Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions - Plan of action to increase the competitiveness of the European textile and clothing industry
Date: 1997-10-29
Institutions: European Commission
Subjects: EU industrial policy, European industrial area, clothing industry, competitiveness, textile industry

*wppmpJPPII 

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  29.10.1997 
COM(97) 454  final 

COMMUNICATION  FROM THE COMMISSION 

TO THE COUNCIL,  THE EUROPEAN PARLIAMENT, 
THE ECONOMIC AND  SOCIAL  COMMITTEE 
AND  THE COMMITTEE  OF THE REGIONS 

Plan of action 
to increase the competitiveness of the European textile and clothing industry 

TABLE OF CONTENTS 

1.  INTRODUCTION 

2.  RECENT  TRENDS IN THE TEXTILE/CLOTHING  INDUSTRY 

3 

5 

3. 

T HE 

TEXTILE/CLOTHING 

INDUSTRY 

IN  THE  CONTEXT  OF  COMMUNITY 

POLICIES 

3.1. Structural adjustment and competitiveness 

a)Innovation,  research and technological development. 
b) New qualifications  and vocational training. 
c)Integrated structural  initiatives 

3.2 The internal  framework 

a) The single  market 
b) Discipline  and transparency  with regard to State aids 
c) Employment 
d)  Wage costs and social security charges 

3.3. External  relations 

a) Promoting  market access 
b) Rules and disciplines 
c) The environment 
d) The social question 
e) Internationalisation  of firms and industrial cooperation 

4.  CONCLUSIONS 

Annex: 

6 

6 

6 
8 
9 

10 

10 
...11 
11 
11 

12 

12 
13 
13 
14 
14 

16 

19 

EUROPEAN  PLAN  OF  ACTION  TO  INCREASE  THE  COMPETITIVENESS  OF  THE  TEXTILE  AND 
CLOTHING  INDUSTRY  (1997 - 2000) 

£ 

1. 

INTRODUCTION 

1.1 

is  addressed  to  the  Council  and  the  European 
This  communication 
Parliament,  to the ESC and the Committee  of the Regions, in the light of the 
conclusions  reached  at  the  Industry  Council  meetings  on  28 March  and 
14 November  1996.  It  falls  within  the  context  of  the  talks  which  have  been 
taking place, at the Commission's  initiative, between the parties involved in the 
textile/clothing  sector  and  in  particular  the  national  and  Community  public 
authorities and both sides of the industry. 

The  purpose  of  this  dialogue  has  been  to  carry  out  an  overall  assessment  of  the 
measures  introduced  by  the  European  Union  and  the  Member  States  to  increase 
the industry's competitiveness, to consider what further  steps need to be taken and 
to  assess  the  restructuring/modernisation  strategies  implemented  by  the  private 
sector. 

The  two  sides  of  the  industry  have  produced  a joint  report  reviewing  the  results 
achieved  and  setting  out  a  series  of  further  measures  which  might  be  taken  at 
Community  level.  The  primary  objective  is  to  further  improve  structural 
adjustment  within  the  industry  while  giving  all  due  attention  to  the  problem  of 
employment. 

The  further  measures  suggested  fall  within  the  broad  lines  of  the  Commission's 
industrial policy and its policy on social and economic cohesion. 

1.2 

The  changes  which  have  taken  place  in the  industry  in  recent  years  have  shown 
up many strong points but also a number of weaknesses. 

The  industry  has  modernised  by  adapting  to  the  new  technological  revolution. 
The  competitive  advantages  arising  from  innovation,  creativity,  quality  and 
know-how give it the potential to be a leader on international open markets. 

However,  the  drive  towards  modernisation  in  an  increasingly  competitive 
international  environment  has meant a considerable  reduction  in the number of 
jobs.  This  is  particularly  worrying  in  view  of  the  regional  concentration  and 
social  impact of employment  in the textiles/clothing  industry. 

1.3 

The  changes  which  have  come  about  in  the  textile  and  clothing  sector  clearly 
demonstrate  that  it  is  not  a  matter  of  "traditional"  industries  competing  with 
"high-tech"  industries  but  that  there  are  simply  competitive  and  uncompetitive 
firms. 

The textile  and  clothing  industry  has considerably  boosted  its  productivity  and 
thus  competitiveness  in  recent  years,  thereby  proving  that  it  is just  as  much  an 
industry  of the future  as other economic activities. 

1.4 

The broad  outlines of the industrial  policy  pursued  by the European  Commission 
have been set out in recent communications.1 

These guidelines  establish  a general framework  for  industrial  strategy  in the 
textile/clothing  sector.  This  strategy  takes  particular  account  of  the  specific 
features  which  characterise  this  branch  of  industry.  The  various  measures 
taken in different  fields of Community activity are all aimed at developing the EU 
textile/clothing  industry's  competitive  advantages.  An  overall  plan  to  make 
these  measures  coherent  and effective  has been drawn  up on the basis  of  the 
contributions received. 

1.5 

From  the  studies  carried  out  by  the  textile/clothing  working  groups,  it  emerges 
that  there  are  a number  of  priority  areas  for  action  by  the  parties  concerned, 
i.e.  businesses,  employers'  associations  and 
trade  unions,  national  and 
Community public authorities. 

The main priorities are as follows: 

- 

jobs and training, areas in which some of the solutions can and must be  found 
within the  industry  but  which  also  require  action  on  a broader  scale to  ensure 
that jobs  are  created  by  the  economy  of  the  European  Union  as  a  whole  and 
that potential employees are trained or retrained for new  qualifications; 

-  Development  and  the  dissemination  of  new  products,  methods  and 
equipment,  of  communications  and  information  technology  in  the  sector, 
including distribution, which proves to constitute a fundamental  asset; 

- 

the  proper  operation  of the  internal  market,  while  ensuring  a high  level  of 
protection  for  consumers  and the environment,  should  not place new  obstacles 
in the way  of the free  circulation  of goods. Legislation  on public  procurement 
and competition must ensure that the whole of the textile and clothing  industry 
benefits  from the single market; 

-  access  to  the  markets  of  third  countries  and  strict  compliance  with  the 
rules  and  disciplines  which  have  been  freely  accepted  under  international 
agreements  are  an  essential  corollary  of  the  globalisation  of  the  markets  and 
the liberalisation of Community imports; 

-  regional  development  must  involve  giving  special  attention  to  viable  firms 
located  in  less-favoured  areas  of  the  Union  so  as  to  create  conditions  which 
enable them to meet the challenge of competitiveness  on an equal  footing  with 
firms located in more developed regions. 

Industrial policy  in an  open  and  competitive  environment  -  Guidelines for  a  Community  approach  -
COM(90)556  final.  An  industrial  competitiveness  policy  for  the  European  Union  -  COM(94)319 
final. 
final. 
industry 
Benchmarking  - implementation  of  an 
to  economic  actors  and  public 
authorities  - COM(97)153  final. 

the  competitiveness  of  European 
instrument  available 

-  COM(96)463 

Benchmarking 

2.  RECENT TRENDS IN THE TEXTILE/CLOTHING  INDUSTRY 

The textile/clothing  industry plays a major  economic, social and regional role within 
the European  Union. 

According  to  the  Observatoire  Européen  du  Textile  et  de  l'Habillement  (OETH),2 
this industry  employs some 2.2 million persons in nearly  120 000 firms.  It accounts 
for  7.6% of all industrial employment  and 4.2% of the added value.  Furthermore, a 
large  proportion  of  the  workforce  is  female  and  jobs  are  heavily  concentrated  in 
certain regions. 

During  the  1990s,  the  industry  has  been  seriously  affected  by  a  number  of 
factors,  notably  the  economic  recession  in  Europe  followed  by  a  modest 
recovery, increased competition and technological advances. 

In  general, the  modest  economic  recovery  in the European  Union  has  not  led  to  an 
increase  in  domestic  demand:  wages  and  salaries  have  risen  only  slightly  while 
the 
unemployment  has 
consumption of clothing and household textile products. 

these  factors  have  restrained 

increased,  and  both 

At the  same  time, competition  has bebome much more  intense  with the  opening  up 
of the  Community  market  as a result  of a number  of preferential  trade  agreements, 
the implementation of the conclusions of the Uruguay Round of the negotiations and 
the  presence  of  a number  of  major  partners  in  international  trade.  In particular,  the 
increased  competition  of  low  wage  countries  have  created  an  important  relocation 
movement  of certain segments of production. 

Finally,  technological  advances,  the  increasing  dissemination  of  Information 
Technology  have  made  the  industry  more  capital-intensive  and  have  led  to  greater 
automation,  particularly  in  the  textile  sector.  They  especially  induced  structural 
changes in the internal organisation of firms  and in the operation of the industry  as a 
whole. 

The  industry's  response  to  the  scale  of  these  recent  challenges  has  been  a 
thorough  restructuring  and  modernisation,  involving the relocation  of its  more 
labour-intensive  operations which  have less added value.  This is well  illustrated 
by the  trend  in Outward  Processing  Traffic  (OPT):  imports  of clothing  under  OPT 
arrangements  are  steadily  increasing  and,  in  1996,  accounted  for  some  20%,  in 
value, of all imports of clothing into the European Union. 

Generally  speaking,  productivity  and  competitive  advantages  have  been 
increased,  particularly  in  the  areas  of  rapid  response,  "just  in  time"  techniques, 
quality,  creativity,  know-how  and  innovation.  The  European  industry  is  still  the 
world's  leading exporter of textile products and the third largest exporter of clothing 
products. 

The EU textile  and  clothing  sector  - OETH,  Brussels  1997. 

However,  this  complex  set  of  developments  which  have  led  to  structural  changes 
in  the  industry  has  brought  in  its wake  a considerable  reduction  in  production 
levels  and,  especially,  in  levels  of  employment.  In  the years  from  1990 to  1996, 
production  levels, at current prices, fell  by 5.4% in the case of textiles and by 4.4% 
in the  case  of  clothing.  Over the  same  period,  more  than  600 000 jobs  were  lost, 
100  000oftheminl996. 

3.  THE TEXTILE/CLOTHING  INDUSTRY  IN THE CONTEXT OF COMMUNITY  POLICIES 

Under  the  Treaty  on  European  Union,  the  public  authorities  must  ensure,  while 
respecting  the  principle  of  subsidiarity,  that  the  conditions  necessary  for  the 
competitiveness of the Community's  industry exist. 

While  it  is  the  responsibility  of  the  public  authorities  to  create  the  right 
conditions  in  which  businesses  can  become  more  competitive,  it  is  the  firms 
themselves  which  are  primarily  responsible  for  making  the  necessary 
adjustments. 

The textile/clothing  groups  set up by the European  Commission  have, over  an eight 
month  period,  studied  the  measures  introduced  by  the  public  authorities  and  the 
private sector in line with the following  principles: 

- 

- 

to  promote  a  favourable  environment  for  business  so  as  to  facilitate  structural 
adjustment; 

to  ensure that  the single  market  operates correctly  and that the competition  rules 
are applied; 

- 

to maintain an open approach to international trade and markets. 

3.1  Structural  adjustment and  competitiveness 

(a)  Innovation,  research and technological development 

Both  sides  of  industry  recognise  that  if  the  European  Union  is  to  remain  a  major 
producer  of  textiles  and  clothing,  it  is  vital  to  continue  boosting  the  industry's 
competitiveness through innovation, research and technological  development. 

At  the  Community  level,  one  has  to  stress  the  greatest  mobilisation  of  the  textiles 
and  clothing  industries  with  the  aim  of  developing  and  in particular  the  use  of  new 
methods  and  equipment  (such new machine concepts  in weaving, new non  polluting 
dyeing  and  ennoblement  methods  without  effluents),  new  high  value  added  fabrics 
(technical  textiles,  structural  textiles  with  3  dimensions  and  functional  textiles ...). 
Their  induced  effects  on employment  in new job  creation  and/or  in consolidation  of 
the  existing  structures,  are  increasingly  significant,  thus  contributing  to  the  recent 
improvement  of  the  level  of  competitiveness  of  the  European  textile  &  clothing 
industry. 

Thus,  the  Community  RTD  programmes  have generated  certain  synergies  and,  in 
co-operation  with  industry,  mechanisms  for  co-ordinating  and  participating  in  line 
with areas deemed to be the most important for the sector. 

At  the  heart  of  the  4th  RTD  Framework  programme  and  within  the  specific 
programme  "Industrial  and  Material  Technologies",  the  targeted  research 
in 
project,  Total  Quality  Textiles,  appeared  to  be  an  effective 
strengthening the technological capacities of a structurally  fragmented  sector as well 
as  succeeding 
from  SMEs.  Approximately  350 
organisations of which 300 SMEs took part in research (with cofinancmg  of ECU 40 
million from  a total cost of approximately  80 million) in this specific  programme. 
New machines ("ink jet", "plasma", "C02  supercritical"), new textile products whose 
traditional  sector  was  in  the  area  of  Clothing/Furniture  now  have  additional 
applications  in  the  areas  of  transport,  premises,  health,  leisure  and  have  been 
developed under numerous Community research projects. 

increased  participation 

instrument 

in 

The possibilities  offered  by  the  "Technology  Stimulating  Measures"  intended  for 
the  SMEs  (exploratory  benefits  helping  to  prepare  proposals  and  CRAFT  projects 
strengthening  co-operation between  SMEs to entrust technological  problems to third 
parties)  enabled  numerous  European  SMEs  to  collaborate  to  develop  new  textile 
products,  new  methods  of  organisation,  of  production  and  work  methods.  Such  is 
the  orientation  of  the  actions  undertaken  in  the  programme  of  "finalised  socio 
economic  Research". 

The  ESPRIT  programme  has  also  helped  bring  about  innovation  in  fields  such  as 
image  data  banks,  decision  support  systems  and  electronic  commerce  in  the  textile 
and clothing  sector.  The industry  has already  begun work on preparing  a project  for 
applying  and  disseminating  information  technology  in  this  sector.  The  project, 
designed  to  integrate  a number  of existing  initiatives  in the  same  field,  provides  for 
the  development  of  a  European  communication  and  identification  system  for 
products and services based on voluntary standards validated by the industry.  One of 
the advantages of this system would be the use, throughout the European Union, of a 
common language for electronic trading operations. 

The  Programme  of  the  4th  Innovation  Framework  programme  supports 
industrial  projects  aiming  to  adapt  and  transfer  technologies  specific  to  certain 
regions  or  to  certain  sectors  towards  new  regions  or  new  sectors  in  the  European 
Union; 
it  brings  together  the  producers  (often  SMEs  or  their  professional 
associations)  and  technology  users  as  well  as  research  centres.  A  number  of  these 
projects  concern  the  textile  and  clothing  sector,  such  as  "centrifugal  spinning  mill 
technology" and "flexible  production  at lower fabric sample cost". 

The  Innovation  programme  also  proposes  various  tools  of  interest  for  the  textile  / 
clothing  sector:  research  studies  of  the  needs  and  strengthens/weaknesses,  or  of 
scanning  of the possible technological  options, within the framework  of its European 
Innovation  Observatory;  operations  to  raise  awareness  in  new  technologies  for 
SMEs;  European  sectoral  exchanges  for  the  transfer  of  technology,  access  to  new 
know-how  and  best  practices  in  innovation  management;  using  a  network  of 
innovation relay centres to put businesses in contact with one another. 

In  the  preparation  of  the  5th  Framework  programme,  the  current  research 
guidelines  in particular  are related to the ambitions  of the textile / clothing  sector  to 
improve companies competitiveness to maintain and create jobs adapted4n particular 
to sustainable development.  Concerns are met in the key actions  "Products,  methods 
and  organisation"  of  the  programme  "to  encourage  competitive  and  sustainable 
growth"  as  well  as  in  the  key  action  "New  working  methods  and  electronic 
commerce"  of  the  programme  "To  develop  a  user-friendly  information  society". 
Priority  should  be  focused  on  actions  considered  most  directly  essential  for  the 
It  is  for  example  the  case  in  the  actions 
competitiveness  of  the  entire  chain. 
encouraging the setting up of Quick response techniques, making it possible to adapt 
in  real  time  the  manufacturing  processes  to  market  trends  and  to  reduce  stocks.  In 
addition  to  an  improved  adaptation  to  demand,  these  techniques,  by  giving  a 
comparative  advantage  to the  location  of production  in Europe, are  likely  to  have  a 
determining effect  to reverse the negative tendency on employment. 

(b)  New qualifications  and Vocational training 

Structural  changes  in  the  textile/clothing  sector,  in  particular  the  increasingly 
widespread  use  of  information  and  communication  technologies,  mean  that  the 
workforce now requires new types of  qualifications. 

Technological  developments  and  their  impact  on  the  way  firms  are  organised 
require  the  workforce  to  be  trained  in  a  much  wider  range  of  skills  than  was 
needed  for  the  "production  line"  work  so  typical  of  the  previous  industrial 
revolution. 

in  this  field,  national 

together  with  the 
Also 
Community's  ADAPT,  EMPLOI  and  Leonardo  da  Vinci  programmes  provide 
opportunities for finding  appropriate ways of meeting the needs  identified. 

instruments  and  programmes 

Via these programmes, the Commission is also trying to simulate the development of 
trans-national  initiatives  aimed  at  disseminating  the  best  practices  and  know-how 
throughout  the  regions  of  Europe.  These  initiatives,  enabling  the  dissemination  of 
the positive results achieved,  will  certainly  do a great deal to raise awareness, which 
in  itself  is  very  necessary  and  even  essential  in  a  fragmented  sector  such  as  the 
textile/clothing  industry. 

A detailed study of the needs for new qualifications  in the clothing sector was carried 
out  in  1995 and  a similar  study  for  the textile  sector  is being planned.  Moreover,  as 
part  of  their  sectoral  dialogue  and  under  the  Leonardo  da  Vinci  programme,  both 
sides  of  the  industry  are  preparing  projects  in  the  fields  of  versatility  training  and 
technical textiles. 

Training must also take into account the growing needs associated  with  globalisation 
and the internationalisation  of production, which call for qualifications  in the field  of 
international  business  relations.  Environmental  aspects  must  also  form  a  vital  and 
integral part of vocational  training. 

Training  schemes  must  also  be used  to give  the  industry  a  more  modern  image 
where qualifications  and technology are concerned - an image which  reflects  the 
present reality of the industry. 

(c)  Integrated structural  initiatives 

In  response  to  the  new  challenges,  the  industry  has  undertaken  a  structural 
adjustment  in  which  the  two  fundamental  factors  have  been  the  reinforcement  of 
specific  competitive  advantages,  particularly  with  regard 
in 
intangibles,  and  an  improvement  in productivity  - itself  linked  to  both  tangible  and 
intangible investments. 

investment 

to 

To  improve  its  response  to  market  requirements,  the  industry  has  developed  a 
"vertical" system  of operation  in which the concept  of a network  is essential,  in 
particular, for SMEs. 

The  vertical  approach  has  created  new  requirements  for  increased  flexibility  in 
production, the dissemination  of new techniques, swift  reaction to market trends, the 
adoption of high quality  standards and ecological  considerations. 

Integration  of  the  industry  also  makes  it  increasingly  possible  to  exploit 
complementarity  and  synergy  within  this  sector  by  means  of  industrial 
cooperation  schemes  and,  in  particular,  subcontracting.  In  this  connection,  the 
Commission  has  sent  the  Council,  the  European  Parliament,  the  Economic  and 
Social  Committee  and  the  Committee  of  the  Regions  a  communication  on 
subcontracting  in  the  textile/clothing  sector.3  On  the  basis  of  this  communication, 
and  of  the  conclusions  adopted  by  the  Council,  a  strategy  for  boosting  the 
competitiveness  of subcontracting activities has been introduced  in close  cooperation 
with  both  sides  of  the  industry,  and  pilot  projects  are  being  implemented  (SCAN: 
Subcontracting  Assistance  Network;  IBEX:  International  Buyers'  Exhibitions; 
revision  of  the  subcontracting  nomenclatures;  practical  guide  to  the  legal  systems 
governing  industrial  subcontracting  in  Europe;  partnership  guide  for  industrial 
subcontracting). 

A  number  of  instruments  are  available  for  backing  up  and  supporting  structural 
changes.  At  European  Union  level,  the  Structural  Funds  and  the  Cohesion  Funds 
play  a  pivotal  role  in  these  fields,  especially  in  regions  where  investment  costs 
arising  from  geographical  location  and  infrastructure  requirements  are  higher. 
In 
particular,  considerable  assistance  is  being  provided  by  schemes  to  boost  the 
competitiveness  of  SMEs  (via  the  SPD  etc.)  and  via  the  Community's  SMEs 
initiative programmes, the RETEX programme, etc. 

The  evaluation  of  the  programmes  promoted  by  the  Structural  Funds,  which  the 
Commission  intends  to  undertake  early  next  year,  will  show  what  adjustments  may 
be  necessary  to  improve  their  impact  on  the  sector.  This  is  a  response  to  the 

The  competitiveness  of  subcontracting  in  the  textile  and  clothing  industry  in  the  European  Union, 
COM(96)210 final,  15 May  1996. 

industry's  request  that  a  table  be  drawn  up  showing  the  most  successful  projects, 
with a view to disseminating the best practices. 

3.2  The internal  framework 

(a)  The single  market 

Intra-Community trade accounts for  most of the textiles and  clothing  produced 
In  1996,  intra-Community  consignments  were  worth 
in  the  European  Union. 
ECU 53.4 billion, while exports to non-EU countries amounted to ECU 30.3 billion. 

The  completion  of  the  single  market  meant  the  disappearance  of  a  whole  series  of 
administrative  procedures  (frontier  controls,  verifications  of  origin,  etc.),  and  this 
greatly  benefited. the  industry  by  making  it  easier  to  adapt  flexibly  to  market 
requirements and by reducing costs (in particular administrative and transport costs). 

Recently,  new  national  legislation  on  textiles  and  clothing  has  been  introduced  for 
the  purposes  of  protecting  consumer  health  and  the  environment.  These  initiatives 
the  use  of  certain  chemicals  (such  as  azo  dyes, 
relate, 
pentachlorophenol,  formaldehyde  and  heavy  metals)  in the  treatment  of textiles  and 
clothing products. 

in  particular, 

to 

The  proliferation  of  national  legislation,  which  sometimes  differs  in  several 
respects,  risks  creating  new  technical  obstacles  to  the  operation  of  the  internal 
market.  Commission  staff  are considering  what measures  should  be taken  to  set  up 
a  framework  which  would  ensure  not  only  consumer  and  environmental  protection 
but  also  the  proper  operation  of  the  internal  market.  In  some  cases  (azo  dyes  and 
pentachlorophenol),  harmonisation  at Community  level might  be  sufficient,  whereas 
in  other  cases  (formaldehyde  and  heavy  metals)  the  risks  seem  to  merit  further 
analysis. 

Promotion  of  the  European  eco-label  for  bed  linen  and  tee-shirts  and 
the 
introduction,  in the near future,  of a similar label for textiles constitute, together  with 
the  initiatives  promoted  at national  level,  an effective  instrument  for  environmental 
protection  while  at the  same time enhancing  the competitiveness  of  the  firms  taking 
part in this system. 

The  new  action  plan  for  the  Single  Market,4  put  forward  by  the  Commission  on 
4 June  1997  and  supported  by  the  European  Council  in  Amsterdam,  proposes 
operational  solutions. 

A  Green  Paper  was  published  in  November  1996  to  initiate  a  discussion  with 
the interested  parties with  a view  to finding  ways  of improving  the operation  of 
the  internal  market  in  the  field  of  public  procurement.  This  Green  Paper 
identifies,  in particular, the limited  impact of the rules on public procurement  and the 
inadequate  transposition  of  the  directives  by  the  Member  States.  An  electronic 
information  system for public procurement (SÏMAP) is also being  developed. 

Action  plan  for  the  Single  Market,  Communication  of  the  Commission  to  the  European  Council, 
CSE(97)1  final,  4 June  1997. 

10 

(b)  Discipline and transparency with regard to State aids 

The  completion  of  the 
competition  policy. 

internal  market  requires  greater  stringency 

in 

The  Commission  is  thus  faced  with  the  need  to  ensure  rigorous  discipline  and 
genuine  transparency  where  State  aids  are  concerned  in  respect  of  all  sectors  of 
economic  activity.  Discussions  with  the  Member  States  show  that  there  is  broad 
support  for  a  multisectoral  framework  for  regional  aid  to  major  investment 
projects.  This  framework  will  be  applicable  to the  textile/clothing  sector,  thus 
meeting the need - frequently  stressed by both sides of the industry - for  a strict 
control  on  aids  in  this  sector  by  means  of  a  sectoral  or  horizontal  framework 
including notification  thresholds suited to its particular characteristics. 

In this context,  the  Community  frameworks  of aid  for  the RTD, for  training  and  for 
the  SMEs  as  well  as  the  guidelines  of  aid  for  employment  have  to  be  considered 
attentively  within  the  context  of  support  measures  for  the  competitiveness  of  this 
industry. 

(c)  Employment 

The  loss  of  more  than  a  quarter  of  the  jobs  between  1990  and  1996,  and  the 
pattern in which this continues, constitutes  a major concern  of the  Community, 
strengthened  by  the  regional  concentration  of  the  losses  of  these  jobs.  Their 
economic importance and their social impact clearly exceed possibilities of European 
industry,  and  consequently  are  entwined  within  the  framework  of  European  Union 
employment  policy. 

The  measures  and  guidelines  envisaged  in  particular  for  support  of  innovative 
companies,  within  the  framework  of  the  conclusions  of  the  Amsterdam  European 
Council  and  in  particular  of  the  forthcoming  Luxembourg  European  Council  on 
Employment,  as  well  as  any  policy  of  the  Member  States  for  employment,  should 
therefore  take care to take into account the specific  requirements of this sector. 

The  Commission  welcomes  in this  respect  the  negotiation  of a "confidence  pact  for 
employment  in  the  textile  /  clothing  industry",  which  would  stress  training  and  the 
reduction  /  organisation  of  working  time,  and  would  thus  allow  encouragement  of 
concerted measures, in compliance with the rules of competition in force. 

(d)  Wage costs and social security charges 

Within  the  textile/clothing  industry,  certain  highly  labour-intensive  sub-sectors  are 
particularly  vulnerable  to  the  impact  of  indirect  labour  costs  (social  security 
contributions and direct tax on incomes). 

The  handicap  this  represents  vis-à-vis  our  main  competitors  is  considerable  and 
increasing.  In  spite  of  the  well-known  budgetary  problems  this  would  create,  the 

11 

Commission  has repeatedly  argued  in  favour  of  reducing  indirect  labour  costs,5  an 
approach which has been confirmed by a number of European Councils. 

The adoption of specific measures to alleviate indirect labour costs in the sector so as 
to promote employment and competitiveness must comply with the obligation not to 
distort competition.6 

In  accordance  with  the  Treaty  rules  on  the  subject,  and  with  the  principle  of 
subsidiarity,  the Commission  considers  that the problem  should  be looked  at in 
greater  detail,  in  cooperation  with  the  Member  States  and  both  sides  of 
industry.  In the  context  of  the  talks  between  the two  sides  of  the  textile/clothing 
industry, any proposal regarding the organisation of working time and flexibility  will 
be carefully  examined by the Commission. 

3.3  External  relations 

(a)  Promoting  market access 

The  European  Union  attaches  great  importance  to  maintaining  a link  between 
inclusion  of  the  textiles/clothing  sector  in  the  WTO  rules  and  compliance  with 
the undertakings  given by the contracting parties. 

This  approach  also  inspired  the  market  access  strategy  for  the  European  Union,  set 
out  in the  Communication  of  14 February  1996,7 which  aims  to  be more  aggressive 
than in the past. 

The  slowdown  in  internal  demand  for  textile/clothing  products  in  recent  years  and 
the  increased  competition  from  imports  make  it  vital  to  develop  exports,  especially 
to  countries  where the market  has  potential  for  growth.  The  trend  in  Community 
exports  to  the  most  open  markets,  where  the  European  industry  is  up  against 
global  competition,  shows  that  the  Community  industry  has  the  capacity  to  be 
competitive. 
The 
Commission  will  continue  to  seek  ways  of  improving  information  on  national 
initiatives  in  the  short  term  and,  if  necessary,  to  play  a  co-ordinating  role. 
In 
addition,  any  proposal  put  forward  by  the  industry  for  long-term  promotion 
initiatives  will  be  considered.  In this  connection,  the  Commission  could  consider 
whether  it  would  be  effective  to  set  up  textile/clothing  industry  representation 
offices  in one or more countries which offer  particular potential for exports. 

initiative  has  yielded  positive  results. 

The  EXPROM 

5  White Paper:  Growth, Competitiveness, Employment -Brussels  1993. 

6 

7 

These  matters  are  being  studied  by  the  Group  on  Taxation  Policies  (the  Monti  Group)  in  accordance 
with  the  guidelines  issued  by  the  Dublin  Council  (December  1996)  and  by  the  ECOFIN  meeting  on 
1  1  November  1996. 

The  global  challenge  of  international  trade:  a  market  access  strategy  for  the  European  Union 
COM(96)53  final,  14 February  1996. 

12 

Some  non-Community  countries  are  maintaining  or  creating  unjustified  tariff  and 
non-tariff  barriers  to  protect  their  markets.  The  most  striking  examples  are 
Argentina,  China,  India,  South  Africa  and  the  United  States.  This  protectionism 
does not favour the development of trading relations.  It is often  contrary  to the 
obligations  laid  down  in  the various  agreements  signed  as  part  of  the  Uruguay 
Round  and,  above  all,  contrary  to  the  Agreement  on  Textiles  and  Clothing 
(ATC). 

To improve the effectiveness  of Community commercial policy, the Commission  has 
set  up  a  data  bank  on  obstacles  to  trade:  it  has  become  an  operational  instrument 
accessible to the economic operators.  Cooperation between all the parties  concerned 
is essential to ensure the effective  and on-going operation of this  instrument. 

(b)  Rules and  disciplines 

The Commission expects the European Union's partners to apply rigorously  the 
agreements  they  have  signed  regarding  the  protection  of  intellectual  property 
rights, subsidies, dumping and rules of origin. 

The globalisation  of the markets and the progressive deregulation of the  Community 
market require all the parties concerned to maintain conditions of fair  competition. 

The Commission  will continue to apply the instruments available to it, in compliance 
with  its  international  obligations,  in  order  to  maintain  a  climate  of  healthy 
competition.  Close  cooperation  between  the  Member  States  and  the  economic 
operators  is essential  for  this purpose,  as is clear  from  the procedure  initiated  under 
the Regulation  on obstacles  to trade (ROT)8 in respect  of the United  States'  rules  of 
origin. 

(c)  The  environment 

Protecting  the  environment  is  not  only  important  politically  and  socially  but  also 
creates economic and employment  opportunities.  At the level of the individual  firm, 
the  costs  of  environmental  protection  are  often  seen  as  a  handicap  to  international 
competitiveness.  There  are,  nevertheless,  real  opportunities  for  firms  which  take  a 
dynamic  approach  and  integrate  environmental  considerations  into  their  general 
strategy. 

The  award  of  an  eco-label  to  these  firms  is  an  effective  way  of  promoting  their 
image.  In the discussions  taking  place within the WTO's  "Trade  and  Environment" 
(EEC)  Committee,  the  Community's  aim  is  to  maintain  the  integrity  of  the 
eco-labelling  systems  based  on a life  cycle analysis  (the Community  system)  and  to 
increase  transparency  both  in their  operation  and  in the  establishment  of  criteria  for 
awarding  the  label.  This  Committee,  on  which  the  Community  will  be 
represented,  has  recently  commenced  an  analysis  of  the  environmental  impact 
of  liberalising  trade and  on the commercial  impact  of environmental  legislation 

8  Council  Regulation  (EC) No 3286/94 of 22 December  1994. 

13 

in the sector concerned. The use of labels recognised  at a European  or  international 
level,  covering  both  the  materials  and  the  methods  used,  could  increase  the 
competitiveness of these products while having a positive environmental  impact. 

Moreover,  companies  must  be encouraged,  in particular  through  RTD  programmes, 
to cope with the problems linked to the environment  by increased  use of "clean" and 
recycling technologies in order to take advantage of future  economic opportunities. 

A particular effort  in distribution of information  at both producer and consumer level 
would be desirable to increase benefits  as a result of actions in this  field. 

(d)  The social  question 

The  Commission  has  recognised  the  importance  of  respecting  fundamental  social 
rights in international relations.  It has already set out its position on the link between 
trading agreements and internationally  recognised  labour standards,9 both in a recent 
Communication10  and in the appropriate multilateral fora such as the ILO and WTO. 

The  Commission  has  stressed 
to  promote  compliance  with 
the  need 
fundamental  labour  standards  while  rejecting  their  use  for  protectionist 
purposes.  These  views  are  now  shared  at  multilateral  level  by  all  members  of 
the WTO.11  The  Commission  also notes that  initiatives  promoted  by the  economic 
operators, focusing  on respect for social rights, such as the "ctëan clothes" campaign, 
have been welcomed by consumers. 

The  Commission  is  currently  examining  those  aspects  of  the  social  label  which  are 
linked  to  transparency,  reliability  and  compatibility  with  the  rules  of  international 
trade.  This analysis will  give the Commission  an objective  overview  of the  benefits 
and disadvantages of such an approach. 

(e)  Internationalisation  of firms and industrial cooperation 

For  some  years  now,  a  growing  number  of  European  firms  have  been  developing 
strategies  for  the  internationalisation  of  their  production  with  a  view  to  increasing 
their  competitiveness  on  all  international  markets.  This  strategy  goes  hand  in  hand 
with  the  process  of  adapting  industrial  activity  within  the  European  Union  to  meet 
the  requirements  of  the  production  process  in  terms  of  high  added  value,  rapid 
response and a short circuit. 

As  part  of  its  industrial  cooperation  policy,  the  Commission  will  continue  to 
promote  the  development  of  a  permanent  and  coherent  framework  for 
cooperation  for  mutual  benefit  and  will  do  all  it  can  to  support  a  number  of 
pilot projects  based on existing instruments. 

9 

There  is  now  an  international  consensus  on  recognising  a  set  of  Conventions  drawn  up  by  the 
International  Labour Organisation  (ILO). 

10  The  trading  system  and  internationally  recognised  labour  standards,  COM(96)402  final,  24  July 

1996. 

1 '  Ministerial  Statement  issued  at Singapore on  18 December  1996. 

14 

Stepping  up  cooperation  on  standards,  administrative  procedures  and  commercial 
issues  may  be  an  appropriate  way  to  help  develop  the  sector's  international 
competitiveness within the context of market globalisation. 

For  historical,  economic  and  geographical  reasons,  the  European  Union  is 
particularly  interested in the situation in neighbouring countries, i.e. the countries of 
Central  and  Eastern  Europe  (as  part  of  its  pre-accession  strategy)  and  the 
Mediterranean countries. 

More generally,  consideration  should be given to the actual opportunities  provided 
by  Community  programmes  (PHARE, TACIS,  MEDA, ECIP, JOPP, EURO/MED 
PARTNERSHIP,  BRE,  BC-NET,  etc.).  Trade  and  professional  organisations  can 
play  an  important  role  in  implementing  the  Community  policy  on  industrial 
cooperation. 

15 

4.  CONCLUSIONS 

4.1 

The dialogue promoted by the Commission within the textiles/clothing groups has 
shown  the  benefits  to  be  derived  from  complementarity  and  coherence  between 
the  initiatives  taken  by  the  two  sides  of  industry,  the  Member  States  and  the 
Community  institutions. 

in 

industry, 

two  sides  of 

The 
their  report,  have  made  a  number  of 
recommendations.  Among  the  subjects  dealt  with  in  this  report,  the 
Commission  considers  that  particular  attention  should  be given  to jobs  and 
training,  and  to  the  transfer  of  technologies,  to  the  use  of  information 
technology,  to the promotion  of synergies  between  Community  and  National 
programmes  in order to maximise the results, to the operation of the  internal 
market and to market access. 

.When drawing  up their  initiatives, the two  sides of  industry  should  take  account 
of the instruments available in the Member States and at Community level. 

The  Member  States  and  the  Commission,  while  respecting  the  principle  of 
subsidiarity,  should work even more closely together  so as to generate  synergy  in 
their support for the measures taken by the economic operators. 

4.2 

The best guarantee of jobs  in this sector lies in the dynamism  of viable  firms.  In 
order  to  absorb  jobs  lost  by  the  industry,  the  economy  as  a  whole  must 
generate  sufficient  employment.  Nevertheless,  levels  of  employment  in  this 
industry  must  be  monitored  with  particular  attention  on  account  of  their 
regional  concentration  and  the  fact that  a large  proportion  of the  workforce 
is female. 

Within  the  context  of  the  conclusions  reached  at  the  European  Council  in 
Amsterdam,  the  provisions  of  the  new  Treaty  Chapter  on  employment  and  the 
views  repeatedly  expressed  on  this  matter  by  the  Commission,  there  must  be 
continued  and  detailed  talks  between  the  two  sides  of  industry  on  the 
problems of employment. 

With  regard  to  training,  appropriate  responses  must  be sought  at national  level 
and  in  the  context  of  Community  instruments.  Continual  training,  covering  the 
requirements  in  terms  of  new  qualifications  and  retraining,  remains  a  priority. 
Efforts  must  be  made  by  all  the  parties  concerned  and,  above  all,  by  the  firms 
involved. 

At  Community  level, the  pilot  projects  currently  taking  place  should  result  in  an 
efficient  dissemination  of  good  practices.  It  should  be  possible  to  ensure  that 
examples  of  success  at  Member  State  level  are  disseminated  throughout  the 
European  Union to the benefit  of the industry as a whole. 

4.3 

The  textile/clothing  industry  has  had  a  certain  amount  of  success  with  the 
increased  use  of  new  products,  methods  and  equipment  as  well  as  with  the 
these  acquired 
application  of 

technologies.  Nevertheless, 

information 

16 

advantages  do  not  sufficiently  benefit  the  whole  of  the  industry.  There  is 
insufficient  awareness  of  the  competitive  advantages  to  be  gained,  particularly 
with regard to the organisation of firms and their response to demand. 

Bringing  the  whole  of  the  industry,  including  distribution,  within  a  single 
network  considerably  enhances  its  competitiveness  and  is  of  particular 
benefit  to SMEs, which provide most of the sector's  employment. 

It is vital that the private sector and the national and Community  authorities work 
together  so  that  the  available  instruments  are  used  effectively  to  support  these 
initiatives and to back up significant  projects in this area. 

4.4 

The  internal  market  has  been  completed  without  major  problems  in  the 
textile/clothing  sector.  Both  sides  of  industry  must  work  together  to  remove 
obstacles  to  trade  arising  from  the  non-application  of  the  principle  of  mutual 
recognition.  Nevertheless,  a  co-ordinated  and  integrated  approach  must  be 
taken  to the questions  of environmental  and consumer  protection  and  to  the 
proper  operation  of  the  internal  market.  Commission  staff  are  currently 
examining these questions and the results of their deliberations will be notified,  as 
soon as possible, to the Member States and both sides of industry. 

Where  public  procurement  is concerned, the Commission,  in cooperation  with 
the Member  States, is seeking an appropriate solution to the problems which have 
been seen to hinder the achievement of the objectives of Community policy in this 
area. 

4.5 

The European  Union's  commercial  policy  must be such as to ensure that the 
markets  of third countries  are indeed open to textile/clothing  firms  as much as 
to operators in other sectors. 

The  Commission  cannot  accept  a  situation  in  which  the  implementation  of  the 
European  Union's  undertakings  with regard  to the  liberalisation  of  imports  is not 
matched  by  a  correspondingly  greater  ease  of  access  for  its  own  products  to  the 
markets of certain third countries. 

Moreover,  given  the  globalisation  of  economic  activity  and  a fortiori  trade,  the 
Commission  must  demand  that  the  rules  and  disciplines  accepted  under 
international  agreements  are  properly  adhered  to,  and  must  promote  the 
effective  use  of  the  instruments  already  available  for  defending  European 
commercial  interests, when the situation so requires. 

Continued  efforts  must  also  be  made  to  include  minimum  environmental 
standards  and  the  respect  for  fundamental  social  rights  in  international 
relations. 

17 

4.6  All  the  measures  under  consideration  and joint  efforts  by  the  parties  concerned 
should ensure that this branch of industry has a major role to play in the economy 
of the European  Union.  It will maintain  its economic and  social  importance  in 
spite  of job  losses.  The  changes  currently  taking  place  mean  there  is  a  trend 
towards high added-value and wealth-creating jobs. 

The Commission will do everything in its power to help improve the general 
economic  climate,  to  adapt  its  instruments  to  present  needs  and  to  ensure 
that the strategies pursued have an overall coherence. 

The attached action plan must be constantly monitored.  The Commission, in 
cooperation with the Member States, will continue its discussions with both sides 
of the industry to ensure that trends are continually monitored and that the action 
being taken is adapted to both structural and cyclical changes. 

18 

EUROPEAN PLAN OF ACTION 
TO INCREASE THE  COMPETITIVENESS 
OF THE TEXTILE AND CLOTHING  INDUSTRY 
1997 - 2000 

Recommendations  from  the two sides of 
industry 

INNOVATION AND INDUSTRIAL AND 

INFORMATION TECHNOLOGIES 

Action 

links  between  R&D,'  •  Steps  have  already  been 

•  The  existing 
technologies 
and  ,  new 
innovation 
suggest 
complementarity 
the 
between  the  various  initiatives  in  this 
field  should be exploited. 

that 

taken 

to 
develop  new  products,  methods  and 
equipment  as  well  as  the  application  of 
information  technology  and  electronic 
commerce techniques in the sector. 

•  To 

and 

co-ordinate 

the 
dissemination  of  the  results  of  research 
and their application  in practice remains 
a priority objective. 

ensure 

EMPLOYMENT,  SOCIAL SECURITY AND 

TAXATION 

•  Tripartite  cooperation  to  be  stepped  up 
(Commission,  Member  States,  the  two 
sides of industry). 

•  More 

talks 

on 
detailed 
jobs, 
creating/maintaining 
reducing/reorganising  working 
time, 
training  and  flexibility  in  the  internal 
organisation of firms. 

•  Initiatives  recommended  in  the  field  of 
tax legislation with regard to the transfer 
of family  businesses. 

•  A  thematic  network  is  to  be  set  up  for 

research purposes. 

•  An  ad  hoc  working  group  has  been  set 
up  on  the  basis  of  the  Report  on  the 
development  of  tax  systems 
the 
European Union.1 
These topics  will  be tackled  in the  talks 
between the two sides of the industry. 

in 

•  A  study  on tax  avoidance  and  the  black 
economy  have  been  promoted  by  the 
Commission. 
A  Green  Paper  on  this  subject  is  being 
drafted. 

•  A 

forum  has  been  held  on 

the 
Recommendation  on  the 
transfer  of 
SMEs  (OJ  L  385/94).  The  results  will 
A 
be 
Commission 
on 
follow-up  action  will  be  presented 
shortly. 

report. 
communication 

summarised 

in  a 

Taxation  in the European  Union : Report  on the development  of tax systems  -  COM(96)546. 

19 

Recommendations  from  the two sides of 
industry 

TRAINING 

Action 

•  Training  needs  for  new  qualifications. 
retraining 

training 

and 

Internal 
programmes. 

•  SMEs in the sector  must be given easier 

access to the existing instruments. 

•  Training  requirements  in  the  clothing 
sub-sector  have  been  examined  in  the 
talks  between  the  two  sides  of  the 
industry;  a  similar  initiative  is  planned 
for  the  textile  sector.  A  number  of 
projects  put  forward  by the two  sides  of 
industry are being considered. 

•  The  second  stage  of 

the  ADAPT 
programme  began  in  January  1997.  In 
autumn  1997, the  new  projects  selected 
by 
the  Member  States  will  be 
implemented» 

INDUSTRIAL 

COOPERATION 

BETWEEN 

EUROPEAN  UNION  FIRMS 

< • 

•  Continuation  and  monitoring  of  the 
programme 
subcontracting 
(Commission 
Communication 
COM(96)210  final  of  15 May  1996  and 
conclusions  of  the  Council  meeting  on 
14 November  1996. 

ENVIRONMENT 

Azo  DYES -  PCP 

•  To 

ensure 

ecological 
considerations  are taken into account  in 
making firms  more competitive. 

that 

•  Current  action  on  technical  relations 
between  those  who  place  the  orders  and 
those  who  make  them  up;  promotion 
Buyers' 
(IBEX: 
International 
(SCAN: 
Exhibitions); 
Subcontracting  Assistance  Network); 
statistics. 

information 

•  A  practical  guide  to  the  legal  systems 
governing  industrial  subcontracting  in 
the European Community  and a guide to 
partnership  in  industrial  subcontracting 
will be available in September  1997. 

•  The  Commission  will  be  involved  in 
the  exercise  which  the  WTO's  "Trade 
and  Environment"  Committee  has 
Its  aim  is  to  analyse 
recently  begun. 
the 
impact  of 
the  environmental 
the 
and 
trade 
liberalisation 
commercial  impact  of  environmental 
legislation  in this sector. 

of 

20 

Recommendations  from  the  two sides of 
industry 

Action 

•  To  encourage  harmonisation  of 

the  •  The  desirability  and 

Member  States'  laws  on  azo  dyes  and 
to  avoid 
pentachlorophenol 
correct 
the 
creating  obstacles 
operation of the internal market. 

so  as 
to 

feasibility  of 
harmonisation  in  this  field  is  currently 
being  assessed.  This  assessment  relates 
to  two  matters,  namely  the  health  risks 
arising from the use of  these  substances 
and  the  effect  which  a  ban  on  these 
substances  would  have  on  the  internal 
market  and in third countries.  Directive 
76/769 is to be revised. 

PUBLIC  PROCUREMENT 

•  Measures 

to  make 

effective  in practice 

legislation  more  •  A  Green  Paper 

entitled 

"Public 
Procurement  in  the  European  Union: 
exploring 
forward"  was 
published in November  1996. 

the  way 

•  Action to ensure that the Member  States 
have transposed  the directives  on public 
contracts. 

INDUSTRIAL  AND COMMERCIAL  PROPERTY 

•  Promoting  measures 

counterfeiting 
designs and industrial models. 

and 

to 

combat 
the  copying  of 

STATE  AIDS 

•  Introduction 

of 

a  multisectoral 
framework,  with a notification  threshold 
suited  to the  particular  characteristics  of 
the textile/clothing  sector. 

•  A  communication  is  to  be  issued  in 
1998  together  with  a  plan  pf  action 
setting  out  measures  for  making  the 
legal  framework  more  effective  so  that 
the  objectives  of  Community  policy  in 
this field  can be better achieved.  A pilot 
project  has  been 
a 
sei  up 
computerised 
information  system  for 
public procurement (SIMAP). 

for 

reached 

•  On  13 March  1997, a  common  position 
the  Directive: 
on 
was 
COM(93)344 final.  It will take between 
nine  and  21  months  to  complete  the 
codecision procedure. 

•  The  multisectoral  framework  plan  is 
the 

talks  with 

in 

being  considered 
Member States. 

21 

Recommendations from  the two sides of 
industry 

COMMERCIAL  POLICY 

•  Improving  access to the markets of third 

countries. 

Action 

its 

international 

the 
In 
Commission  will  continue  its  efforts  to 
promote market access. 

relations, 

Compliance  with 
disciplines  and  continued  efforts 
combat  fraud. 

rules 

the 

and 
to 

sides  of 

In collaboration  with the Member  States 
and  both 
the 
Commission  will  apply  the  instruments 
of  commercial  policy  available  to  it, 
whenever the situation so requires. 

industry, 

•  Measures to promote exports 

information  with 

•  The  Commission  will  strive  for  a  better 
the 
exchange  of 
if  necessary,  a 
Member  States: 
coordination  scheme will  be  introduced. 
be 
Any 
examined 
the 
economic operators.  Consideration  may 
be  given  to  setting  up  textile/clothing 
industry  representation  offices  in  third 
countries. 

proposal  will 
in  collaboration  with 

long-term 

More  detailed  discussion  of 
connected with the social label. 

issues 

•  The  Commission  is currently  examining 
those  aspects  of  the  social  label  which 
are  linked  to  transparency,  reliability 
and  compatibility  with  the  rules  of 
international trade. 

European  firms  to  adopt  a  code  of 
conduct 

•  The  Commission 

is  considering 

the 
possibility 
a  wide 
of  promoting 
dissemination  of  the  code  of  conduct 
among firms and consumers. 

22 

ISSN 0254-1475 

COM(97) 454  final 

DOCUMENTS 

EN 

10  08  04  13 

Catalogue  number  :  CB-C0-97-467-EN-C 

ISBN  92-78-24599-2 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

o23