideas and proposals on this subject in the White Paper on 
growth, competitiveness and employment. 
The policies introduced, with strong support from the Community, to 
accompany the industrial change must be stepped up to bolster the textile 
and clothing industry's greatest competitive strengths, following a 
horizontal approach. In particular, they will make It possible: 
- to strengthen RTD and innovation activities throughout the textile 
industry, in particular by taking fuller account in the Fourth (1994-98) 
Framework Programme of the specific nature of small firms and of their 
needs for the dissemination of new technologies; 
- to make it easier for workers and managers to adapt to industrial change 
and to new production systems, with the aid of a new generation of 
training and conversion schemes under the new Objective 4 of the 
Structural Funds, to respond to firms' specific needs; 
- to improve firms' know-how, with the aid of a new Community Initiative on 
industrial change and competitiveness to encourage the dissemination of 
know-how and technologies and, In particular, form networks of small 
subcontracting firms with a view to specific training and information 
schemes. 
Extra resources will be available for the Community research programmes and 
for the programmes adopted on the Community's initiative under the 
Structural Funds. The measures to support diversification and conversion, 
as provided for in the RETEX Programme, will be continued and stepped up. 
In order to restore the competitiveness of the textile and clothing Industry 
it is essential for the Uruguay Round to agree on a generally satisfactory 
package of measures for the textile industry, i.e.: 
- progressive integration of the textile industry in GATT which must take 
the form, in particular, of greater opening-up of non-Community markets; 
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- tlghtening-up of the GATT rules and discipline, particularly of the 
anti-dumping, anti-subsidy and safeguard measures and greater protection 
for intellectual property; 
- Improvements to the Community's commercial policy instruments, In the 
form of greater transparency and efficiency. 
Reinforcement of the mechanisms for direct cooperation between the Industry 
and the Commission is desirable, particularly on the following points: 
- identification and follow-up of solutions to make the industry more 
competitive. The first step could be to target the work done by the 
European Textile and Clothing Observatory on selected phenomena such as 
subcontracting and purchases of semi-finished products outside the 
Community. In addition, a framework for broad cooperation could be 
created by organizing round tables bringing together the European and 
national representatives of the industry, distributors, consumers and 
trade unions; 
- promotion of exports to non-Community countries, particularly to the new 
markets which will open up in the wake of the Uruguay Round; 
in the context of the TAFI, intensification of the constructive dialogue 
already started with the industry by setting up an ad hoc task force; 
- provision of full, regularly updated information in order to combat 
non-tariff barriers more effectively. This will strengthen the 
Commission's position in its negotiations with non-Community countries; 
- analysis of the situation of the industry to enable the Commission to 
ensure more effective application to the agreements. 
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1* Introduction 
Based on a communication from the Commission (COM (91) 399 final), on 
17 June 1992 the Council adopted a resolution describing the measures to be 
taken to improve the competitiveness of the textile and clothing Industry 
(OJ No C 178, 15.7.1992). This called upon the Member States and the 
Commission to adopt and propose such measures and upon the Commission, 
amongst other things, "to submit to it regular reports on developments in 
the competitiveness of the textile and clothing industry within the 
Community". 
This communication, based on the 1988-92 data and the figures already 
available for 1993, marks the response to the Council's request and paints a 
comprehensive picture of the competitiveness of the industry. It also 
describes recent developments In the structure of the Industry and trade and 
reviews the industrial strategies applied in this sector and the support 
measures taken at Community level to follow up the communication from the 
Commission and the Council resolution. 
This should provide the Council with the information which it requested on 
the situation of the industry and enable it to monitor the action taken by 
the Community in this field. 
Naturally, the Community institutions must also consider the future and the 
need to step up or supplement the measures already taken. The Commission is 
convinced that the efforts to bolster the competitiveness of the Industry 
must be continued to support the adjustment process. 
The Commission suggests that the Council should hold a preliminary debate at 
its meeting on 18 November 1993 to give its political assessment of the 
situation in the European textile and clothing industry and on the 
developments described in this report. 
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2. Recent developments In Industrial structures 
2.1 General context 
With a workforce of around 2 636 000 (2 753 000 including chemical fibres 
and the five new Lander), a value added of ECU 65 billion and a turnover of 
ECU 180 billion, the textile and clothing industry still occupies a key 
position in the Community's industrial base. 
With 9% of all Jobs in industry, it remains one of the most important 
industries in the Community in terms of employment. In some regions, where 
over 40% of the Jobs depend on it, all economic activities remain highly 
vulnerable to the changes in the textile and clothing industry. Textiles 
and clothing generate 5.3% of the total value added in the Community and are 
important markets for other sectors (e.g. mechanical engineering, the 
chemical industry, etc.). They are also recognized as a rich source of 
know-how and creativity in the Community. 
Between 1988 and 1992 the textile and clothing industry operated in a 
context marked by the following features: 
A climate of economic recession 
After the Gulf crisis in 1991, the hopes of recovery faded as the Western 
economies, with the exception of the USA, fell into a steady decline which 
lasted the whole of 1992 and has deepened this year. 
The distinctive features of this recession as compared with earlier ones 
are, indisputably, the high unemployment and the Member States' heavy budget 
deficits, heightened by serious monetary and financial problems. 
Contraction of demand 
Demographic factors (lower birth rate combined with ageing of the 
population) plus the reduction in the share of the family budget spent on 
textiles, accentuated by the general economic recession, produced a decline 
in final consumption in 1992. Moreover, distributors and consumers have 
become more versatile and more demanding, particularly in respect of value 
for money. 
Industrial demand too has suffered the consequences of the downturn in other 
sectors. 
Fierce international competition and increasing internationalization 
The European textile and clothing industry remains vulnerable to low-price 
imports made possible by extremely low wages and also by questionable 
trading practices and social conditions in many exporting countries. 
Difficult access to many real, or potential, markets likewise seriously 
curbs exports from the Community. 
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The expansion of trade has been accompanied by internationalization and 
relocation of production which has become one of the predominant response 
strategies of firms in the Community. The increases In turnover and in 
exports from the Community stand in marked contrast to the sharp reduction 
in production within the EC. 
2.2 Basic developments from 1988 to 1992 
Since 1988, activity in the textile and clothing industry in the Community 
has been marked by a sharp, growing decline In the volume of employment, 
production, investment and, more recently, consumption (see Annex 1). 
Alongside these negative trends, firms' turnover has grown, while their 
value added has levelled off. 
Nevertheless, the data available up to the first few months of 1993 show 
that the current recession is longer and deeper than the usual cycles and 
that no change of tide is imminent in the short term. 
In its report to the May 1993 Council meeting on industry, the European 
Textile and Clothing Observatory provided a detailed analysis of the 
situation in the industry In the EC. In the light of this report and of 
more recent information, five basic developments since 1988* can be 
highlighted: 
(i) The industry has shed 434 000 Jobs in the Community (down by 14%), 
153 000 of them in 1992 alone (twice the average annual rate In the 
'80s). Almost 70% of the Job losses In manufacturing Industry over 
the last four years were In the textile and clothing industry (see 
Annex 2). There were big differences from one Member State to 
another, as illustrated by Annex 2a. 
At the same time, over 2 000 textile and clothing firms closed down 
last year. 
(ii) Production was down by 4.7% in the textile sector and by 6.4% for 
clothing, more than in the rest of manufacturing industry despite 
the increase in apparent consumption up to the early '90s, most of 
which was swallowed up by imports (see Annexes 3 to 5). 
Sector-by-sector analysis of production trends since 1988 shows 
falls in every sector except wool, carpets and industrial textiles, 
although in 1992 the problems gradually spread to every sector. The 
biggest falls in production were with cotton spinning and weaving 
(down by 17%) and woven clothing (down by 12%). 
1988 was chosen as the reference year partly for statistical reasons 
(foreign trade series) and partly for convenience for medium-term 
analyses. 
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Annexes 6 and 7 also show that the trends varied widely from one 
Member State to another. 
(Mi) After several years of sustained growth which increased the supply 
capacity of the industry, Investment in both the textile and 
clothing sectors was 32% and 25% lower respectively, at constant 
prices, in 1992 than in 1998. 
Last year investment in the textile industry was at its lowest since 
1982 in volume terms. The biggest cuts were in the cotton industry 
which is one of the most modern sectors in Europe but also suffers 
from substantial overcapacity worldwide. 
As a result of the oversupply, stock levels rose sharply, 
particularly in the third quarter of 1990, prompting most firms to 
pursue a moderate pricing policy. 
(iv) Apparent consumption in the Community rose until 1990 In the textile 
sector and until 1991 on the clothing side. Then the general 
economic recession led to a sharp fall in final consumption and in 
intermediate demand from the downstream industries. Consumer 
spending on textiles and clothing fell by 1.6% between 1991 and 
1992, while retail sales of clothing were down by 5.3%. 
Demand trends by end-use over the last four years confirmed the fall 
in sales of clothing, which accounted for no more than 45% of final 
consumption in 1992. This was offset by an increase in industrial 
textiles. 
in the light of the situation on the market, imports grew very 
slowly in 1992. However, they had grown extremely rapidly between 
1988 and 1991 as Community producers lost market share. Exports have 
grown steadily without, however, managing to stabilize the trade 
deficit which has widened from ECU 5.6 billion to ECU 12 billion in 
four years. 
Producer prices grew slower than consumer prices apart from In 1992 
when the rates were fairly similar. The gap between the trends for 
these two prices was widest when average import prices were falling 
fastest (between 1988 and 1990), particularly for textiles. 
(v) Nevertheless, this generally gloomy picture must be tempered by the 
more encouraging trends in turnover and value added. 
4) 
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The former rose by 4% in the textiles sector and 12% in clothing 
over this four-year period at constant prices, although It has 
stabilized since 1990. The latter (in firms employing over 20 
workers) varied, falling by 1.7% in the textile sector but 
increasing by 3.2% on the clothing side. Nevertheless, in relation 
to production, value added grew from 33% to 35% in both sectors. 
These trends confirm that the development of industrial strategies 
based on relocation has partly compensated for the contraction of 
local production, particularly In the clothing industry. It also 
signifies a marked change in activity throughout the industry, 
albeit with greater differences than in the past between the 
strategic objectives of the textile and clothing sectors. 
2.3 Trends in 1993 
The figures available for the first five months of this year show that the 
downturn in activity has been even sharper than in 1992, with production 
down by 8% in both the textile and clothing sectors (see Annex 2). 
In view of the renewed fall in final consumption and of the weakness of the 
confidence indicators, production could fall to its lowest ebb in the last 
20 years. 
No area of activity has been spared, not even the carpet or non-woven 
sectors, not only because of the falling demand for clothing but also 
because of the downturn in sectors such as the building and car industries. 
- 17 -
3. Assessment of international competitiveness 
3.1 General context 
Assessment of international competitiveness by analysing trade trends is a 
key instrument for diagnosing the textile and clothing industry. Between 
1988 and 1992 the Community economy, which was already very open to 
international trade in this sector by world standards, became even more so. 
Both import penetration in relation to apparent consumption and exports' 
share of production grew strongly over these four years. Consequently, the 
international division of labour will play an increasingly decisive role in 
textile and clothing firms' strategy. 
However, the conditions in which the Community market was steadily opened up 
distinctly aggravated certain Imbalances: 
(i) the trade deficit with non-Community countries in this sector 
deteriorated as imports grew faster than exports; 
(ii) to a large extent this import growth replaced intra-Community 
production, leading to a decline in production and jobs in the 
industry in absolute terms. 
Imports from outside the Community grew by an average of 8% a year by 
volume, compared with Just 4.6% for exports, between 1988 and 1992 (see 
Annex 8). This gap widened the Community's trade deficit in textiles and 
clothing, particularly in 1990 and 1991. In 1991 the deficit with non-
Community countries reached the new record of ECU 12.4 billion (see 
Annex 9). 
- 18 -
In 1992 the deficit shrank slightly to ECU 12.2 billion as a result of the 
slowdown in imports triggered by the stagnant demand within the Community 
combined with the improved terms of trade. 
Between 1988 and 1992 the gap between total demand, which grew by an average 
of 1.6% a year, and production, which fell by some 0.8% a year, widened for 
all finished textile products. This gap was filled by imports, some of which 
replaced intra-Community production. The upstream sectors (spinning, weaving 
and fabrics) were hit not only by falling total demand, as they lost outlets 
in the Community (down by an annual average of 4.4%) but also by fiercer 
competition from imports. 
Another point to stress is that the greater opening-up to non-Community 
countries has been accompanied by remarkably dynamic Intra-Community trade, 
which has grown by an average of 5% a year. Between 1988 and 1992 
intra-Community trade's share of sales rose from 64% to 66% reflecting, to a 
certain extent, the impact of completion of the internal market. 
The general trends mentioned mask significant differences in competitive 
performance on the different markets, as is clear from the more detailed 
analysis below. 
3.2 Exports 
While exports to all the free market industrialized countries (USA, EFTA and 
Japan) in 1992 were slightly down on 1988, exports to all other countries 
continued to grow at a remarkable rate, by 9.6% a year In volume terms for 
textiles and 16% for clothing (see Annex 10). 
- 19 -
Consequently, industrialized countries' share of ail exports from the 
Community fell, by volume, from 56.3% to 44.5% for textiles and from 80% to 
70.8% for clothing. 
The poor performance by exports from the Community on the markets in the 
developed countries between 1988 and 1992 is reflected by the decline in 
Community products' share of developed countries' total imports (see Annex 
12). For example, the market share of textile and clothing products from the 
EC fell from 12.4% to 8.8% in the USA and from 67.2% to 66.5% in the EFTA 
countries, while in Japan their market share has been falling sharply since 
1990 (from 24% to 16.2%). The developing countries benefited from these 
losses of market share. 
These trends indicate a genuine loss of international competitiveness. The 
reasons are analysed in Chapter 4.1 This could have serious implications if 
this trend were to continue in the future. The industrialized countries are 
the traditional markets for exports from the Community (the USA, Switzerland 
and Austria are the three leading customers). Generally, these exports take 
the form of middle- to top-of-the-range products. 
The rapid growth of textile exports to Central and Eastern Europe, including 
the Republics of the former Soviet Union, and to certain developing 
countries is largely attributable to the extremely marked expansion of 
subcontracting in recent years. This entails exporting fabrics to be made up 
locally and subsequently re imported onto the Community market after 
processing. 
The Mediterranean countries remain the leading export market for textiles 
from the Community (with 23% of the Community's exports In 1992). However, 
Central and Eastern Europe and the ASEAN countries recorded the highest 
growth rates, particularly In 1992. Naturally, the extremely rapid export 
growth to Central and Eastern Europe also reflects the far-reaching changes 
In economic relations with these countries since 1990, which has taken their 
share of textile exports from the Community from 8.7% in 1988 to 15% in 
1992. 
Clothing exports to Central and Eastern Europe have also been growing 
extremely rapidly, not only due to the expansion of subcontracting in the 
case of semi-finished clothing but also in the wake of the steady opening-up 
of markets which were once almost completely sealed off. Exports of clothing 
to the developing countries have also grown from a very low base. This has 
been encouraged by unilateral liberalization measures in certain countries. 
However, these have not been consolidated and therefore remain shaky. 
Generally, the protectionist trade policies pursued by most developing 
countries continue to block access to their markets. 
In view of the generally competitive markets In the industrialized 
countries and the relatively stable conditions of access to them, 
movements In relative shares of imports to those markets are considered a 
good indicator of international competitiveness. 
- 20 -
3.3 Imports 
The loss of competitiveness on the part of European industry revealed by the 
analysis of export trends is further confirmed by import growth. However, 
major disparities were found between the textile and clothing sectors. For 
example, imports of textiles from non-Community countries rose by 5.3% a 
year while imports of clothing were up by 13.8% a year by volume (see 
Annex 13). 
In 1992 Switzerland, Austria and the USA, in that order, remained the 
Community's three leading suppliers of textile products. However, the 
industrialized countries' combined share of the Community market fell from 
43.4% to 40.2% between 1988 and 1992, while Central and Eastern Europe and 
the developing countries, particularly in Southern Asia, strengthened their 
positions on the Community market. India, China, Pakistan and Indonesia are 
now amongst the Community's leading suppliers of yarn and fabrics (see 
Annex 11). 
The developing countries and Central and Eastern Europe now account for over 
95% of all imports of clothing into the Community in volume terms (and 91% 
in terms of value). Within this group, however, the situation changed 
significantly between 1988 and 1992. For example, China has become the 
leading exporter to the European Community (with a market share of almost 
9%). Turkey, Morocco, Tunisia, India, Poland and Indonesia have also made 
significant gains. On the other hand, Hong Kong, the leading supplier in 
1988, has slipped back to third place, while South Korea and Taiwan too have 
become less competitive. In essence, these changes indicate that the 
comparative advantage has shifted away from the countries where wages have 
now risen to close to the Community minimum. 
The very marked acceleration in imports, particularly of clothing, from 
Central and Eastern Europe and the developing countries between 1988 and 
1992 is attributable to a combination of four factors, which are analysed in 
greater detail in Chapters 4 and 5: 
(i) aggravation of the structural disadvantages of most producers in the 
Community from the point of view of industrial competitiveness; 
(ii) the appreciation of most European currencies against the US dollar 
up to September 1992; 
(iii) the changes in economic relations with the former Soviet Union and 
Central and Eastern Europe, as reflected, in particular, by 
bilateral agreements which have substantially liberalized trade; 
(iv) the adoption of restructuring strategies based on relocation of 
labour-intensive activities with a view to cutting production costs, 
particularly in the clothing sector. 
- 21 -
3.4 Balance of trade 
In the textile sector, the European Community still recorded a trade surplus 
of ECU 2.1 billion in 1992 (see Annex 9). The Community's traditional 
deficit with Asia was worse in 1992 than in 1988. By contrast, the surplus 
in trade in textile products with Central and Eastern Europe and the 
Mediterranean countries has almost doubled since 1988, as subcontracting has 
grown. Between 1988 and 1992 the surplus with the industrialized countries 
contracted by 26%, the sharpest reductions being in the surplus with EFTA 
(down by 37%) and Japan (down by 57%). 
Increased imports of clothing from developing countries and Central and 
Eastern Europe were largely to blame for the deterioration of the trade 
deficit in this area to ECU 14.3 billion in 1992. Although declining since 
1990, the balance of trade in clothing with the industrialized countries 
remains in surplus, but not by enough to bridge the deficit with other non-
Community countries. 
One point which must be stressed is the very unusual pattern of trade with 
certain non-Community countries which remain almost completely closed to 
imports from the European Community (with the exception of Hong Kong and 
Macao which are free ports), yet are very big exporters to the Community. 
Not one of the 13 countries listed in Annex 14 (Turkey, China, Hong Kong, 
Taiwan, South Korea, Macao, Pakistan, India, Indonesia, Thailand, the 
Philippines, Brazil and Malaysia) imports from the Community even a third of 
the value which It exports. Together they account for a deficit of 
ECU 18 billion. 
3.5 Differences between product categories 
The average values of textile and clothing imports and exports vary widely 
(see Annex 15). On average, textile products exported from the Community to 
non-Community countries cost 73% more than products imported from the same 
countries. In the case of clothing, the difference is 122%.2 Between 1988 
and 1992 this difference widened. 
Taking Intra-Community trade as the reference level, the average price 
differences shrink to 21% for textiles and 66% for clothing because of 
the more varied nature of trade patterns between the Member States, where 
bottom-, middle- and top-of-the-range products are all traded freely. 
- 22 -
More detailed analysis based on MFA categories offers the explanation that 
the Community specializes in the most expensive varieties of the same type 
of product. This is the fruit of a selective strategy targeted on the top-
of-the-range products on the market. However, this cannot nullify the role 
played by price In competition since, as a general rule, the smaller the 
price difference between the imported and exported varieties of the same 
category, the further the balance of trade in the category concerned tilts 
in favour of the Community. 
Analysis by stage of manufacture reveals that the EC has a large deficit in 
clothing but a relatively small deficit in the upstream sectors (apart from 
knitted fabric) and in household textiles (see Annex 16). The Community has 
a surplus or an even balance of trade In knitted fabric and finished textile 
products (except household textiles). Looking at the individual types of 
fibre, the EC is competitive in wool textiles, maintains an even balance 
with silk but is In an extremely fragile position in the cotton sector and 
with all varieties of made-up goods (see Annex 17). 
The direct import penetration rate rose to 39% of final consumption of 
clothing in 1992 (compared with 27% In 1988)3 and by a relatively smaller 
amount for fabrics (27% in 1992 compared with 21% in 1988). However, it must 
be noted that the upstream sectors are vulnerable to the increase in imports 
downstream since a very large proportion (78% to 95%) of their production is 
sold on the internal market. 
Since 1988, import penetration has increased in every sector except chemical 
fibres (see Annex 18). Although exports' share of total production has also 
increased in most of the branches considered, international competitiveness 
has generally declined. The balance of trade in every product category 
except knitted fabric and miscellaneous textiles has deteriorated. 
4. Analysis of the factors determining International competitiveness 
Chapter 3 identified some of the general trends in the competitiveness of 
the European textile and clothing industry compared with its leading rivals 
over the last five years. The explanation for these trends lies In the 
factors determining the cost and general quality of the product placed on 
the market. Most of these factors concern the productive side (costs, 
productivity, etc.), others organization of production and distribution as a 
whole and yet others foreign trade practices and policies. 
3 Imports account for over 50% of intra-Community consumption of many 
clothing products: T-shirts, shirts, suits, knitwear, etc. 
- 23 -
4.1 Exchange rates 
Movements in the exchange rate for European currencies, particularly against 
the US dollar, have a definite impact on the international competitiveness 
of the European textile and clothing industry. Already over 50% of all 
textile and clothing imports from outside the EC come from countries which 
normally price their exports In dollars: the USA and Canada, but also Latin 
America and almost all Asia. 
Moreover, the vast majority of raw materials of animal or plant origin are 
imported and depend on world prices, which are likewise quoted in dollars. 
As regards the position of European currencies vis-à-vis the dollar, the 
period covered by this report can be divided Into two: before and after 
September 1992, the date marking the start of the monetary problems still 
shaking the European Monetary System. 
Before September 1992, all the European currencies except the drachma 
appreciated in value against the dollar, to the net detriment of the 
international competitiveness of the Community industry (see Annex 19). In 
practice, the beneficial effects of this revaluation on the prices of raw 
materials and imported intermediate products are more than counterbalanced 
by the adverse effects on the cost of internal factors of production which 
account for a far higher share of the total costs. All this must be seen in 
the context of an industry very open to International competition. 
There Is a strong correlation between the EC's trade deficit in textiles and 
clothing and the exchange rate between the ECU and the dollar (see Annex 
20). Similarly, the falling share of exports from the EC in imports to the 
USA suggests the impact of the monetary factor. 
Since September 1992 and up to August 1993 (the latest data available), all 
European currencies fell against the dollar, which could possibly boost 
international competitiveness. However, these gains will not be spread 
evenly throughout the Community. The countries with currencies shadowing the 
DM registered a less marked devaluation and will also have to withstand the 
increased competitiveness of their rivals within the Community which 
devalued very heavily (by between 20 and 40%). 
(5) 
- 24 -
If the turbulence within the EMS persists, businesses will face extra costs 
for their intra-Community transactions, as they will be forced to cover 
themselves against possible changes in the parity of their currency not only 
against the dollar but also against other currencies in the EMS. These extra 
costs could amount to up to 2.5% of the total cost of a delivery. 
4.2 Labour costs 
The proportion of the total production costs attributable to labour costs 
(direct wages, other payments to workers and employers' social security 
contributions) depends directly on the labour intensity of the technology 
employed and on wage levels. It is normally very low (7 to 12% in the 
industrialized countries) in spinning mills which use highly automated 
production processes. At the other end of the scale, in Industrialized 
countries labour costs can account for 40% of the total cost of making-up 
activities (assembly and finishing) requiring long manual production lines. 
Annex 21 reveals enormous differences In average wages, both within the 
Community and between the Community and non-Community countries. The data 
refer to spinning and weaving. The figures available for maklng-up 
activities show similar disparities, albeit on a smaller scale. 
Gaps like these cannot be attributed primarily to special economic 
conditions or to employment practices too far removed from European 
standards, notably child labour and the absence of trade union freedoms, but 
must be put down more to structural factors: 
(I) the generally higher skill levels of the European workforce which 
must be reflected by higher productivity (see Section 4.4); 
(II) the low level of industrialization and abundant supply of unskilled 
labour for primary activities in the developing countries and the 
surplus manpower released by industries in the midst of 
restructuring in Central and Eastern Europe. 
Between 1988 and 1992 the labour cost gap, expressed in dollars, widened 
between most Member States and their rivals, both in the industrialized 
world (USA) and In Asia or North Africa. Only the recently industrialized 
countries in the middle of the wage scale (Taiwan, Turkey, Korea and Hong 
Kong) recorded bigger wage increases than most EC countries. 
In the medium term, the NICs in Asia and some countries in Central and 
Eastern Europe could probably fit into the current intra-Community wage 
scale of 1 to 6. This phenomenon implies changes in the International 
division of labour as these countries, particularly the NICs, become more 
competitive on more sophisticated branches of the market and relocate 
production in response to the competition from countries with lower wages. 
- 25 -
Based on the data in Annex 22, real wages have risen extremely fast 
throughout the Community except in Italy and the United Kingdom, despite the 
deteriorating labour market and the contracting final demand. The 
fundamental explanation for this trend lies in inadequate operation of the 
labour market in the form, in particular, of the rigidity of wages to cuts, 
in this respect, it is important to note the diverging behaviour of real 
wages in the Community and in the USA, where they have remained virtually 
constant throughout the same period. 
Higher inflation in the Community than in the USA or Japan also led to 
faster growing nominal wages. By contrast, the devaluation of certain 
currencies since September 1992 could play an important part in bridging the 
gap in wage growth. 
Employers' social security contributions vary widely within the Community 
(see Annex 23). Although reductions in certain countries could help with the 
approximation of labour costs, a broader package of measures is needed to 
produce an effective solution to the competitiveness problems posed by this 
factor. 
4.3 Capital productivity 
The productivity of production plant is a key factor in international 
competitiveness. In the textile industry, the upstream sectors (spinning and 
weaving) are the most heavily dependent on capital productivity for their 
competitiveness, since they are relatively capital-intensive by the 
standards of this industry.4 This factor depends on both: 
(a) modernization of production plant, which is dictated by the quality 
and pace of capital investment; and 
(b) the capacity utilization rate which, In turn, depends to a large 
extent on organization of the production system and on the 
institutional and cultural conditions for employment. 
(a) Capital investment 
In the 1980s the upstream stages of the textile industry underwent a genuine 
technological revolution which substantially improved their productivity. 
Today, investment per job can be as high as ECU 3 million for the most 
efficient plant for spinning (open-end rotors) and cotton weaving 
(shuttleless looms). 
However, the upstream sectors of the textile industry can be considered 
moderately capital intensive by the standards of all manufacturing 
industry. 
- 26 -
Annexes 25 and 26 illustrate the equipment available and Investments in such 
plant since 1983. 
Over the last ten years, the EC's share of all purchases of spinning and 
cotton-weaving equipment worldwide has been 10% and 25% respectively. 
This Is twice the EC's share of capacity Installed worldwide and therefore 
signifies an extremely high plant modernization rate. 
Worldwide, investment displayed a fairly cyclical pattern, with extended 
growth in all geographical areas from 1983 to 1988 followed by a sharp 
slowdown sparing only the Asian countries, which experienced only a modest 
slowdown in spinning but continued to build up substantial new weaving 
capacity. 
In 1992 plant purchases revived in the wool and cotton weaving Industries in 
most regions but fell substantially In the cotton spinning sector, even In 
Asia. In 1992 the EC's position in the cotton industry in relation to its 
leading rivals weakened, except in the case of open-end operations. 
Years of heavy investment in the Community have been followed by a slowdown, 
starting in 1990, due to three main factors: 
(i) a sharp increase in interest rates, where a very wide gap has now 
opened up compared with the rates charged in the USA and Japan (see 
Annex 26) adding to the European Industry's traditional handicap in 
terms of the cost of capital; 
(il) a tangible deterioration in the prospective return on investments as 
a result of the falling demand since 1991 and of the losses of 
market; 
(ill) a cyclical phenomenon related to the lack of new technological 
breakthroughs after the wave in the 1980s with the introduction of 
automation and computer-aided manufacturing. 
Despite this recent slowdown In investment, the Community wool and cotton 
industries remain amongst the most modern in the world, as Indicated by the 
plant modernization rate (proportion of plant purchases over the last ten 
years in relation to installed capacity). 
However, country-by-country analysis reveals very big differences within the 
Community, not only in the plant modernization rate but also In the level of 
investment per Job (see Annexes 27 and 28). 
- 27 -
(b) Capacity utilization rate 
Generally, producers in the Community make less intensive use of their 
production plant than their non-Community rivals. For example, in Taiwan 
spinning and weaving plant is in operation for 97.2% of the maximum 
possible, compared with 84% in the USA and the Community average of not more 
than 76%. 
This disparity reflects the more rigid organization of work in Europe and 
the generally shorter working hours (see Annex 29) compared with the USA, 
Japan and most NICs. 
Increasingly, practices such as these are perceived as a competitive 
disadvantage for the European industry. Accordingly, over the last five 
years, virtually every Community Member State has been moving towards more 
intensive utilization of production plant without, however, increasing 
working hours which are still even being reduced, except In Spain, Portugal 
and Greece. 
This new trend can be attributed to the introduction of organizational 
systems allowing more flexible work and shorter delays between successive 
production runs. 
4.4 Labour productivity 
Apparent labour productivity, measured in terms of value added per employee, 
has been rising by an annual average of 3.2% throughout the industry. 
This is hardly surprising, despite the falling production, In view of the 
heavy Job losses reported In the sector combined with the trend to 
concentrate high value-added activities In the Community. 
However, big differences In productivity levels persist within the 
Community, reflecting the differences in wage levels and average Investment 
(see Annex 30). The countries with the highest wages have also been making 
the fastest progress with restructuring production plant, so that the gains 
in productivity partly compensate for their disadvantage on wages. 
The key aspect in connection with competitiveness is, however, international 
comparison of the real productivity levels for the average worker doing 
similar jobs. 
- 28 -
The figures in Annex 31, which show the productivity indexes based on expert 
opinion,5 show that the advantage held by certain Community countries on 
this point is too slim to compensate for their higher wage costs. 
As a result, when it comes to unit labour costs, the Community countries are 
at a distinct disadvantage over non-Community countries, apart from Japan in 
the case of weaving and spinning (see Annex 32). 
The steady erosion of the productivity advantages stems partly from the 
particularly rapid spread of new production technologies at international 
level. Over the last few years certain non-Community countries have acquired 
particularly efficient modern production plant, in some cases at a faster 
rate than the Community. 
Consequently, higher labour productivity cannot be achieved by modern plant 
alone. It also depends on the dynamism of the industrial base and on the 
quality of the human resources available. 
In industries where economies of scale are of minor importance, small firms 
are a driving force towards higher productivity by virtue of their 
flexibility to adapt to change and their lower overheads. A recent study6 
found that small firms achieved the highest productivity in most 
Member States. In the clothing sector, medium-sized firms employing between 
100 and 200 workers had the highest productivity, whereas in the textile, 
knitwear and simple made-up goods sectors very small firms achieved the 
highest productivity per employee. 
The predominant trend in the textile and clothing industry throughout the 
1980s in every Community Member State has been towards smaller firms, 
particularly at the production stage. In 1988, small and very small firms 
employed 41% of the total workforce in the textile industry and 57% In 
clothing and generated 47% of the total turnover in both these sectors. 
However, this category of firms, which is far more widespread in the 
Community industry than in non-Community countries (whether the USA or 
NICs), is particularly sensitive to relocation which tends to destroy local 
networks of subcontractors. 
5 Source: Werner International. 
6 Com!text!I, "Structure de l'industrie textile-habillement en Europe: Rôle 
des petites et micro-entreprises", bulletin 1993/4. 
- 29 -
4.5 Human resources 
Human resources and skills are the basic source of productivity improvements 
and flexibility for the economy and Individual firms alike. But they can 
also seriously slow down the dissemination of technological innovations, of 
new production processes and new organizational methods should skills prove 
unsuitable or insufficient. 
It is generally considered that the Community's competitive advantages over 
non-Community countries lie In the superior quality of its human resources 
rather than in its modern production plant. However, training standards, 
management and even awareness of the problem vary markedly between the 
various regions of the Community. 
Talks between employers and trade unions are endeavouring to propose 
adequate responses to today's major problems and challenges. Although the 
information on training needs, particularly In the made-up goods sector, is 
still inadequate, it is already clear that: 
(a) Training tailored to the new needs generated by industrial change is 
not always available: 
* new production technologies call for continuous training; 
* reorganization of production and distribution systems calls for 
new sk i11 s ; 
* greater competitiveness calls for greater efforts on 
flexibility, reliability, quality and know-how. It also implies 
integration of skills at all levels In management functions. 
Many of these are "horizontal" skills. 
(b) The unattractiveness of the sector makes it more difficult to 
recruit certain skills. 
(c) The large proportion of female workers (78% in the clothing 
industry) and the big regional disparities in vocational training 
are two unique features which make this sector more vulnerable. 
Better dissemination of know-how and experience is essential In this 
respect. 
(d) The heavy Job-shedding in the industry calls for general training 
schemes. 
Workforce skills must, therefore, be considered a key factor in flexibility 
and adaptation and, increasingly, in access to employment. 
- 30 -
4.6 Raw material, energy and environmental costs 
Raw material prices, quoted in dollars, have been failing very sharply since 
1990 (see Annex 31). However, this is unlikely to improve European 
producers' competitive position since their competitors will also benefit 
from it. On the other hand, the revaluation of most Community currencies in 
relation to the dollar will have given Community producers, particularly in 
the upstream sectors, certain competitive advantages over their rivals In 
the dollar region (or in countries which have devalued their currencies). 
Although synthetic fibres and cotton are traded as commodities on world 
markets, some producers nevertheless pay substantially lower prices. This 
applies in particular to Taiwan In the case of polyester and to Pakistan and 
India in the case of cotton, as a result of double pricing practices which 
have been denounced repeatedly. 
The Impact of electricity prices varies, but is greatest in the finishing 
sector. Very substantial differences have been reported, not only In 
comparison with certain non-Community countries (particularly the USA where 
electricity prices are far lower) but also within the Community. Italian, 
Spanish and Portuguese producers, for example, have to pay twice as much as 
their French or Dutch counterparts. Completion of the internal energy 
market will no doubt narrow the existing gaps and lower the average price in 
the Community. 
The cost of compliance with national environmental standards already 
accounts for a large proportion of total production costs, particularly for 
dyeing and finishing. In Germany, for example, environmental costs already 
amount to 9.2% of the total while in most other EC countries the figure is 
close to 5% (see Annex 32). The Community's new environmental protection 
policy should bring these figures closer together. However, environmental 
costs are virtually negligible in the vast majority of the developing 
countries and of Central and Eastern Europe. 
4.7 Complex factors affecting competitiveness 
In addition to these quantitative criteria, the International division of 
labour reflects two other types of factor which, on the whole, favour 
continuation of certain production activities In the Community: 
- first, there are a series of barriers to internationalization of 
production, particularly in the form of the costs and risks incurred by 
customers; 
- 31 -
- second, there are the complex factors, I.e. the key factors determining 
success which are hard to quantify but largely compensate for local cost 
disadvantages. 
(a) The main added costs generated by internationalization of sourcing 
and subcontracting are:7 
transport costs; 
administrative costs for customs clearance; 
costs to cover revaluation of the dollar (purchases for future 
delivery, currency option, etc.); 
the costs of issuing letters of credit; 
financial costs due to the fairly strict terms of payment 
normally demanded by non-European suppliers; 
quality control costs, If this task is performed by specialist 
undertakings. 
Taking account of all these costs, but excluding customs duties and quotas, 
since completion of the internal market on 1 January 1993 Community 
producers hold an average advantage of 7% over their competitors close to 
the Community and of 11% over those further away. 
Added to these costs,there are also the risks inherent in extra-Community 
transactions due to: 
the deterioration in quality which sometimes follows over-hasty 
changes of supplier; 
the transfer of the firm's own know-how to the subcontractor or to 
competitors which are also customers of the same subcontractor; 
the added cost, or even Impossibility, of delivery due to import 
quotas; 
the loss of networks of specific know-how available on a traditional 
European market. 
(b) The complex factors most quoted by the firms are: 
the sophistication and quality of the product; 
the reliability of the supplier; 
the ability to accept small orders (short circuiting); 
local availability of high-quality yarn or fabric; 
technical know-how; 
flexibility of production; 
delivery t ime; 
the possibility to repeat orders. 
European suppliers are considered to offer their customers better conditions 
on all these counts than their non-Community competitors. 
Institut Français de la Mode (IFM) "A competitive analysis of finished 
textile and clothing products: imported versus European manufactured 
items", 1992. 
(6) 
- 32 -
Annex 33 clearly shows that although Asian countries offer more generous 
retail margins, they cannot satisfy the demand for small orders (short 
circuiting) or for moderate to high quality. Instead, they therefore hold 
the competitive advantage in manufacturing relatively standard basic 
products, such as household linen, simple made-up goods, yarns and fabrics 
or bottom-of-the-range clothing. Against this, the Mediterranean countries 
and Eastern Europe continue to offer advantageous conditions both In terms 
of retail margin and quality criteria, particularly in the case of clothing 
One final point to note is the strong position of NICs with regard to 
quality and technical know-how. In the near future, this could strengthen 
their competitive position on the markets in top-of-the-range products. 
This trend Is reinforced by the system of quantitative quotas which 
encourages producers to upgrade their products in each category. 
- 33 -
4.8 Distortion of International competition 
All kinds of distortion of competition are widespread on the world market in 
textiles and clothing. Very few countries can claim to practice no form of 
protectionism or of direct promotion of their exports. 
The European Community too imposes tariffs and applies import quotas 
negotiated bilaterally with the leading exporting countries. The duties 
imposed by the Community are amongst the lowest in the world on textiles. A 
large number of exemptions and suspensions are also allowed In application 
of the Generalized System of Preferences and several preferential 
agreements. The rapid growth of imports In recent years raises questions 
about who really benefits from the system and the advisability of 
maintaining it in the textile sector.8 
The tariff and non-tariff barriers set up in many non-Community countries, 
particularly developing countries and NICs, distort the patterns of trade 
and put Community producers and exporters at a serious disadvantage. 
Usually, in practice barriers of this kind constitute veritable bans on 
access to the market, either because of their level or due to the arbitrary 
way in which they are applied. 
Import duties of up to 100% are common, particularly in Asia and Latin 
America. In most cases, the more elaborate the product the higher the 
tariff in order to encourage local production of products with a higher 
added value (clothing). Some countries, such as the Philippines, Taiwan or 
Korea in the recent past, have cut their customs duties, but, for want of 
consolidation under the GATT rules, can still raise them again to suit their 
political requirements. The textile and clothing industry is one of the 
most heavily protected sectors. This Is because the importance of local 
industries to the industrial base puts them in an extremely strong position 
to exert pressure on the authorities. In many Asian countries (India, 
Pakistan, Indonesia, China, etc.) textiles and clothing is considered a 
strategic industry and an extremely important hard currency earner. 
The USA, the Community's leading market for exports of textiles and its 
third market for clothing, also imposes high import duties, with maximums 
ranging from 15% to as high as 42%, particularly for woollen fabrics and 
clothing. The Commission expects a considerable reduction in these peaks as 
the USA strictly implements the Tokyo agreement. 
8 The USA does not apply the GSP in the textile and clothing sector. 
- 34 -
The commonest non-tariff barriers include import bans, exchange controls and 
local distribution systems. As well as restricting Imports, these barriers 
also play an important indirect role in promoting exports. In particular, 
the protection extended to local producers on their home market enables them 
to charge prices which are normally higher than the world market rate. 
Several means of artificially enhancing the competitiveness of exports are 
commonly used: 
- production and export subsidies; 
- dumping (particularly in the upstream sectors of the Industry); 
- double pricing of raw materials. 
Copying of designs and models is another source of distortion of 
competition, in that this fairly widespread practice on most non-Community 
markets denies the firm holding the trademark the chance to reap the full 
commercial benefits from exercising the trademark or exploiting a specific 
innovation. This practice seriously damages the interests of European firms 
which hold a distinct competitive advantage in branded goods. 
At the moment all these practices and policies relating to International 
trade in textiles and clothing militate distinctly against the interests of 
the Community's industry, which rightly recognizes them as one of the 
adverse factors to blame for its loss of competitiveness. Integration of 
the Industry into the GATT rules and disciplines could help to create a more 
evenly balanced international environment. 
- 35 -
5. Industrial strategies 
5.1 Over the last twenty years textile firms in the Community have faced 
two major challenges: 
- competition from products from low-wage countries; 
- weak capacity for long-term growth in final demand. 
They have been forced to meet these challenges by restructuring their 
methods of organization, technologies, etc. at various times, depending on 
their position in the chain and their location. Clothing firms in high-wage 
countries such as Germany or the Netherlands were the first to be hit and, 
consequently, to respond. The upstream branches reacted later, in response 
to the loss of home markets in the wake of the thinning-out of the clothing 
industry and to the emergence of Integrated sectors In certain developing 
countries, encouraged by the availability of raw materials and investment 
aid. Today, countries such as Portugal or Greece still need to restructure 
In response to challenges of this type, but have hardly started the process. 
Consequently, the textile and clothing industry in the Community presents a 
very varied and, at times, contrasting picture with a juxtaposition of firms 
in different stages of a restructuring process, of which the broad lines are 
nevertheless becoming clear. More specifically, four major strategies can 
be identified for the restructuring of the European textile industry: 
(i) modernization of production plant; 
(ii) relocation to lower-wage countries; 
(ill) specialization in specific markets or products, with the adoption of 
a product strategy; 
(lv) change of organization and methods to encourage globalization and 
flexibility. 
Naturally, these four methods of restructuring are by no means incompatible 
but are often combined in firms' choices of strategy. 
5.2 The textile industry has undergone extensive technical modernization. 
Considerable progress has been made with automation, allowing savings on 
labour costs and, at the same time, transforming the production system, 
which has become more capital intensive, particularly at the spinning and 
weaving stages. 
Some even say that these technological changes have reversed the trend and 
returned the comparative advantage to firms in the most industrialized 
countries, which could benefit from more direct access to the technological 
innovations ( particularly by Joining "clusters" bringing together the 
industries producing the plant and materials) and have a reserve of more 
skilled human resources. 
- 36 -
However, before new advantages such as these are converted into more 
balanced patterns of trade, other factors must also enter into play (a more 
favourable exchange rate, fairer terms of international trade and more 
flexible employment). 
Although the clothing industry has also benefited from technological 
innovations, particularly computer-aided design (CAD), it remains 
labour-intensive, particularly the making-up operations. This makes it more 
difficult to reduce the wage disadvantage by modernizing production plant. 
5.3 Clothing firms' relocation strategy has taken the form of international 
subcontracting:9 fabrics or semi-finished clothing are delivered to 
producers in low-wage countries, which perform generally highly 
labour-intensive but simple tasks such as making-up and finishing and then 
return the finished product to the firm which placed the order. 
This practice has led to the disintegration of the original production 
units, which now retain only a very small core of workers employed, however, 
for activities offering high added value or of strategic importance: 
product development, quality control, small production runs and customer 
services. In other cases, most frequently In France or Italy, relocation 
implies a thinning-out of the local networks of subcontractors who 
traditionally offered the advantages of flexibility and cost control.10 In 
some low-wage regions of Portugal or Greece, subcontractors who 
traditionally worked for customers in other Community countries have been 
replaced by producers from countries with even lower wages (the Maghreb 
countries or Central and Eastern Europe). 
A recent survey of a sample of over 200 large or medium-sized subcontractors 
found that production under their control in other countries rose from 30% 
of the value of their own production in 1988 to 40% in 1992.11 The same 
survey concluded that this trend was likely to continue in the years ahead 
as the improved performance of the firms which have embarked on this path 
forces their rivals to follow suit. 
9 Direct investment is virtually non-existent In this sector, where 
technology and capital play a minor role. 
10 Subcontractors employ an estimated 500 000 workers in the Community. 
11 Schaeffer "Outward Processing Trade in the EC Clothing Industry", 
European Textile and Clothing Observatory, 1993. In this study, the 
countries to which production has been relocated include the low-wage 
countries in the Community. 
- 37 -
Originally relocation was targeted on the production of long runs of simple 
products. Today it is gaining ground for short production runs and more 
complex products. A series of factors encourage further development of this 
strategy in the clothing industry, including the widening wage gap, the 
impact of the telecommunications revolution, the sustained heavy pressure on 
production costs on a market in recession and the increasing Involvement of 
the distribution chains in directly productive activities. 
Relocation is also on the increase in other branches of the Industry, albeit 
on a more modest scale, principally in the form of direct Investment 
alongside subcontracting and direct purchases of finished fabrics or 
unbleached cloth. Apart from the advantage of lower wage costs, other 
objectives also come into play, such as to establish a presence on markets 
currently closed to imports in order to satisfy local demand, to follow the 
relocation of clothing production or to avoid certain environmental 
constraints which are considered too heavy a burden. 
The discipline imposed by the Community on outward processing traffic (OPT) 
aims at ensuring that the Community maintains a very firm base in the 
upstream branches of the textile Industry. In order to qualify for more 
favourable tariffs (which can even go as far as exemption in the case of the 
countries of Central and Eastern Europe) or for an extra quota, OPT 
operators in the Community must, in principle, use fabrics originating in 
the Community. However, the steady liberalization of trade with the 
countries most commonly involved in OPT (the countries with preferential 
arrangements and Central and Eastern Europe) could loosen the control 
allowed by this discipline in the future. 
5.4 Product differentiation is achieved by: 
- the spread of the fashion factor to stimulate repeated purchases in 
consecutive seasons; 
- the fragmentation of the markets into quality and price ranges; 
- the response to the new social, environmental and Industrial 
requirements. 
In this way, product differentiation contributes not only to stimulating 
final demand but also, above all, to reducing the price elasticity of 
demand, thereby improving the profit margins of the leaders in pace-setting 
niche markets. It therefore implies the choice of a specific type of market 
defined in the light of the brand image. 
Differentiation strategies are well suited to large or medium-sized clothing 
manufacturers which rely on local subcontracting networks and are able to 
adapt rapidly to consumer trends. However, this solution is not the only 
way in so far as relocation enables producers or distributors based in the 
Community successfully to pursue strategies based on volume not 
differentiation. Recent trends seem to call into question the traditional 
strategy of brand image differentiation and, instead, put the emphasis on 
the price criterion in consumer choice. 
- 38 -
5.5 New organizational strategies aim at positioning the firm at the most 
profitable stages of the circuit, in terms of generation of added value, and 
to give It a high capacity to respond to fluctuations in demand. 
In the clothing industry, production costs often account for less than half 
of the consumer price. Consequently, the biggest margins are downstream, in 
the distribution circuit. Globalization strategies aim at improving the 
firm's position in the chain, by integrating a series of activities from 
design right through to the retail trade and focusing on the activities with 
the highest added value. Today this same concept is applied by producers, 
who have gradually added distribution activities, and by distributors who 
have moved further back along the chain to secure certain supplies meeting 
their precise specifications. 
Integration of production and distribution activities facilitates the 
adoption of quick response methods and short circuiting. Global 
undertakings must, therefore, remain flexible to avoid excessive stocks or 
excessive delays in restocking points of sale. 
5.6 This Juxtaposition, within the Community, of strategies at different 
stages of development explains the widely contrasting forms of competition 
which producers In the Community must face. For the sake of simplification, 
a distinction could be drawn between two types of competition: 
(i) The first is based mainly on the most sophisticated products, where 
Community producers must compete against the other industrialized 
countries as well as the rivals emerging in the NICs for certain 
made-up products. This includes top-of-the-range clothing, finished 
fabrics with high added value, Industrial fabrics, etc. If they are 
to succeed in this field, producers in the Community must play to 
their strengths of creativity, innovation, services and proximity to 
the most profitable consumer markets. Differentiation and 
adaptability will play the major part in determining their 
competitive position. 
(ii) The second type of competition concerns relatively homogeneous basic 
products such as cotton yarn/synthetic fibres, unbleached or 
bleached cloth and the vast majority of non-differentiated household 
textiles and middle- to bottom-of-the-range clothing. Community 
producers' competitors come from the low-wage countries. In this 
case, competition is based primarily on price, even though 
ultimately value for money (taking account of delivery times, 
finishing, etc.) determines the siting of production. 
These two types of competition create a kind of "duality" with modern and 
traditional firms existing side by side within the Community, sometimes with 
diverging interests, particularly with regard to foreign trade and 
competition policy. Traditional firms must also restructure In order to 
make the industry as a whole more competitive at international level. 
- 39 -
6. Community measures 
6.1 Commercial policy 
6.1.1 MFA and bilateral EC agreements 
In accordance with the negotiating directives received from the Council on 
6 October 1992, in December 1992 the Commission successfully negotiated a 
one-year extension of the MFA, which was going to expire at the end of 1992, 
without any change in its provisions, and an extension for two years (plus a 
tacit renewal for a third year If necessary) of each of the existing 
bilateral textile agreements. 
The Community's textile agreements under the MFA or within certain 
preferential relationships with other countries are the main political 
instrument to defend the European textile and clothing industry against 
low-cost imports disrupting the markets and to give the industry the 
possibility to re-establish its competitiveness. These agreements cover a 
wide range of possibilities for consultation with partner countries which 
have not always been fully utilized in the past. 
Their most important components are certain quotas on Imports Including 
correct management thereof and the negotiation of new quantitative 
restrictions when justified by the economic situation of the Community's 
industry. 
Following the completion of the single market leaving only Community quotas 
in existence, the Commission, in cooperation with the national licensing 
authorities, has established an integrated computerized system for the 
coordination of quota management (SIGL). After a transitional period of 
provisional arrangements the Community system has become fully operational. 
Regarding the application of the safeguard clause, timely trade statistics, 
but also information on other economic Indicators must be constantly 
available. Member states must urgently Improve their statistical reporting 
systems to make such data available within the required deadlines, since 
otherwise it will be Impossible for the Commission to manage the Community's 
textile policy efficiently. Only on this basis will the Commission be able, 
with a view to conducting an efficient textile trade policy in the context 
of the single market, to monitor the industry's economic situation and to 
initiate, if necessary, consultations with third countries with a view to 
restraining imports if the conditions for such action are fulfilled. 
6.1.2 Control and fraud prevention activities 
Policy measures extending or limiting trade (e.g. the Community's 
Generalized System of Preferences or the quantitative restrictions of the 
EC's bilateral textile agreements) could encourage certain economic 
operators to seek unduly to exploit certain provisions or to circumvent 
them, as the case may be. Such activities also distort competition and 
undermine the competitiveness of the European industry. 
(7) 
- 40 -
In addition to ensuring the Member States' licensing authorities and customs 
administrations apply the appropriate controls on textile imports, 
Member States also provide mutual assistance in the customs field,12 in 
particular by exchanging information and by taking joint action under the 
coordination of the Commission. For this purpose the Commission has made 
available a computerized information network (SCENT), which has recently 
been extended through the Customs Information System (CIS). 
In order further to intensify the efforts of the competent authorities in 
the Community to put an end to those fraudulent practices, the Commission, 
with the help of the European Parliament and the Member States, launched the 
textile ant I-fraud initiative (TAFI) and cofinanced the establishment of an 
anti-fraud task force, to be managed by the industry, to detect anomalous 
imports. Through this new initiative, and also in cooperation with third 
countries, the Commission intends to support the activities of both the 
Community textile industry and the competent authorities in the 
Member States in combating fraud. 
On the basis of systematic surveillance and analysis of trade flows and 
intensified efforts to discover and trace fraudulent transactions, the 
collection of evidence of fraud will also be facilitated by additional 
missions to third countries. When clear evidence of evasion of quantitative 
limits is available the Commission, in agreement with the Member States, 
will open the necessary consultation with third countries in order to deduct 
the fraudulent imports from the quotas of the countries of true origin. The 
Commission intends to increase the effectiveness of this action by 
strengthening both the procedures and the resources. 
6.1.3 Uruguay Round 
Within the GATT and the ongoing Uruguay Round negotiations the Commission is 
trying to make progress in opening up the markets of the Community's trading 
partners and reducing unfair trading practices in world trade in textiles. 
Acceptance of a textile package based on the Dunkel text will be assessed in 
the light of satisfactory progress in the other areas of the negotiations 
relevant to trade in textiles. 
In view of the complexity and interdependence of economic and political 
factors which are relevant for developments in international economic 
activities and trade, the following priorities have been identified for most 
urgent further action: 
12 Council Regulation (EEC) No 1468/81 of 19 May 1981 (0J No L 144, 
2.6.1981, p. 1). 
- 41 -
Market access 
The analysis of competitiveness in Chapter 2, but also the Uruguay Round 
negotiations, have clearly underlined the major importance of, and need for, 
mutual market access between world trading partners. Therefore, the 
reduction of tariff and non-tariff barriers has become the centre of 
negotiations. There is no more Justification for comprehensive protection 
of highly competitive and continuously growing and exporting textile and 
clothing industries in many countries, particularly in newly industrialized 
countries (NICs), but also in certain developing countries. 
Therefore the Commission will continue to insist on a real and effective 
reduction of barriers to textile markets in developed as well as developing 
countries. The Community's objective must be to achieve reasonable economic 
results. On such a basis It would be possible also to accept the gradual 
integration of the textile sector into GATT. Purely superficial reductions 
from very high tariff levels do not ensure improved market access. 
The main objective, therefore, remains the harmonization of tariffs In all 
major textile exporting and importing countries. The Community proposal 
tries to find a compromise by establishing two sets of maximum duty rates 
for certain product categories, one set to be applied to advanced countries 
and the second to other countries. 
Once the Uruguay Round has been concluded, another aspect relevant to 
international trade in textiles will be the harmonization of the rules of 
origin planned within the framework of the Customs Cooperation Council. The 
Community's priority must be to maintain at least the present level of 
processing required in the EC. 
Ant I-dumping and anti-subsidy measures 
Depending on the progress In the Improvement of real market access, dumping 
and subsidization may take on a new perspective. While dumping practices in 
open markets generally lose ground, subsidization could increase. Both 
practices are covered by the Uruguay Round negotiations In order to Improve 
the existing GATT rules and competitive conditions on worId markets. 
The improvements in the antI-dumping and antl-subsidy provisions to be 
proposed by the Commission, particularly those concerning a reduction of the 
deadlines for investigation, will respond to the specific needs of the 
textile sector. 
Currently there are 21 anti-dumping measures and one ant I-subsidy measure in 
force in the textile sector against 12 third countries, while seven 
investigations are in progress. 
- 42 -
Trade-related aspects of intellectual property rights (TRIPS) 
The spread of industrialization beyond the traditional centres of 
manufacturing has created a situation in which questions of transfer and 
protection of intellectual property have become vastly more important than 
ever before. The European textile and clothing Industry today Is suffering 
from piracy all over the world. It was therefore In the Community's 
interest that intellectual property was introduced in the GATT Uruguay 
Round. In this context the TRIPS negotiations have produced a draft 
agreement as a basis for the introduction and application of the necessary 
legislation in the most important textile trading countries. Moreover at 
the Community's request the TRIPS provisions contain an obligation for all 
parties to ensure through industrial design law or through copyright that 
requirements for securing protection for textile designs, in particular in 
regard to any cost, examination or publication, do no unreasonably impair 
the opportunity to seek and obtain such protection (Section 4, 
Article 25-2). 
Already at present, on the basis of specific cases of violation of 
intellectual property rights, consultations could be held with most of the 
Community's textile trading partners and measures could be envisaged in the 
framework of existing bilateral textile agreements. 
6.1.4 Generalized System of Preferences (GSP) 
The new ten-year scheme announced by the Commission in its communication of 
6 July 1990 to the Council (COM(90)329 final) has been postponed from one 
year to the next because of the uncertainty concerning the outcome of the 
Uruguay Round. This has led to a freeze on the annual GSP arrangements, 
starting in 1990 and lasting until 1993. 
At its meeting on 28 April 1993 the Commission examined a memorandum on the 
GSP for 1994. It concluded that It was preferable to postpone introduction 
of the new ten-year scheme once again until 1 January 1995 since Uruguay 
Round negotiations will not be concluded until the end of 1993, making It 
impossible to start to implement the results until 1994 at best. 
For 1994 the Commission is thinking in terms of Inclusion of a minimum 
package of changes to allow readjustment and simplification, without 
changing the basic mechanisms of the GSP. 
The Commission's proposal for 1994 includes updating the reference 
statistics, taking account of the changes in the sensitiveness of the 
products and in Individual countries' competitiveness and applying the 
differentiation mechanisms to the most competitive countries. 
- 43 -
In the near future the Commission will have to start to examine the new 
ten-year GSP scheme including, inter alia, the insertion of special 
arrangements to take account of the impact of the social and environmental 
aspects on competition. The review of the specific mechanisms applicable to 
textile and clothing products will have to take account of the changes in 
international competition since the last review and of the prospects after 
the Uruguay Round negotiations. It will also have to be based on an 
assessment of the real benefits which the system offers to exporting 
countries. 
6-1-5 Export promotion 
With increasing competition from imports and improved access to textiles and 
clothing markets, particularly to those countries with large and rapidly 
growing markets, it seems important to support the efforts of the European 
industry to develop its exports to those markets outside the Community. The 
initiatives taken by the Member States but also by the European Parliament 
should be further improved. In 1991 the Commission launched an export 
promotion scheme (EXPROM) seeking to develop new markets for EC textile 
products. 
A large part of the ECU 680 000 budget for EXPROM was used to support a 
range of initiatives in the textile and clothing sectors designed to help 
Community exports exploit opportunities In new markets as well as promoting 
a distinct Community image. Working together with the relevant European 
industrial federations, several analyses investigating the potential of new 
markets were commissioned and a variety of exploratory missions and trade 
fairs were supported in those markets already identified as offering 
opportunities for EC exports. 
6.2 Single market 
6.2.1 Community rules on outward processing traffic 
In the context of the new Initiatives and strategies of enterprises In the 
textile and clothing industry, transfrontier subcontracting, I.e. outward 
processing traffic (OPT), has become of major importance (see Chapters 3 and 
5). In product areas which are not subject to quantitative Import 
restrictions in the Community, all operators In the EC industry have equal 
opportunities to carry out OPT. However, where specific OPT quotas have 
been established, Community Regulation No 636/8213 granting additional 
quantitative access to OPT operators in categories under restriction, the 
benefit has, in principle, been reserved for the Community's clothing 
industry. 
13 Official Journal No L 76, 20 March 1982, p. 1. 
- 44 -
The establishment of Community OPT quotas on 1 January 1993 requires 
elimination of the disparities in the interpretation of Regulation 636/82 
between the Member States. To this end, the Commission has proposed 
amendments to the Regulation which will harmonize application throughout the 
Community.14 
The Commission's proposed amendment (COM(93)259 final) to this Regulation is 
not intended to establish a new policy approach to OPT imports but, on the 
basis of compromises between the Member States' currently different 
interpretations, aims at defining clear common lines for the implementation 
of this Regulation in the Community. At the same time it tries to reflect 
the wishes and needs of the European clothing industry in its efforts to 
improve its international competitiveness as well as to be consistent with 
the Community's overall textile trade policy. 
6.2.2 Protection of intellectual property rights 
The basic importance of the creation of new trademarks (labels), models and 
designs in the field of textile fashion for the competitiveness of the 
Community's textile and clothing industry has become increasingly evident. 
A suitable system of registration and legal protection of industrial 
designs, not only in the Community but also at international level, and 
effective application thereof to textile trade worldwide is therefore 
needed. 
The Commission, in anticipation of the results of the Uruguay Round in this 
field and as a clear signal to other participants in world trade, has 
proposed two pieces of internal EC legislation: 
- rules laying down measures to prohibit the release for free circulation 
in the Community of counterfeit goods, including illegally copied designs 
and models (amendment of Regulation 3842/86),15 
- Community Regulation on the legal protection of industrial designs.16 
These proposals take particular account of the specific situation in the 
textile and clothing market, e.g. the quick change of fashion, the multitude 
of designs and models and the small and medium size of most of the 
enterprises. 
14 Commission communication to the Council: Implications of the internal 
market for commercial policy in the textile and clothing sectors, 
SEC(92)896 final, 1 June 1992, p. 2. 
15 COM(93)329 final, 13 July 1993. 
16 C0M(93)342 final. 28 July 1993. 
- 45 -
6.2.3 Protection of the environment 
Environment policy, depending on the sector of industry concerned and on 
existing consumer preferences, can either be an advantage or a disadvantage 
to the competitiveness of an industry: 
- there could be advantages for industries offering environmental 
protection technologies, goods and services or ecologically sound 
consumer products, 
- but at the same time there could be disadvantages for industries which 
have to bear higher environmental costs for production than their 
competitors in other countries with lower environmental standards or 
suffer from non-acceptance by consumers of ecologically sound products. 
The situation in the Community's textile and clothing industry seems to be 
different in the individual lines of production as well as Member States, 
but it still lacks transparency. It is evident that the Community has to 
continue its efforts to harmonize its environmental policy if certain 
distortions in intra-Community competition are to be avoided. 
Very few of the textile-exporting developing countries have already 
established environmental standards. In assessing their conditions of 
international competitiveness. Community producers have to take differences 
in the degree of enforcement of such standards increasingly into account. 
This is one of the reasons why the Commission supports the view that as soon 
as possible after completion of the Uruguay Round work in international 
trade organizations should also cover the environmental aspects. 
Another important part of the environmental aspect is systematic information 
of consumers will make them aware of the advantages of ecologically sound 
products and develop their willingness to give them preference. This aspect 
Is Included in the Fifth Action Programme on the Environment,17 but also 
taken into account by the initiatives concerning the eco-label. 
Regulation 880/9218 on eco-labels and Regulation 1836/9319 allow voluntary 
participation by companies In the industrial sector in a Community 
eco-management and audit scheme. 
17 "Towards sustainable development", OJ No C 138, 17.5.1993. 
18 OJ No L 99, 11.4.1992. 
19 OJ No L 168, 10.7.1993. 
- 46 -
6.3 Competition policy 
There is a danger that the current economic context in the textile and 
clothing industry could prompt the authorities to take more measures to save 
firms In order to soften the social and regional impact of the difficulties 
facing firms. Far from solving the problems, these measures hamper and 
needlessly delay proper operation of the adjustment mechanisms, thereby 
adding to the economic and social costs. 
To avoid aggravation of the overcapacity In certain subsectors, it is 
essential for firms to have a legal framework ensuring compliance with the 
rules on competition. 
Aid may be granted to textile and clothing firms on the basis of schemes 
authorized by the Commission for regional development purposes, to promote 
R&D, to protect the environment, to support small firms, etc., while 
observing the general guidelines laid down in the following specific 
frameworks: 
(a) Aid to the synthetic fibres industry Is controlled by the code on 
aid to this industry which entered into force In 1977 and was last 
renewed and amended in December 1992.20 
Under this system, the Commission must be notified of all aid 
covered by this code and will make its authorization of aid 
conditional on a "significant reduction" In the production capacity 
of the assisted company. 
20 OJ No C 346, 30.12.1992. 
- 47 -
(b) The specific aid to the textile and clothing industry was defined in 
the 1971 communication from the Commission to the Member States on 
aid to the textile industry21 and defined in greater detail in the 
1977 letter.22 
A more rigorous competition policy will also call for a greater effort to 
improve the transparency of aid to textile firms. To this end, the 
Commission has urged the Member States to improve the notification 
procedures, operating on a standardized basis, and to establish an annual 
report on the aid granted by the Member States to vulnerable industries in 
crisis (including textiles and synthetic fibres). Closer collaboration 
between the national authorities and the Commission is necessary to enable 
the Commission to evaluate the sectoral impact of non-sectoral aid, which 
has not yet been the case. 
The Commission departments concerned have begun to consider restriction of 
regional aid for highly capital-intensive investments since their 
contribution to regional development Is sometimes not enough to compensate 
for the possible distortion of competition. 
6.4 Support for modernization and conversion 
6.4.1 Research and technological development 
Textile and clothing firms are usually downstream from the technological 
innovation process. They benefit from the process by adapting their needs 
(flexibility, productivity, durability and quality plus cost-effectiveness) 
to the progress made in the sectors with the know-how and resources required 
to develop generic technologies. 
21 Document SG(71)363 final (July 1971). 
22 Document SG(77)D/1990 of 4 February 1977 and the Annex thereto (Doc. 
SEC(77)317 of 25 January 1977). 
- 48 -
Continuous adaptation to innovations in information technologies, materials 
or production methods is a fundamental component of the competitiveness of 
textile firms. However, the textile industry itself, particularly firms 
developing innovatory solutions specifically for this industry, continue to 
play a vital role. These firms must play a decisive role In the Innovation 
process by capitalizing on their advantageous position based on experience, 
creativity and a thorough knowledge of the needs of the Industry. 
Consequently, the European textile and clothing industry depends on rapid 
adaptation to generic technologies and on a specific innovation programme 
which, in recent years, has enabled it to promote, in particular: 
(i) the development of more flexible production systems capable of 
responding to the new strategic requirements stemming from short-
circuiting; 
(ii) application of technological progress for quality control (for 
example, automatic fault detection); 
(iii) environmental protection, in conjunction with the objectives of 
improving quality and making more rational use of resources; 
(iv) application of new materials and processes for a wide range of 
end-uses, particularly for clothing and industrial textiles; 
(v) use of emerging technologies displaying considerable potential 
(biotechnology and optoelectronics). 
Development of generic technologies and of specific solutions and subsequent 
application thereof to the priorities of the textile and clothing Industry 
call for parallel coordinated efforts to disseminate and demonstrate 
research findings and know-how. Particular attention must be paid to 
training staff in new techniques and to making development of the training 
needed an integral part of the RTD projects. 
The Third Framework Programme for Community RTD Includes a series of 
activities to satisfy the need to take up the results of applied research. 
Firms and research institutions in the textile Industry have benefited 
directly from these, particularly from BRITE/EURAM (the programme to support 
research into industrial technologies and advanced materials), and from the 
multidisciplinary schemes targeted on small businesses, such as the CRAFT 
(Cooperative Research Action for Technology) pilot projects and the 
BRITE/EURAM feasibility awards. 
- 49 -
In recent years, there has been a marked improvement in participation in 
BRITE/EURAM by the textile and clothing industry, as a result of closer 
cooperation between the various branches of the industry and upstream 
sectors and a better flow of information between the industry and the 
research centres, allowing clearer identification of the priorities and of 
the research objectives. The Commission has organized Information and 
awareness campaigns to support these efforts. 
For the period from 1994 to 1998, the Commission has submitted its proposal 
for the Fourth Framework Programme for Community RTD, with a total budget of 
ECU 13.1 billion. The proposal is for the Community's RTD activities to 
concentrate more on generic technologies for widespread use In all sectors 
of activity. The joint research on information and communications 
technologies, industrial technologies, materials or biotechnologies, for 
example, will have spin-offs for many branches of industry, including 
textiles and clothing, and help to improve their international 
competitiveness. 
The activities to encourage the use of new technologies by small firms will 
be stepped up in the Fourth Framework Programme. The proposal puts the 
accent of the dissemination activities on small firms and propose a 
completely new financial instrument specially designed to encourage small 
firms to take up the findings of Community research. This new instrument 
will be added to the measures already in force to ensure more effective 
participation by small firms in the Community's RTD activities. 
6.4.2 Training 
The Commission's current guidelines on human resources policy are making a 
significant contribution to solving the problems described in Chapter 4. 
Starting in 1994, the Community, in partnership with the national 
authorities, will implement a series of measures under the new objective 4 
of the Structural Funds aiming at: 
(i) predicting the new medium-term requirements and ensuring adequate 
training; 
(ii) reducing the impact of industrial change In terms of job losses and 
improving workers' chances of keeping their Job or of finding 
another. 
- 50 -
The action to be taken in this area will include a number of novel features 
compared with the other activities financed by the Structural Funds: 
- it will apply to the entire Community, not Just the assisted regions; 
it will be open to all sectors of activity, with no priority sectors-, 
- priority will be given to workers and managers who are in employment but 
are likely to be affected by industrial change; 
- it will take the form of a few types of action responding to priority 
objectives (for example, training schemes on the introduction of flexible 
manufacturing systems, computer links between customers placing orders 
and small subcontracting firms or environmental technology). 
The Community must be selective and concentrate on a limited number of 
fields in which industrial change has the greatest Impact on 
competitiveness. Priority will have to be given to activities offering major 
benefits in terms of strengthening Industrial competitiveness: 
(a) training schemes on key skills for the new systems for organizing 
production; 
(b) transnational action; 
(c) activities giving priority to small firms. 
In order to take greater account of the changes in employment, Job profiles 
and real needs for training, the Commission has started talks to enable 
employers, trade unions and the Commission to share their ideas. A 
programme of activities and discussions with the two sides of Industry has 
been focusing on four priorities*. 
- vocational training (the need for statistics and know-how on employment 
and training In the textile and clothing Industry; involvement in 
programmes run by the public authorities, such as the "EuroquaiIfication" 
scheme and exchanges of information and views on projects in the industry 
receiving support under the NOW, EUR0F0RM, FORCE and COMETT programmes); 
- Jobs for women (draft Joint opinion on access to vocational training for 
women and discussions on teleworking and undeclared employment); 
- the RETEX regional round tables (to study the problems caused by 
conversion of the textile and clothing industry both Inside and outside 
the Community); 
- the social clauses in trade agreements, particularly In the GSP. 
6.4.3 Diversification and conversion 
The process of adapting the textile and clothing industry to the new 
conditions on the market, as described in Chapter 5, entails substantial 
social costs, particularly In regions heavily dependent on the industry. 
Diversification of the industrial base in such regions is becoming more 
- 51 -
necessary than ever. However, the backwardness or general decline in 
industrial activity makes such diversification difficult in a very large 
proportion of the textile regions in the Community. 
Consequently, the uneven levels of regional development within the Community 
curb industrial change and add to the social costs of the inevitable 
restructuring. 
The Structural Funds provide substantial support for the recovery programme 
in the regions hardest hit by the changes in the textile and clothing 
industry. 
First, the Community support frameworks help to improve the general 
conditions for development in the least favoured regions and for modernizing 
their economic base, in line with the priorities agreed between the national 
authorities and the Commission. Textile and clothing firms In some Member 
States have been granted aid up to certain limits set on the basis of the 
rules in force on competition policy. 
In addition, in 1992 the Commission adopted a new Community programme 
(RETEX) which is now being put into operation In most Member States. The 
objective is to speed up diversification of production in regions heavily 
dependent on the textile and clothing industry and to make It easier for 
viable firms in all branches of industry to adapt. 
To this end, RETEX puts the emphasis on improving the know-how available in 
firms, cooperation between undertakings in the same region or branch, the 
establishment of local management and advisory teams, the use of new 
technologies to improve quality and easier access to financial markets. 
The RETEX programme aims at diversification of the economy In the assisted 
(objective 1, 2 and 5b) regions of the Community which satisfy set criteria, 
as regards dependence on the sector. Regions hit by heavy Job losses In the 
sector but not considered assisted regions are therefore excluded. 
The Commission has published a green paper on the new generation of 
Community initiative programmes to be implemented between 1994 and 1999. 
This document emphasizes the need to respond to industrial change with a 
package of measures to support modernization of the manufacturing base, 
particularly to adapt human resources, throughout the Community. 
A new horizontal Community initiative tailored specifically to the needs of 
the industry and with more flexible geographical coverage could make a 
significant extra contribution to attaining the diversification and 
conversion objectives of RETEX. 
- 52 -
6.4. Information and communication 
The Commission intends to continue the schemes to improve the flow of 
information, communications, cooperation and the dissemination of 
experience, by developing an effective policy for providing services for 
businesses. 
Four general areas for support have been defined: 
1. Provide fuller information, particularly economic and structural 
statistics and analyses of potential scenarios. To this end, the 
Commission has started a pilot project, in the form of the European 
Textile and Clothing Observatory, in cooperation with the industry. The 
Commission is also taking measures, In coordination with the 
Member States (the national statistical institutes) to analyse the 
structure of the market and trends In this sector, with particular 
emphasis on subcontracting. 
2. Support studies to provide a fuller understanding of the structure of the 
industry and/or conduct pilot projects, provided they lead to practical 
proposals (skills required in the clothing industry, subcontracting in 
the Community, etc.). 
3. Encourage coordination of information and exchanges of experience by 
networking centres of excellence or regional observatories. Closer 
cooperation and partnerships are being prepared in key sectors of 
subcontracting, with the aid of BC-Net, the Business Cooperation Centre, 
Europarténariat and the Interprise programme. 
4. Promote communication with the aid of a standardized data interchange 
language: specific programmes (STAR, telematics systems, etc.) or the 
Community action programme on Trade Electronic Data Interchange Systems 
(TEDIS) to support the Industry's work on EDI. 
- 53 -
ADDENDUM 
Repercussions of the opening-up to Central and Eastern Europe 
for the Portuguese textile industry 
At the Council meeting on general affairs on 30 September 1991 at which the 
mandate for negotiations with Poland, Hungary and Czechoslovakia was 
discussed, the Commission undertook to assess the consequences of the 
gradual opening-up of the Community market to textiles from these three 
countries for the Portuguese textile industry. 
It must be remembered that, because of their status as state-trading 
countries, up until 1989 trade in textiles with all these countries was 
severely limited by the quantitative restrictions imposed by the bilateral 
agreements. To encourage economic recovery in Central and Eastern Europe, 
the textile quotas for Hungary, Poland and Czechoslovakia were increased in 
1990/91 and those for Romania and Bulgaria in 1991/92. The quotas 
specifically for outward processing traffic (OPT) were improved early in 
1991. The association agreements concluded in late 1992 included 
significant increases in the OPT quotas for the first three countries and, 
in the course of 1993, for Romania. 
In the new Protocols which entered into force in 1993, except in the case of 
Bulgaria, for which no date has yet been fixed, the Community committed 
itself to phase out the quantitative restrictions within five years. A 
start has also been made on dismantling the customs duties, on a reciprocal 
basis. 
The liberalization of trade with Central and Eastern Europe Is only Just 
beginning to have an effect. It is therefore too early for a full 
assessment of the consequences. The Commission will keep a vigilant watch 
on developments and will keep the Council informed. The latest data 
available at this juncture reveal the following trends: 
1. Since 1988, trade in textiles between the EC and Central and Eastern 
Europe has grown extremely dynamically. Up to 1992 exports of textiles 
from the EC rose by an average of 22% per year (in terms of quantity) and 
exports of clothing by 41%. Imports of textiles rose by 13% and of 
clothing by 21%. 
The EC's balance of trade with these countries shows a surplus of 
48 000 tonnes for textiles and a deficit of 93 000 tonnes for clothing. 
2. The pattern of OPT trade has changed particularly rapidly as firms in the 
Community are keen to take advantage of Central and Eastern European 
countries' considerably lower labour costs for highly labour-intensive 
activities. Imports of clothing covered by OPT arrangements rose from 
Just 26 000 tonnes in 1988 (or 46% of all imports) to 73 000 tonnes (62%) 
in 1992. 
- 54 -
This trend also explains the rapid growth in exports of fabrics from the 
Community, a large proportion of which are intended for local making-up 
operations and subsequent reimportation into the EC. 
3. Trade with Central and Eastern Europe is shared extremely unevenly within 
the EC. Germany takes 45% of the textiles Imported into the EC from 
Central and Eastern Europe and 57% of the clothing. It also claims 54% 
and 39% respectively of all the EC's exports to Central and Eastern 
Europe. Italy, the Benelux countries and France also take large shares. 
Portugal's direct trade with Central and Eastern Europe In both 
directions is virtually negligible. 
4. The main impact of the opening-up of trade with Central and Eastern 
Europe on the Portuguese textile Industry will be greater competition on 
the Community market. A large proportion of the products supplied by 
Portugal compete directly with the exports from Central and Eastern 
Europe, often on the basis of subcontracting arrangements. 
The Community market takes 75% of all Portugal's exports of textiles and 
clothing (ECU 3 billion out of ECU 4 billion). Any contraction of this 
market could have serious consequences for Portugal's entire economy. 
The textile and clothing Industry accounts for approximately 25% of all 
industrial employment in Portugal and 30% of its exports of goods. 
5. The data available so far provide no evidence that the opening-up to 
Central and Eastern Europe has had any significant impact on Portugal's 
traditional patterns of trade on the single market. Between 1988 and 
1992 Portugal's sales rose steadily by an average of 9.5% per year In the 
case of textiles and 14.3% for clothing (see Annex 36). 
Portugal has even strengthened its competitive position within the 
Community; Its share of all the EC's Imports (both Intra-Community and 
extra-Community) rose from 3.2% In 1988 to 3,7% in 1992, although its 
position on the EFTA and US markets deteriorated slightly. In 1992 all 
the Central and Eastern European countries' combined share of EC imports 
was roughly equivalent to Portugal's (3.6%). 
6. As in all the rest of the Community, production in the Portuguese textile 
and clothing industry contracted sharply In 1992. Output in the textile 
sector (including knitwear) was down by 8% compared with 1991 and 4.4% 
lower than in 1988. Clothing production fell by 2.5% in 1992 but is 
still 2.4% higher than In 1988. 
This situation occurred despite the continued, albeit slower, growth of 
deliveries on the Community market (5.7% for textiles and 4% for 
clothing). Fundamentally, the Portuguese Industry's current difficulties 
are attributable to the contraction in demand and to the fiercer external 
competition on Its national market. 
ANNEXES 
Annex 1 : 
Annex 2: 
Annex 2a 
Annex 
Annex 
Annex 
Annex 6: 
Annex 7 
Annex 8: 
Annex 9: 
Annex 9a 
Annex 10 
Annex 11: 
Annex 12: 
Annex 13: 
Annex 14; 
Annex 15: 
Annex 16; 
Annex 17; 
Annex 18 
Annex 19: 
Annex 20: 
Annex 21 : 
Annex 22: 
Annex 23 
Annex 24: 
Annex 25 
Annex 26 
Annex 27 
Annex 28 
Annex 29: 
Annex 30; 
Annex 31 
Annex 32 
Annex 33: 
Annex 34 
Annex 35 
Annex 36: EC: basic structural data 1988-1992 
EC: employment 1988-1992 
Employment trends In the Member States 1988-1992 
EC: production index trends 1980-1992 
EC: volume trends 1988-1992 - Textiles 
EC: volume trends 1988-1992 - Clothing 
EC: textile and clothing production (1980-1992) 
Production index trends by Member State 
EC foreign trade with non-Community countries 
(by volume) 1988/92 - Textiles and clothing 
EC foreign trade with non-Community countries 
(by value) 1988/92 - Textiles and clothing 
EC: foreign trade 1990-1992 
Average annual growth rates for exports from the EC 
(% by volume) 
The EC's ten leading partners 
EC's share of textile and clothing exports to the EFTA 
countr ies 
EC's share of textile and clothing exports to Japan and 
the USA 
Average annual growth rates for imports Into the EC 
(% by volume) 
EC trade In textiles and clothing - 1992 
Average prices of products traded - Textiles and 
clothing 
Production and foreign trade by stage of production: 
1992 
Production and foreign trade by branch 
Production and foreign trade trends by stage of 
production 1988-1992 
Movement of the dollar against Community currencies 
EC's share of textile and clothing imports In the USA 
Trade deficit and exchange rates 
Labour costs in spinning and weaving 
Wage, exchange rate and price trends (1988/93) 
(spinning and weaving) 
Social security contributions as a percentage of 
labour costs in 1993 (spinning and weaving) 
Spinning plant - deliveries in 1983-92 as a percentage of 
plant installed In 1991 
Weaving plant - deliveries in 1983-92 as a percentage of 
plant installed in 1991 
Interest rates in 1992 
Modernization rate in the European cotton industry 
(open-end rotors and splndleless looms) 
Investment per employee in 1991-1992 - textile Industry 
Normal operator hours 
Value added per employee in 1992 
Productivity index 1993 
Unit labour cost index 1993 
Raw material prices 
Environmental costs in dyeing and finishing 
Competitive analysis of supplying countries 
Exports from Portugal and the countries of Central and 
Eastern Europe to the EC 
zl< s 
Annex 1 
EC: Basic Structural Data 1992/1988 
1988= 100 
115 
105 
95 
85 
75 
^ ^ 65 
Employment Turnover 
Source: OETH.CIRFS.Eurostat Invest. Production App. consumption 
Annex 2 
EC: Employment 1988 -1992 
100 
-18.6% -2.8% 8 -10.5% 
*UtMUMtMWM'J*»M**U>**>*>*>* -14.1% 
-700 -84 0.4% -24 
Ji*iA 
Manufact. Ind. 
Steel Electronics Shipbuilding 
Automobile Textile/Clothing 
Unit: Changes 1988/1992 in thousands and in perc 
Sources: OETH/Eurostat/DG III-E4 
ANNEX 2a 
Employment trends in the textile and clothing 
industry in the Member States 1988 - 92 
Belgium 
Luxembourg 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Netherlands 
Portugal 
United Kingdom 
E.C 1988 
86.878 
942 
24.821 
479.881 
96.378 
346.617 
393.370 
22.521 
804.473 
31.755 
289.179 
493.999 
3.070.814 1992 
79.495 
926 
20.337 
425.733 
79.642 
294.550 
332.472 
21.131 
718.123 
30.418 
263.833 
369.882 
2.636.542 Percentage change 
1992/88 
- 8.5 
- 1.7 
-18.1 
-11.3 
-17.4 
-15.0 
-15.5 
- 6.2 
-10.7 
- 4.2 
- 8.8 
-25.1 
-14.1 
Source : OETH 
rï 
Annex 3 
EC: Production index trends 
1980-1992 
1985= 100 
84 85 86 
•Textiles H6f-Clothing 
•••Manuf. Ind. 92 93 
projections 
Source: Eurostat 
Annex 4 
EC: Volume trends 1988-1992 
1985= 100 
120 
115 
110 
105 
100 
1988 Textiles 
1989 1990 1991 1992 
•^Production H3-App. Cons. »Production Manuf. Ind. 1993 
projections 
•f -* Sources: Eurostat.CIRFS 
Annex 5 
EC: Volume trends 1988-1992 
Clothing 
1985 = 100 
130 
120 
110 
100 
1988 
Sources: Eurostat.CIRFS 1989 1990 1991 1992 
•B-Production n»App. Cons. * Production Manuf. Ind. 1993 
projections 
ANNEX6 
EC : TEXTILE AND CLOTHING PRODUCTION (1980 -1992) 
1985 = 100 
Country 
Belgium/ 
Lux. 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Netherlands 
Portugal 
United-
Kingdom 
EC 12 Textiles (NACE 43) 
(incl.knitwear) 
1980 
95.0 
85.6 
105.4 
104.6 
104.4 
112.4 
114.3 
102.5 
101.0 
87.5 
101.7 
103.4 1988 
100.9 
92.4 
97.4 
105.8 
104.4 
92.9 
106.2 
108.9 
94.5 
108.2 
101.7 
102.6 1991 
104.5 
87.4 
99.8 
90.7 
99.5 
83.8 
118.9 
114.4 
98.0 
112.3 
85.6 
101.2 1992 
106.7 
84.4 
92.0 
83.0 
94.9 
82.2 
125.4 
112.4 
90.0 
103.3 
85.2 
97.8 1992/1988 
+ 5.7 
- 8.7 
- 5.5 
-21.6 
- 9.1 
-11.5 
+ 18.1 
+ 3.2 
- 4.8 
- 4.5 
-16.2 
-4.7 Clothing 
(NACE 453 + 454+ 456) 
1980 
107.3 
79.5 
122.2 
132.1 
126.1 
106.1 
99.1 
104.1 
135.1 
92.6 
109.6 1988 
91.3 
72.8 
91.6 
97.0 
97.7 
84.0 
95.4 
96.9 
101.9 
108.5 
102.5 
94.7 1991 
128.7 
68.7 
86.2 
92.8 
97.8 
72.2 
79.2 
95.7 
120.9 
114.0 
88.3 
90.6 1992 
130.6 
72.2 
77.0 
89.4 
93.3 
65.7 
76.2 
100.2 
111.0 
111.1 
89.3 
88.6 1992/1988 
+ 43 
- 0.8 
- 16.0 
- 7.8 
- 4.5 
- 21.8 
- 20.1 
+ 3.4 
+ 8.9 
+ 2.4 
- 12.5 
- 6.4 
Source : Eurostat 
«r* 
Annex 7 
Production index trend by Member State 
% 1992/1988 
40 
20 
v -20 
BLEU DK 
Source: Eurostat •Textiles 
•Clothing 
D H IRL NL UK EC 
Annex 8 
EC foreign trade with non-Community countries 
(by volume) 
1988/92 
(000) Tons 
2,600 
2.400 
2,200 
2,000 
1,800 
1,600 
1,400 
1,200 
1988 Textiles 
1989 1990 1991 1992 
Imports Exports 
• I ^ ^ 
(000) Tons 
1,600 
1,400 h 
1988 Clothing 
1989 1990 1991 1992 
Imports Exports 
Source: EUROSTAT 
"textile» - CITC 65 
Ckxhing-CrTCM(-S48) k\ 
Annex 9 
EC foreign trade with non-Community countries 
(by value) 
1988/92 
Million ECU 
15,000 
9,000 
1988 Textiles 
1989 1990 1991 
Imports S Surplus 1992 
Million ECU 
30,000 
5,000 1988 Clothing 
1989 1990 
Exports B Deficit I 
Source: EUROSTAT 
Textile*-CTTC 65 
Clothing-CTTC 84 (-848) 1991 1992 
r <• 
Annex 9 a 
EC: Foreign Trade 1990-1992 
Textiles Tons 
(excl. knitwear) 
milBon ECU 
Clothina Tons 
find, knitwear) 
milflon ECU 
Total T + C Tons 
million ECU Imports EC (*) 
1990 1991 1992 Pet. change 
92791 
2,253,609 
11,425 
1,048,627 
18,626 
3,302,036 
30,060 2,308,631 
11,887 
1,298,696 
23,394 
3,607,326 
35,281 2,352,473 
11,620 
1,370,374 
24,375 
3,722,847 
35,996 1.9 
-2.2 
6.6; 
4.2S 
3.2 : 
2.0 ;; Exports EC (•) 
1990 1991 1992 Pet. change 
92/91 
; 1,446,608 
12,823 
243,290 
9,865 
1,689,898 
22,688 1,507,441 
13,098 
244,486 
9,763 
1,751,927 
22,861 1,602,774 
13,703 
256,760 
10,114 
1,868,524 
23,817 6.3 
4.6 
4.6 
3.7 
6.1 
4.2 ; : 
Balance 
1990 1991 1992 
-806,901 
1,398 
-806,237 
-8,760 
-1,612,138 
-7,362 -801,190 
1,211 
-1,064,209 
-13,641 
-1,865,399 
-12,430 -749,699 | 
2,083 
-1,114,624 
-14,261 
-1,864,323 
• 
-12,178 
Source: EUROSTAT 
Textiles » CITC 65 
Clothing - CITC 84 (-848) (*): Extra-EC only 
•^ 
^ 
ANNEX 10 
Average annual growth rates for exports from the EC 
(%, by volume) 
Destination 
Extra-EC 
Industrialized countries 
EFTA 
USA 
Japan 
Developing countries 
of which : 
Mediterranean rim 
Latin America 
Indian subcontinent 
ASEAN 
Far East 
Central and Eastern 
Europe Textiles 
88/92 
4.6 
-0.3 
-0.2 
-0.2 
0.6 
7.8 
7.7 
14.9 
0.0 
21.1 
5.9 
16.5 91/92 
6.3 
5.2 
3.6 
14.2 
-7.8 
0.5 
-0.4 
9.6 
8.7 
25.8 
3.0 
35.6 Clothing 
88/92 
4.8 
- 0.7 
1.2 
-12.7 
9.3 
7.3 
9.9 
13.0 
22.9 
15.1 
17.9 
53.3 91/92 
4.6 
- 3.8 
- 2.5 
- 8.5 
- 6.9 
9.7 
2.0 
18.4 
- 10.8 
34.7 
32.6 
41.6 TEX + CLOTH 
88/92 
4.6 
-0.4 
0.1 
-1.7 
1.7 
7.7 
7.9 
14.7 
0.2 
20.9 
6.6 
19.6 91/92 
6.1 
3.5 
2.1 
11.7 
-7.7 
1.3 
-0.1 
10.6 
8.3 
26.0 
4.7 
36.5 
Source : EUROSTAT 
Textiles = CITC 65 
Clothings CITC 84 (-848) 
A 
Annex 11 
The EC's ten leading partners 
(% by value) 
IMPORTS 
RNK TEXTILES CLOTHING 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 1988 
EXTRA-EC 
(M.ECU) 
Switzerland 
Austria 
USA 
China 
Turkey 
Japan 
India 
Pakistan 
S. Korea 
Taiwan 9,700 
13.0 
9.2 
8.6 
6.9 
6.9 
6.8 
6.5 
4.0 
3.2 
2.8 1992 
EXTRA?EC 
(M.ECU) 
Switzerland 
Austria 
USA 
India 
China 
Turkey 
Japan 
Pakistan 
Indonesia 
S. Korea 11i620 
10.9 
9.3 
8.6 
7.6 
7.2 
6.5 
5.6 
4.7 
4.1 
3.0 1988 
EXTRA-EC 
(M.ECU) 
Hong-Kong 
Turkey 
Yugoslavia 
S. Korea 
China 
Morocco 
Tunisia 
India 
Austria 
Taiwan 23,882 
9.8 
4.9 
4.6 
4.5 
4.2 
2.5 
2.4 
2.4 
2.2 
2.0 1992 
ixTRAiei: 
(M.ECU) 
China 
Turkey 
Hong-Kong 
Morocco 
Tunisia 
India 
Poland 
Indonesia 
S. Korea 
Austria 35,995 
8.7 
6.9 
6.9 
3.5 
3.4 
2.7 
2.5 
2.5 
2.0 
1.9 
EXPORTS 
RNK TEXTILES CLOTHING 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 1988 
iXTRAlEG!:: 
(M.ECU) 
USA 
Switzerland 
Austria 
Japan 
Yugoslavia 
Sweden 
Finland 
Tunisia 
Morocco 
Canada 10,891 
12.9 
9.1 
8.7 
6.9 
6.6 
5.3 
3.3 
3.2 
3.2 
2.5 1992 
EXTRA-EC 
(M.ECU) 
USA 
Austria 
Switzerland 
Poland 
Japan 
Tunisia 
Morocco 
Sweden 
Hong-Kong 
Hungary 10.5 
8.0 
7.4 
5.7 
5.0 
4.9 
4.8 
3.9 
3.0 
2.8 1988 
iXTRASËC 
{M.ECU) 
Switzerland 
USA 
Austria 
Sweden 
Japan 
Norway 
Finland 
Canary I. 
Canada 
Hong-Kong 18,772 
7.6 
6.8 
5.7 
4.4 
3.0 
2.6 
1.3 
1.2 
1.1 
1.0 1992 
'WÈÊÊÊsM 
(M.ECU) 
Switzerland 
Austria 
USA 
Sweden 
Japan 
Norway 
Hong-Kong 
Canary I. 
Finland 
Tunisia 23V8i7 
6.8 
5.7 
4.6 
4.2 
4.0 
2.2 
1.5 
1.1 
1.0 
0.8 
Source: EUROSTAT ' 
Textiles (CTCI rev. 3) = 65 
Clothing (CTCI rev.3) = 84 - 848 
t> 
Annex 12 
EC's share of textile and clothing exports to the 
EFTA countries 
EC's share of textile and clothing exports to 
Japan and the USA 
% 
25 
20 
15 
10 
5 88 
TfC-CITC(65+S4448) 
Sourca: OECD, Comtrad» 89 90 91 92 
I I 
ANNEX 13 
Average annual growth rates for imports into the EC 
(%, by volume) 
Destination 
Extra-EC 
Industrialized countries 
EFTA 
USA 
Japan 
Developing countries 
of which : 
Mediterranean rim 
Latin America 
Indian subcontinent 
ASEAN 
Far East 
Central and Eastern 
Europe Textiles 
88/92 
5.3 
3.7 
3.0 
3.9 
3.0 
5.3 
1.6 
-6.2 
13.0 
0.8 
12.1 91/92 
1.9 
1.1 
6.6 
-9.1 
-6.6 
0.3 
-5.3 
-20.7 
13.4 
8.5 
-11.0 
22.0 Clothing 
88/92 
13.8 
9.6 
1.8 
27.3 
-6.2 
13.4 
14.3 
28.0 
25.9 
17.8 
6.1 
21.8 91/92 
5.5 
-0.8 
0.2 
- 2.6 
-22.0 
3.8 
5.1 
9.4 
16.0 
3.2 
-4.1 
31.5 TEX + CLOTH 
88/92 
8.0 
4.1 
3.0 
5.6 
2.2 
8.5 
7.4 
-3.3 
14.5 
14.9 
3.9 
15.6 91/92 
3.2 
1.0 
6.2 
-8.4 
-7.8 
1.8 
-0.1 
-17.0 
14.0 
6.2 
-7.0 
25.7 
Source ; EUROSTAT, COMTRADE 
<*1 
Annex 14 
EC trade in textiles and clothing - 1992 
(000 ECU) 
China 
Turkey 
India 
Hong-Kong 
Indonesia 
Pakistan 
South Korea 
Thailand 
Malaysia 
Taiwan 
Macao 
Philippines 
Brazil 
TOTAL Exports 
62r974 
390,326 
22,065 
783,180 
45f636 
23,281 
283,112 
57,103 
39,684 
225,829 
2,830 
45,115 
64,664 Imports 
4,309,280 
3,560,594 
2,093,451 
2,640,753 
1,382,877 
1,089,544 
1,300,038 
956,288 
651,350 
787,156 
430,765 
353,759 
292,893 Balance 
•4,246,306 
-3,170,268 
-2,071,386 
-1,857,573 
-1,337,241 
-1,066,263 
-1,016,926 
-899,185 
-611,666 
-561,327 
-427,935 
-308,644 
^228,229 
2,045,799 19,848,748 -17,802,949 
Source : Eurostat 
r1 i 
ANNEX 15 
Average prices of products traded - Textiles 
Import Export lntra-;EC 
Average prices of products traded - Clothing 
40.00 T 7.00 
Intra-EC 
T-i 
ANNEX 16 
Production and foreign trade by stage of production : 1992 
(1000 tonnes) 
Branches 
Chemical fibres 
Spinning 
Woven goods & fabrics 
Woven goods 
Knitted fabric 
Clothing 
Made-up knitwear (*) 
Made-up fabric 
Textiles-final uses 
Carpets 
Household textiles 
Industrial textiles 
other textiles(**) 
Total - final uses Production 
3,176.6 
2,456.5 
2,551.2 
2,033.2 
517.9 
2,156.1 
1,053.7 
1,102.4 
2,718.4 
703.4 
760.7 
393.6 
860.6 
4,874.5 Exports 
extra-EC 
474.0 
127.9 
498.2 
452.0 
46.3 
203.5 
109.8 
93.7 
348.6 
87.1 
50.5 
42.8 
168.2 
552.1 Imports 
extra-EC 
634.9 
426.4 
643.2 
594.9 
48.3 
1,237.0 
574.6 
662.4 
432.9 
83.5 
162.2 
68.0 
119.2 
1,669.9 Consumption 
3,337.3 
2,755.0 
2,696.2 
2,176.2 
520.0 
3,189.6 
1,518.5 
1,671.1 
2,802.7 
699.8 
872.4 
418.8 
811.6 
5,992.3 % 
Imp/Cons 
19.0 
15.5 
23.9 
27.3 
9.3 
38.8 
37.8 
39.6 
15.4 
11.9 
18.6 
16.2 
14.7 
27.9 % 
Exp/Prod 
14.9 
5.2 
19.5 
8.9 
9.4 
10.4 
8.5 
12.8 
12.4 
6.6 
10.9 
19.5 Balance 
- 160.8 
- 298.5 
- 145.0 
- 142.9 
2.0 
- 1,033.6 
- 464.8 
- 568.7 
84.3 
+ 3.6 
- 111.7 
- 25.2 
+ 49.0 
11.3 | - 1,117.8 
Source : CITH - CIRFS (*) including 'fully fashioned' knitwear (**) including non-woven goods 
ANNEX 17 
Production and foreign trade by branch 
(1.000 tonnes) 
Branch Prod. Exp. Imp. Cons. Imp/Cons Exp/Imp 
% 
lÊxiilesC*) 
Cotton 
Wool 
Silk 
ClPthineC**) 
Cotton 
Wool 
Silk 2578.9 
1420.6 
490.1 
1342.6 
665.9 
764.2 344.9 
142.2 
92.9 
153.4 
48.9 
50.5 861.6 
62.7 
97.0 
893.0 
170.9 
190.8 3095.6 
1341.0 
494.2 
2082.2 
787.9 
904.5 27.8 
4.7 
19.6 
42.9 
21.7 
21.1 40.0 
226.8 
95.8 
17.2 
28.6 
26.5 
Source : CITH 
(*) Spinning and weaving (1992 figures) 
(**) Knitwear and woven goods (1991 figures) 
7? 
ANNEX 18 
Production and foreign trade trends by stage of production 1988 - 1992 
Branches 
Chemical Tib res 
Spinning 
Woven goods & fabrics 
Woven goods 
Knitted fabric 
Clothing (*) 
Made-up knitwear 
Made-up fabric 
Textiles-final uses 
Carpets 
Household textiles 
Industrial textiles 
Other textiles(**) 
Total - final uses 1988 = 100 (by volume) 
Production 
103.8 
90.7 
91.6 
88.7 
104.9 
94.2 
101.2 
88.3 
98.8 
116.1 
86.2 
94.9 
141.7 
96.7 Exports 
extra-CE 
62.5 
106.5 
138.0 
139.3 
126.8 
113.6 
115.8 
111.2 
117.3 
104.7 
100.0 
135.9 
127.5 
115.9 Imports 
extra-CE 
97.5 
103.6 
119.7 
117.4 
157.3 
155.9 
176.7 
141.4 
142.4 
126.7 
157.2 
135.2 
140.9 
152.2 Consumption 
113.1 
91.8 
91.0 
87.9 
106.5 
109.8 
119.4 
102.4 
101.6 
118.9 
93.3 
96.6 
101.5 
105.9 Imp/Cons 
86.0 
113.1 
132.0 
133.2 
147.6 
142.1 
147.7 
138.0 
140.0 
106.3 
168.6 
139.6 
139.0 
143.8 Exp/Prod 
60.1 
118.2 
150.0 
156.3 
120.3 
120.5 
114.3 
125.0 
118.5 
90.5 
115.8 
143.4 
89.9 
120.2 Balance 
(variation in 000 tonnes) 
- 268.5 
- 590.0 
- 321.3 
- 325.0 
7.8 
- 1,648.0 
- 695.1 
- 952.8 
91.2 
- 13.7 
- 164.4 
- 44.0 
+ 1.7 
- 1,759.1 
Source : CITH - CIRFS (*) including 'fully fashioned' knitwear (**) including non-woven goods 
ANNEX 19 
Movement of the dollar against Community currencies 
-20.00 -10.00 
Revaluation 0.00 10.00 
Change TI % 20.00 30.00 40.00 
Devaluation 50.00 
[end 1991 -'August 1993 n end 1988 -
LJ end 1991 
ScW# • k\fe*'Me< JMI-. 
?r 
ANNEX 20 
EC's share of textile and clothing imports .in the USA 
# 14.00 T 
12.00 --
10.00 -
8.00 •• 
6.00 -
4.00 --
2.00 • 
0.00 
1988 1989 1990 1991 
J EC's share of US i«ports ECU/US$ T 0.95 
4 0.9 
4 0.85 <» 
o 
4 0.8 w 
4 0.75 
0.7 
1992 
Trade deficit in textiles and clothing and exchange rates 
0.00 
1988 1989 1990 
EC deficit 1991 
ECU/US$ 1992 T 0.95 
S Q\A£GL Eurostat, Cou^tr^d* H 
-4 Annex 21 
Labour costs in spinning and weaving 
Latpour costs = Wages + Other costs paid to operators + social costs 
• 1988 
• 1993 
(a): 1990-93 
10 15 20 
Source: Werner Int. US$/hour 25 
ANNEX 22 
Wage, exchange rate and price trends 1988/93 
(Spinning and weaving) 
Belgium 
Denmark 
Netherlands 
Germany 
Italy 
France 
United Kingdom 
Ireland 
Spain 
Greece 
Portugal 
EC(**) 
USA 
Japan Cost US $/hour 
1993 
21.5 
21.3 
20.9 
20.6 
16.2 
15.1 
10.3 
9.2 
8.0 
7.2 
3.7 
13.9 
11.6 
22.3 % Change 1988/93 (*) 
Real wages 
(national currency) 
+ 23.6 
+ 30.2 
+ 15.5 
+ 16.2 
+ 6.1 
+ 20.9 
+ 10.5 
+ 17.7 
+ 17.7 
+ 14.3 
+ 21.4 
+ 13.9 
+ 1.8 
+ 19.6 Consumer 
price 
+ 15.6 
+ 13.1 
+ 13.0 
+ 19.1 
+ 33.7 
+ 15.8 
+ 30.4 
+ 15.6 
+ 39.4 
+ 113.5 
+ 65.8 
+ 33.6 
+ 21.3 
+ 10.7 Nominal wages 
(national currency) 
+ 39.2 
+ 43.3 
+ 28.5 
+ 35.3 
+ 39.8 
+ 36.7 
+ 40.9 
+ 33.3 
+ 57.1 
+127.8 
+ 87.2 
+ 47.5 
+ 23.1 
+ 30.5 Exchange rate between 
US $ & national 
currency 
- 3.5 
+ 2.0 
- 5.3 
- 5.1 
+ 22.5 
- 2.1 
+ 18.7 
+ 8.8 
+ 16.5 
+ 66.7 
+ 18.2 
+ 13.5 
0.0 
- 18.9 Wages in US $ 
+ 42.7 
+ 41.3 
+ 33.8 
+ 40.4 
+ 17.3 
+ 38.8 
+ 22.2 
+ 24.5 
+ 40.6 
+ 61.1 
+ 69.0 
+ 34.0 
+ 23.1 
+ 49.4 
(*) Consumer price : Eurostat forecast; June 1993 
Exchange rate : end August 1993 
Wages in US $ : summer/autumn 1993 (including social security contributions) (**) Weighted average per job in the textile industry 
Source : Werner Int. - Eurostat 
ANNEX 23 
Social security contributions as a percentage of Labour costs in 1993 
Spinning and weaving 
Source : Werner Institute 
^ 
Annex 24 
SPINNING MACHINERY OETH/DG 111*4 
NORTH AMERICA 
SOUTH AMERICA 
ASIA AND OCEANIA 
EUROPE - EC 
EUROPE - EFTA 
EASTERN EUROPE + CIS 
OTHERS 
TOTAL Proportion of instated capacities in 1991 (%) 
Spindle. 
Short 
staples 
8.4 
6.1 
62.2 
5.0 
0.5 
9.4 
8.4 Long 
staples 
5.3 
3.7 
41.8 
36.0 
1.0 
6.7 
5.5 
100.0 100.0 0-E 
Rotors 
10.9 
3.3 
17.0 
6.1 
0.4 
58.1 
4.2 
100.0 Shipments in 1983-92 aa a % of installed capacities 
(modernization rater 
Spindles 
Short 
staples 
8.3 
15.5 
18.4 
36.8 
56.2 
15.4 
24.5 
18.7 Long 
st spies 
21.5 
19.3 
26.0 
24.6 
40.4 
52.1 
40.3 
27.7 0-E 
Rotors 
101.4 
59.1 
71.6 
124.9 
131.0 
84.6 
73.1 
85.6 Shipments in 1992 ae a % 
of shipments in 1991 
Spindles 
Short 
staples 
66,4 
91.6 
63.6 
87.5 
68.3 
134.1 
103.4 
72.7 Long 
staples 
811.3 
118.7 
132.5 
126.3 
292.6 
55.4 
100.6 
106.1 O-E 
Rotors 
197.8 
104.0 
90.6 
111.5 
164.2 
43.7 
119.3 
90.6 
SOURCE: ITMF 
150 Shipments in 1983-92 as a % of installed capacities in 1991 
Annex 25 
WEAVING MACHINERY OCTH/DOIH^ 
NORTH AMERICA 
SOUTH AMERICA 
ASIA AND OCEANIA 
EUROPE - EC 
EUROPE -EFTA 
EASTERN EUROPE + CIS 
OTHERS 
TOTAL Proportion of installed capacities in 1991 (%) 
Looms 
Shuttle-less 
12.9 
5.9 
28.5 
10.9 
0.6 
3B.8 
4.4 
100.0 shuttle 
4.1 
9.0 
71.3 
2.0 
5.1 
8.5 
100.0 Filament 
weaving 
93.8 
3.0 
3.2 
0.0 
100.0 Wool 
weaving 
1.8 
12.3 
39.8 
23.4 
0.6 
17.5 
4.6 
100.0 Shipments in 1983-92 as a % 
of installed capacities 
|ri MMIW nils lion rate) 
Shuttle-less 
looms 
50.9 
39.2 
148.6 
131.4 
93.7 
29.2 
29.7 
77.9 ShuMe-tooms 
0.8 
1.7 
9.1 
o.e 
2.1 
1.3 
1.5 
6.9 Shipments in 1992 es a % 
of shipments in 1991 
Shuttle-less 
looms 
109.1 
111.0 
107.0 
81.8 
39.4 
118.9 
88.5 
107.0 Shuttle-looms 
0.0 
79.1 
56.0 
3500.0 
42.9 
56.2 
SOURCE: rmF 
Shipments in 1983-92 as a % of installed capacities in 1991 
S. America Ana A Oceania Europe-EC Europe-Efta East. Earope+Cù Olacn 
Shuttle-less looms ill— Looms with shuttle 
^S 
ANNEX 26 
INTEREST RATES IN 1992 
0 PERCENTAGE 
5 10 15 
Source : Werner Int. 
V 
ANNEX 27 
MODERNIZATION RATE IN THE EUROPEAN COTTON INDUSTRY 
(OPEN-END ROTORS AND SHUTTLE-LESS LOOMS1) 
Open-End (%) Shuttle-less Looms (%) 
Belgium 119.8 116.0 
Denmark 100.0 3.3 
Germany 135.4 146.9 
Greece 69.0 20.7 
Spain 143.0 138.0 
France 94.0 151.0 
Ireland 60.0 19.1 
Italy 179.3 236.0 
Netherlands 98.5 35.4 
Portugal 101.9 46.4 
United Kingdom 80.9 100.2 
E.C 124.9 136.0 
World 85.6 77.9 
Source : ITMF 
'Deliveries in 1983-92 as a percentage of plant installed in 1991. 
31 
Annex 28 
Investment per Employee in 1991-1992 (ECU) 
Textile Industry (incl. Knitwear) 
2,000 
1,000 
B-L DK D (West) 
NL F IRL UK E 
H P EC 1991 
1992 
Source: OETH/DG III-E4 
ANNEX 29 
NORMAL OPERATOR HOURS 
1991 
0 500 1,000 1,500 2,000 
TAIWAN 
MOROCCO 
TURKEY 
BRAZIL 
PORTUGAL 
USA 
JAPAN 
GREECE 
IRELAND 
HUNGARY 
SPAIN 
UK 
NETHERLANDS 
FRANCE 
GERMANY 
ITALY 
BELGIUM 
DENMARK 2,500 
Source : Werner Int 
& 
AWEX 30 
Source: &€TH 
ANNEX 31 
PRODUCTIVITY INDEX 1993 
Primary Textile Industry Clothing Industry 
Spinning & Weaving 
France 75 75 
Germany (W) 92 92 
Greece 57 40 
Italy 100 80 
Portugal 50 55 
Spain 78 60 
UK 70 75 
Brazil 70 45 
Hungary 45 40 
Japan 90 85 
Morocco 35 50 
Taiwan 60 70 
Turkey 75 45 
USA 73 100 
Source : Werner International 
3? 
ANNEX 32 
Unit labour cost index -1993 
20 40 60 80 100 120 
Labour cost Index / Productivity index 
Source: Werner Int./ DG 
2* Clothing •Spinning and weaving 
ANNEX 33 
RAW MATERIAL PRICES 
POLYESTER PRICES 
US $ PER KG 
WEST-GERMANY 
ITALY 
USA 
JAPAN 
TAIWAN 1988 
2.04 
2.01 
1.69 
1.75 
1.61 1989 
1.91 
1.89 
1.85 
1.51 
1.31 1990 
1.96 
1.92 
1.67 
1.61 
1.12 1991 
1.79 
1.40 
1.61 
1.80 
0.99 1992 
1.81 
M7. 
1.64 
1.75 
1.05 1993 
COTTON 
N-Eur. CIF PRICE US $ PER KG 
EUROPE 
USA 
TURKEY 
BRAZIL . 1988 
1.48 
1.58 
1.31 
1.26 1989 
1.67 
1.61 
2.21 
1.67 1990 
1.93 
1.89 
2.34 
1.72 1991 
1.80 
1.80 
1.87 
1.45 1992 
1.31 
1.49 
1.70 
1.53 1993 
1.29 
1.33 
1.79 
1.59 
Source : Cotton Outlook 
ANNEX 34 
ENVIRONMENTAL COSTS IN DYEING & FINISHING 
AS%OHO!ALCOSIS 
1992 
WATER POLLUTION 
AIR POLLUTION 
LABOUR COST 
ENERGY COST 
OVERHEAD 
MAINTENANCE 
DEPRECIATION 
OTH^R CnSTc 
j TOTAL COSTS G 
4.4 
1.2 
1 
0.2 
0.2 
0.2 
1.8 
0.2 
9.2 CH 
2.7 
1.2 
0.7 
0.9 
1.3 
0.7 
2 
0.6 
10.1 I 
1.9 
0.4 
0.3 
0.7 
1.5 
0.2 
0.4 
0.4 
5.8 NL 
2.1 
0.5 
0.3 
0.1 
0.2 
0.7 
1.2 
5.1 UK 
2.3 
0.5 
0.7 
0.3 
0.6 
0.1 
4.5 B 
3.5 A 
0.8 
0.7 
0.4 
0.1 
0.4 
0.9 
0.4 
0.5 
4.2 
SOURCE :AITIT 
W 
ANNEX 35 
COMPETITIVE ANALYSIS OF SUPPLYING COUNTRIES 
• SUPPLYING 
COUNTRIES 
EC 
MEDITERRANEAN 
RIM 
EASTERN 
COUNTRIES 
MAURITIUS 
NICS 
ASEAN 
LESSER 
DEVELOPED 
ASIAN 
COUNTRIES QUALITATIVE KEY SUCCESS FACTORS 
Sophistication 
index 
121 
93 
HI 
80 
94 
83 
100 Quality 
standards 
+ + 
+ 
+ 
s 
+ + 
-Reliability 
+ 
+ 
+ 
s 
+ 
-Small order 
accepted 
+ + 
+ + 
+ + 
-
-
-Yam or 
fabric local 
availability 
+ + 
+ 
-
a 
+ 
s 
s Technical 
know-how 
(tailored) 
+ + 
s 
+ 
s Technical 
know-how 
(light 
clothing and 
knit wear) 
+ + 
+ 
+ 
+ 
+ + 
s Flexibility of 
production 
+ + 
+ + 
+ Minimum 
delivery lead 
lime 
+ + • 
+ 
+ 
s 
s 
-Repeat order 
possibility 
+ + 
+ 
+ ECONOMIC 
FACTOR 
Nel % rcinil 
margin 
allowed 
54% 
64% 
64% 
55% 
55% 
67% 
67% 
* Respectively quick response process / tradition»! production process. 
Source : IFM, "A competitive analysis of finished textile and clothing products : imported versus uropean 
manufactured items" - 1992 
ANNEX 36 
Exports from Portugal and the countries of Central 
and Eastern Europe to the EC 1988/92 
C 
o 
o O O 
1988 Exports to the EC - Textiles 
Portugal 
PECOs 
1989 1990 1991 1992 
«I 
C o 
o o o 120 T 
100 + 
40 + 
20 4-
0 
1988 Exports to the EC - Clothing 
Portugal 
PECO (TTP) 
PECO (total) 
1989 1990 1991 1992 
Source: Eurostat - Comext 
<?' 
BSN 0254-1475 
COM(93) 525 final 
EN 10 
Catalogue number : CB-CO-93-568-EN-C 
ISBN 92-77-60242-2 
Office for Official Publications of the European Communities 
L-2985 Luxembourg