Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - The future of the textiles and clothing sector in the enlarged European Union
Date: 2003-10-29
Institutions: European Commission
Subjects: EU industrial policy, clothing industry, economic analysis, enlargement of the Union, structural policy, textile industry

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 29.10.2003
COM(2003) 649 final

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

The future of the textiles and clothing sector in the enlarged European Union

TABLE OF CONTENTS

EXECUTIVE SUMMARY...........................................................................................................4

1.

2.

3.

Introduction.....................................................................................................................6

Summary of the economic analysis of the textiles and clothing sector ..........................7

Key challenges and on-going policy initiatives ..............................................................8

3.1.

Enlargement ....................................................................................................................9

3.1.1.

The effects of enlargement on textile and clothing companies in the EU-15 .................9

3.1.2.

The effects of enlargement on textile and clothing companies in the new Member
States

............................................................................................................................9

3.2.

Trade issues...................................................................................................................10

3.2.1.

The abolition of quantitative restrictions on 1st January 2005 – impact on EU
industry and on the poorest countries............................................................................10

3.2.2. Market access to third countries....................................................................................11

3.2.3.

The impact of the WTO’s Doha Development Agenda (DDA) ...................................12

3.2.4.

Impact of imports from major suppliers........................................................................12

3.3.

Competitiveness Issues .................................................................................................13

3.3.1. Research and Development efforts. ..............................................................................13

3.3.2.

Innovation .....................................................................................................................14

3.3.3.

Information and communication technologies..............................................................14

3.3.4. Vocational training........................................................................................................15

3.3.5.

Employment ..................................................................................................................15

3.3.5.1. Equal opportunities .......................................................................................................16

3.3.5.2. Managing change ..........................................................................................................16

3.3.5.3. European Sectoral Social Dialogue...............................................................................16

3.3.6.

Environment..................................................................................................................17

3.3.7. Chemicals......................................................................................................................18

3.3.8. Consumer affairs and public health ..............................................................................19

3.3.9. Corporate social responsibility (CSR) ..........................................................................19

3.3.10.

Intellectual property rights ............................................................................................20

3.3.11. Regional aspects............................................................................................................21

3.3.12. Competition policy, state aid and Internal Market issues .............................................21

2

4.

Proposals to strengthen the sustainable competitiveness of the textiles and clothing
sector in the EU.............................................................................................................21

4.1.

Actions at EU level .......................................................................................................22

4.1.1.

Trade policy ..................................................................................................................22

4.1.1.1. Improving market access conditions in third countries – The Doha Development

Agenda ..........................................................................................................................23

4.1.1.2. Achieving the Euro-Mediterranean Zone......................................................................24

4.1.1.3. Vulnerability of certain textile and clothing producing countries ................................25

4.1.1.4. Addressing sustainability issues....................................................................................27

4.1.1.5. Protecting intellectual property rights...........................................................................28

4.1.1.6. Increased international competition and available remedies ........................................29

4.1.2. Research and development actions ...............................................................................30

4.1.3.

Innovation policy ..........................................................................................................31

4.1.4.

Education and training policy .......................................................................................32

4.1.5. Regional and cohesion policy .......................................................................................32

4.1.6.

Industrial Cooperation...................................................................................................33

4.1.7. Other measures - consumer issues ................................................................................33

4.2.

4.3.

5.

Actions at Member State level ......................................................................................33

Actions at stakeholder level ..........................................................................................35

Operational Conclusions ...............................................................................................36

Annex : Examples of concrete actions at EU-level for the textiles and clothing sector .............38

1.

2.

3.

4.

5.

6.

7.

Enlargement ..................................................................................................................38

Research and Innovation ...............................................................................................38

Information society .......................................................................................................39

Vocational training........................................................................................................39

Environment..................................................................................................................40

Chemicals......................................................................................................................40

Consumer Affairs and Public Health ............................................................................41

3

EXECUTIVE SUMMARY

The European textiles and clothing industry, which accounts for approximately 4 % of total
EU  manufacturing  production  and  7  %  of  manufacturing  employment,  is  currently  facing
unprecedented challenges.

These  are  mainly  related  to  developments  in  its  international  environment,  in  particular  the
elimination of import quotas on the 1st of January 2005 and the challenges and opportunities
of  a  new  round  of  multilateral  negotiations;  the  evolution  of  competitiveness  factors
increasingly associated to innovation, research, skills, quality and creation; the preparation for
enlargement  both  in  the  present  Member  States  and  in  Acceding  Countries;  permanent
restructuring and modernisation processes.

Furthermore,  these  developments  are  occurring  during  a  period  of  marked  slowdown  in  the
economic  activity  in  the  EU  and  some  of  its  more  important  export  markets,  adding  the
difficulties associated with a sluggish demand to an already complex situation.

For  the  first  time  after  almost  four  decades,  with  the  elimination  of  import  quotas  on  1st
January 2005 pursuant to WTO rules, the textile and clothing sector in the EU will be subject
to the same trade and import rules as any other industrial sector. It will happen some months
after the increase in the textiles and clothing EU workforce by  almost a third, bringing it to
over 2,5 million people, as a result of enlargement. The movement that started with the final
elimination of quotas, which had been negotiated at the end of the Uruguay Round ten years
ago,  and  the  process  of  adaptation  to  the  new  circumstances,  has  coincided  with  other
structural  changes  in  the  industry  due  to  the  market  and  general  economic  situation  and
technological changes.

If  it  is  the  primary  responsibility  of  enterprises  to  meet  these  challenges,  the  role  of  public
authorities is and will remain the establishment of favourable framework conditions in which
textiles  and  clothing,  like  other  sectors,  can  develop  and  enjoy  the  opportunity  to  compete,
domestically and internationally, on the basis of equity.

In addition to its size (yearly turnover of € 200 billion, over 177.000 firms mostly SMEs in
EU-15), the sector plays a very significant role in certain regions of the EU - and even more
in  the  new  Member  States.  EU  industry  has  shown  in  quite  a  number  of  segments  world
leadership  and  a  great  deal  of  innovative  capacity,  which  is  a  result  of  a  centuries-long
tradition, of its quality, creativity and fashion capabilities.

How  best  to  give  EU  textiles  and  clothing  industry  the  chances  to  compete  in  the  new
situation  is  the  subject  of  this  communication.  Although  there  may  be  cases  where  sector-
specific proposals may be justified, the Commission does not call for any subsidies, or for a
privileged treatment of the sector, or for the replacement of the import quotas by other forms
of protection.

The communication is a sectoral application of the EU's industrial and trade policies, taking
into account the particular features of the sector. In view of the challenges that the sector will
face  in  the  coming  years,  the  Commission  has  carried  out  a  review  of  its  policies  and
instruments, with the objective of identifying measures or lines of action that can improve the
competitive position of the sector. Taken together, they aim at providing to industry and those
who  work  in  the  sector  a  clear,  predictable  and  coherent  framework  so  that  strategies  and
investments can be more easily planned for the medium term.

4

Textiles and clothing is also an industry particularly important in developing countries. Quite
a  number  of  them  (among  which  some  least  developed  countries  and  smaller  garment
exporting  countries),  and  many  of  the  EU's  neighbours  in  the  South  and  East  of  the
Mediterranean, enjoy a preferential access to the EU market (including the absence of quotas)
and are highly dependant on textile and clothing exports. They may be particularly vulnerable
to  changes  in  the  international  trade  system.  As  the  elimination  of  quotas,  which  may  be
accompanied by further multilateral liberalisation, will erode their preferential treatment, the
communication also makes suggestions so that these countries are better equipped to compete
in the EU market with the world's major textile and clothing exporting countries.

This ideas and suggestions contained in this communication have been put forward having in
mind  the  complexity  of  the  present  situation  and  the  diversity  of  interests  prevailing  in  the
sector.  They  respond  to  the  objectives  of  improving  the  EU  textiles  and  clothing  industry
competitive  conditions  and  of  making  globalisation  work  for  the  benefit  of  all.  For  these
reasons,  the  Commission  intends  to  set  up  a  high-level  group  for  the  period  2004-2006  in
order  to  stimulate  debate  and  to  consult  with  interested  parties  before  translating  ideas  and
suggestions into concrete action.

5

1. 

INTRODUCTION

In its Communication of December 2002 on industrial policy in an enlarged Europe1,
the  Commission  put  industrial  policy  back  on  the  EU  policy  agenda.  Its  objective
was  to  show  how  EU  industrial  policy  needed  to  be  adjusted  in  the  light  of  new
circumstances  such  as  globalisation,  technological  change,  growing  expectations
from society and, last but not least, the imminent enlargement.

The  Communication  reiterated  the  Commission’s  commitment  to  a  horizontal
industrial  policy.  Industrial  policy  seeks  to  improve  framework  conditions  for  all
businesses. First of all, the Commission seeks to co-ordinate the impact of different
policy  and  legal  measures  on  industry.  Many  different  policies  impact  on  the
business  environment  and  therefore  on  industrial  competitiveness.  For  this  reason,
the  Commission  is  currently  analysing  how  other  community  policies  can  help
improve industrial competitiveness so that synergies  between  all  policies impacting
on industrial competitiveness can be exploited. Industrial policy is also  seen within
the  overall  EU  goal  of  sustainable  development,  as  set  out  in  the  Sustainable
Development Strategy. This implies striking a balance between the economic, social
and environmental dimensions.

As  well  as  the  horizontal  aspects,  industrial  policy  needs  to  take  into  account  the
specific  characteristics  that  determine  the  competitiveness  of  individual  industrial
sectors. The frameworks, institutions and instruments in which business operates are
highly  sector-specific.  Policy  makers  need  to  consider  the  complex  mechanisms
behind the competitiveness of each given sector. Action can then be  adapted to the
specific needs of a given sector or checked against its particular requirements.

This Communication represents the sectoral application of both industrial and trade
policies for the textiles and clothing industry. It is based upon a methodology which
has three phases: analysis, discussion and action. The Commission has undertaken a
systematic monitoring and an in-depth analysis of the European textiles and clothing
sector,  with  a  particular  emphasis  on  the  trade  policy  implications,  as  these  are
strategically  important  for  such  a  globalised  sector.  This  analysis  has  been
complemented by discussion with stakeholders. In addition to on-going contacts with
industry and trade union representatives, the Commission organised two conferences
in the first half of 20032.

This  Communication,  situated  as  it  is  within  the  framework  of  the  sectoral
application of both industrial and trade policies, outlines the major challenges faced
by  the  textile  and  clothing  industry  in  the  EU,  whilst  at  the  same  time  taking  into
account the impacts on its partner countries benefiting from preferential access to the
European  markets,  and  makes  a  number  of  proposals 
its
competitiveness. Although the future of the industry depends in the first instance on
the  companies  themselves  and  on  their  responsiveness  and  adaptation  to  ever
evolving circumstances, it is the role of public authorities – at EU level in areas of

to  strengthen 

1

2

Communication of 11.12.2002, COM(2002) 714 final
Conference  “The  future  of  the  textiles  and  clothing  industry  in  an  enlarged  Europe”,  20  March  2003,
further  information  available  on:  http://europa.eu.int/comm/enterprise/textile/conf_tc200303_en.htm;  and
conference  “The  future  of  textiles  and  clothing  after  2005”,  5-6  May  2003,  further  information  available
on: http://trade-info.cec.eu.int/textiles/conf_index.cfm

6

                                                
EU  competence  such  as  external  trade,  but  also  at  Member  State  or  even  at  sub-
national level – to provide the regulatory and other conditions under which the sector
can  prosper,  while  safeguarding  the  interests  of  consumers  and  importers.  This
Communication  is  the  Commission’s  contribution,  in  the  form  of  a  framework  of
policies which will support the industry’s continued efforts to define a winning long-
term strategy in the global market place. It should result in the adoption of specific
measures after  discussion with  the Member  States,  in  the  European  Parliament  and
with the stakeholders concerned.

2. 

SUMMARY OF THE ECONOMIC ANALYSIS OF THE TEXTILES AND CLOTHING SECTOR

The textile and clothing industry is an important part of the European manufacturing
industry  with  a  turnover  of  €  200  billion  produced  in  roughly  177.000  enterprises,
which  employ  more  than  2  million  people  –  a  figure  set  to  increase  to  2.7  million
after enlargement in 2004. The share of textiles and clothing in total manufacturing
value added at EU level amounts to roughly 4% and the share in total manufacturing
employment to around 7%.

The  years  2001  and  2002  were  very  difficult  for  the  textiles  and  clothing  industry
with significant declines in production (-8.7%) and employment  (-8.4%).  The trade
deficit amounted to € 26.2 billion in 2002, the trade in textiles reaching a surplus of
€ 7.9 billion and the deficit in clothing € 34.1 billion.

As regards the textiles and clothing external trade performance, more than 20% (23%
in  the  case  of  textiles)  of  EU  production  in  value  is  sold  on  the  external  market
despite  limited  access  to  many  third  markets.  However,  there  remain  significant
impediments  to  trade  in  textiles  and  clothing,  especially  in  some  of  the  largest  and
more competitive  exporters in the  sector,  and the European industry could increase
production  and  exports  to  those  parts  of  the  world  when  the  impediments  to  free
trade were lifted. By comparison with manufacturing as a whole, it is worth  noting
that external markets are of higher importance for the textiles and clothing industry,
while at the same time import penetration is also significantly higher in this sector,
especially in clothing (41%).

The  textile  and  clothing  sector  in  Europe  has  been  subject  to  a  series  of  radical
transformations over  the last  years,  due  to  a  combination  of  technological  changes,
evolution  of  the  different  production  costs,  and  the  emergence  of  important
international  competitors.  Such  changes  are  likely  to  continue  in  the  foreseeable
future, and the definitive elimination of the system of import quotas which has been
applied  for  the  past  four  decades  on  1st  January  2005  will  bring  in  additional
competition from outside.

In  response  to  past  competitive  challenges,  the  textile  and  clothing  industry  in
Europe  has  undertaken  a  lengthy  process  of  restructuring,  modernisation  and
their  competitiveness  by
technological  progress.  Companies  have 
substantially reducing or ceasing mass production and simple fashion products, and
concentrating  instead  on  a  wider  variety  of  products  with  a  higher  value-added.
Moreover, European producers are world leaders in  markets for technical/industrial
textiles and non-wovens (for example industrial filters, geotextiles, hygiene products,
or  products  for  the  automotive  industry  or  the  medical  sector),  as  well  as  for  high
quality garments with a high design content.

improved 

7

Competitiveness  has  also  been  retained  by  sub-contracting,  or  relocation  of
production  facilities,  for  labour-intensive  activities  such  as  garment  make-up  to
companies  in  countries  with  lower  labour  costs,  mainly  in  the  Euro-Mediterranean
Zone,  including  the  acceding  states  and  candidate  countries.  The  competitive
advantages of the textiles and clothing sector in the EU are now found in a focus on
quality and design, innovation and technology, and high value-added products.

At the same time, globalisation and technological progress have led to the need to re-
think  the  textiles  and  clothing  industry’s  clustering  strategy.  While  still  playing  an
important role for some activities, cooperation at local, district or regional level has
increasingly  proved  inadequate  to  ensure  that  the  chain  of  production  remains  at
close  geographical  proximity  to  the  European  market.  Therefore,  clustering  of  its
very  diversified  activities  is  now  also  based  on  a  wider  geographical  area,  i.e.  the
Euro-Mediterranean zone.

European  products  generally  have  a  positive  quality  mark-up.  Equally  the  EU
industry  has  a  leading  role  in  the  development  of  new  products,  such  as  technical
textiles. These trends towards higher value-added products need to be continued and
accelerated, if the textile and clothing sector in Europe is to remain competitive. This
can be seen from the economic developments in the last two years, where traditional
cotton spinning has come under increasing pressure, in contrast to the production of
the latest generation of more technologically complex fibres, such as those with high
tenacity.

An  in-depth  economic  and  competitiveness  analysis  of  the  textiles  and  clothing
industry is distributed together  with this Communication, along  with an analysis of
its  external  trade  flows3.  The  former  analysis  concludes  that  the  European  textiles
and  clothing  industry  remains  competitive  internationally.  A  comparison  of  trade
performance with the US and Japan reveals that in both textiles and clothing, the EU
has  improved  its  competitive  position.  However,  the  industry  is  under  increasing
competitive pressure from other major textile and clothing producing countries, such
as China, India and Pakistan.

3. 

KEY CHALLENGES AND ON-GOING POLICY INITIATIVES

Enlargement,  significant  changes  in  the  international  trade  environment  and
developments in areas of EU policy related to specific factors of competitiveness of
the  European  textiles  and  clothing  industry  represent  major  challenges  to  policy
makers and to stakeholders in the sector for the coming years.

The  impact  of  enlargement  needs  to  be  adequately  monitored  in  order  to  address
challenges  for  textiles  and  clothing  regions  in  the  present  Member  States  posed  by
the  increase  of  sub-contracting  activities  and  relocation  of  production  facilities.  At
the same time, in the acceding and candidate countries, the pressure for restructuring
and modernisation in the textiles and clothing sector is set to increase as a result of
increased access by third countries to the EU and acceding countries’ markets.

3

Commission  Staff  Working  Documents  “Economic  and  competitiveness  analysis  of  the  European  textile
and  clothing  sector”  and  “Evolution  of  trade  in  textile  and  clothing  trade  worldwide  –  trade  figures  and
structural data”, available on: http://europa.eu.int/comm/enterprise/textile/COM2003.htm

8

                                                
Finally,  bearing  in  mind  the  fact  that  the  competitive  advantages  of  the  European
textiles and clothing industry are largely depending on quality and creation, research
and development, innovation and skills, it is important that initiatives and actions are
taken  which  are  enhancing  and  supporting  the  efforts  in  favour  of  the  textile  and
clothing sector.

3.1. 

Enlargement

3.1.1.  The effects of enlargement on textile and clothing companies in the EU-15

EU-based  textiles  and  clothing  companies  have  a  long  history  of  cooperation  with
their counterparts in the acceding states and candidate countries. This was originally
based on outward processing transactions (OPT), which took advantage of the lower
labour  costs  outside  the  EU.  A  high  level  of  economic  integration  between  the
acceding  and  candidate  countries  has  already  been  established.  Between  75%  and
90% of the exports of these countries stay within the present and future EU members,
and  between 45%  and 75%  of  the  acceding  and  candidate  countries’  imports  come
from the future EU. In recent years, there has been a marked trend towards relocation
of production facilities from the EU-15 to the acceding and candidate countries. This
will  continue  after  enlargement,  with  implications  for  textile  and  clothing
employment in the existing Member States.

3.1.2.  The  effects  of  enlargement  on  textile  and  clothing  companies  in  the  new  Member

States

On  average,  the  textile  and  clothing  sector  plays  a  more  important  role  in  the
economy  of  the  acceding  states  and  candidate  countries  than  in  the  EU-15.
Enlargement  will  lead  to  more  investment  opportunities  as  companies  relocate
production  facilities  to  the  new  Member  States  and  continue  their  sub-contracting
activities.  In  the  first  few  years  after  enlargement,  it  is  possible  that  flexibility  and
proximity  to  the  market  will  help  the  sector  in  the  new  Member  States  to  remain
competitive.  However,  relocation  of  mass  production  to  third  countries  (e.g.  the
Mediterranean rim, Ukraine) is also taking place and needs to be taken into account
when examining the future prospects of the sector.

Although  the  situation  varies  according  to  the  country,  it  is  likely  that  textile  and
clothing  companies  in  some  of  the  future  Member  States  will  experience
considerable difficulties and additional costs in respecting the Community acquis for
environmental protection as well as health and safety requirements. Higher costs for
compliance with EU environmental legislation have been taken into account within
the negotiations with acceding countries (ACs). As a result, transition periods for the
implementation  of  some  EU  directives  have  been  granted,  based  on  detailed
justifications  of  ACs’  requests.  In  relation  to  the  textile  and  clothing  industry,
transition  periods  have  been  granted  to  Poland  and  Slovenia  for  some  installations
for  the  implementation  of  Directive  96/61/EC  (IPPC)4.  The  rest  of  the  ACs  do  not
expect  considerable  difficulties  in  complying  with  the  IPPC  Directive  within  the
textile and clothing sector.

4

Council Directive 96/61/EC of 24 September 1996, OJ L 257 of 10.10.1996, p. 26-40

9

                                                
The textiles and clothing sector in the new Member States will experience particular
competitive  pressure  after  enlargement.  Due  to  their  reliance  on  sub-contracted
activities, many companies in the sector lack adequate information and knowledge to
compete on the global market, and are handicapped by the fact that they do not cover
the whole production segment, including the model design phase.

In  particular,  the  adoption  of  the  EU’s  trade  policy  acquis  at  the  moment  of
enlargement  will  have  a  substantial  impact  on  companies  in  the  sector,  as  their
markets  –  previously  protected  by  higher  tariffs  –  risk  being  invaded  by  low-price
imported  products  from  Asia  in  direct  competition  with  domestic  production.
Furthermore, competition in the enlarged internal market will become more intense
as a result of the dismantling of quantitative restrictions  to imports that  takes place
on 1st January 2005. In general, the EU is the most important market for the acceding
countries for textiles and clothing, and more than half of their exports are in the most
sensitive textile and clothing categories under quota. The exports of similar products
from some Asian competitors show a high level of utilisation of these quotas5.

Finally,  a  big  productivity  gap  in  the  sector  exists  between  the  EU-15  on  the  one
hand  and  the  acceding  and  candidate  countries  on  the  other.  In  the  textiles  and
clothing  industry,  these  countries  produce  the  equivalent  of  10%  of  EU-15  value
added while employing 60% of EU-15 textiles and clothing employment (data is not
available  for  Turkey).  Until  now  the  sector  has  been  able  to  compensate  at  least
partially  for  low  productivity  with  relatively  low  labour  costs.  These  labour  cost
advantages are likely to be eroded in the medium term, creating the need to monitor
the enhancement of competitive advantages associated, as in the EU-15, with quality
and creation, research and innovation, and the development of new skills. The textile
and clothing sector in the acceding and candidate countries will therefore be faced in
the future with substantial structural challenges.

3.2. 

Trade issues

3.2.1.  The  abolition  of  quantitative  restrictions  on  1st  January  2005  –  impact  on  EU

industry and on the poorest countries

A  profound  change  facing  the  world-wide  textile  and  clothing  industry  is  the
abolition  of  all  remaining  quantitative  restrictions  on  January  1st  2005  under  the
WTO-Agreement on Textile and Clothing (ATC), which previously limited imports
of certain textile and clothing products to specific quotas. This will certainly lead to
increased  competitive  pressure  in  the  EU  from  the  main  producers,  such  as  in
particular  China,  but  probably  also  from  other  major  producers  such  as  India  and
Pakistan.

The Commission’s services have launched a study to examine in detail the impact of
quota  elimination  in  the  EU.  The  study,  which  will  culminate  in  a  final  report  in
January  2004,  involves  analysis  of  the  exact  product  types  most  under  threat,  the
resulting  effects  on  production  and  employment  in  the  enlarged  EU,  and  the  likely

5

In 2002, exports in categories 1-9, 12, 13, 15, 16, 20, 26, 29, 31, 78, 83 and 163 accounted for more than
50% of total exports of the ten acceding countries. Around 90% of those exports went to the EU.

10

                                                
impact on specific, textile-dependent regions6. It is plausible that the impact will be
more acute in certain regions with a very high concentration of textile and clothing
production,  and  may  affect  adversely  both  regions  in  the  EU  which  are  already
experiencing  economic  decline  as  well  as  less  skilled  workers  and  many  women
working in garment making.

It  will  also  have  an  impact  on  some  developing  countries,  especially  certain  least
developed countries (LDCs), which have fragile economies with little diversification
of  production  and  exports.  The  same  goes  for  other  countries  with  preferential
agreements with the EU, such as the southern and eastern Mediterranean  countries,
some ACP countries and other small exporters. Some of these countries are heavily
dependent on textile and clothing for their export revenue (the sector can account for
as  much  as  90%  of  their  manufacturing  exports)  and  jobs  (up  to  60%  of
manufacturing  employment),  and  in  some  cases  on  certain  markets  –  primarily  the
EU and the US (for some Mediterranean countries 90 % or more of their textile and
clothing exports go to the EU).

The tougher competition resulting from quota elimination will increase the pressure
on  natural and  human  resources in  order  to  enhance  factor  productivity  and  reduce
production  costs  in  some  third  countries  which  do  not  apply  internationally  agreed
standards  of  social  rights  and  of  environmental  protection.  It  poses  challenges  in
terms  of  sustainable  development,  and  on  the  conditions  for  fair  competition,
including respect of basic labour rights.

3.2.2.  Market access to third countries

The current WTO rules establish that import quotas are to be eliminated in 2005, but
do  not  provide  for  symmetric  obligations  to  eliminate  other  trade  barriers  and
especially  to  reduce  tariffs.  Whilst  the  average  EU  tariff  in  textiles  and  clothing  is
9%,  there  are  many  other  countries  –  especially  in  developing  countries,  including
some of the largest and most competitive exporters in the sector – which protect their
textile and clothing sector under tariffs of up to over 30%, in addition sometimes to
other special taxes/duties and abundant non-tariff barriers.

As  a  consequence,  and  if  the  situation  is  not  corrected,  the  EU,  which  has  tariffs
amongst the lowest in the world, will be a very open market without its firms being
able  to  expand  into  many  countries  whose  imports  barriers  remain  very  high.  This
situation, which would lead to a stiffening and further concentration of competition
on  the  industrialised  countries’  sluggish  textile  and  clothing  markets,  would  not  be
sustainable from a political as well as a fairness point of view, especially as some of
the highly protected third countries have (with the exception of the  least  developed
countries) large potential markets for up-market EU production.

At  present  the  EU,  the  US  and  Japan  account  for  some  80%  of  world  imports  of
garments, which indicates the still low importance of exports from north to south, but

6

In  2002,  the  EU  had  278  bilateral  textiles  and  clothing  quotas.  Textile  and  clothing  imports  subject  to
quotas represented in 2002 21,3 % of total textile and clothing imports in value and 16,5 % in volume. Of
these quotas, 91 were are highly utilised (90 % or more, thus implying a real restrictive effect on imports),
accounting for 15,4 % of EU textile and clothing imports in value and 11,9 % in volume. However, these
highly utilised quotas concern largely very sensitive products and some of the EU's largest suppliers such
as China or India.

11

                                                
also  points  to  low  south-south  trade.  There  is  thus  scope  for  expansion  of  EU
industry  into  other  markets,  some  of  which  are  growing  fast.  While  a  number  of
developing  countries  have  in  this  sector  competitive  advantages  in  the  mass
manufacturing of  cheap,  middle  to  low  quality  products  which  they  will  be  able  to
exploit fully from 2005, EU industry has a competitive strength in the production of
medium to high quality products, fashion items and technical textiles which it should
also be able to use to advantage.

3.2.3.  The impact of the WTO’s Doha Development Agenda (DDA)

The DDA market access negotiations offer first of all an opportunity to obtain greater
balance in trade conditions in the sector world-wide, and in particular to ensure that
the  elimination  of  import  quotas  will  be  accompanied  by  a  real  convergence  of
market access conditions towards low levels of duty. However, the precise modalities
for tariff reduction and  harmonisation have  not  yet been determined, as  well as the
link between a sectoral initiative for harmonisation of duties for textiles and clothing
and the general tariff reduction formula applicable across-the-board.

The  EU  has  to  combine  two  potentially  opposite  objectives:  effective  world-wide
liberalisation  through  harmonisation  of  market  access  conditions  in  the  sector,  and
the need to take into account the situation of a significant number of countries which
enjoy  preferential  treatment  in  the  EU,  such  as  ACP  countries  and  Euro-
Mediterranean countries. Some of these latter countries are highly dependent on their
textile and clothing exports to the EU for their economic development. An important
part of the preferential access they currently enjoy in the EU will disappear when the
protection  that  they derive  from the quota system ceases in 2005. A question to  be
addressed is the level of the tariff preferences that those countries will enjoy in the
future, which will  depend on whether,  or  the  extent to  which,  the  EU  may  have  to
reduce its custom duties as a consequence of tariff harmonisation that may be agreed
in the DDA  generally for all countries. This is an issue which may  also have  some
relevance from the point of view of development cooperation.

3.2.4. 

Impact of imports from major suppliers

Some  of  the  major  textile  and  clothing  exporting  countries  are  still  constrained  by
quotas which are highly utilised, the elimination of which may lead to a significant
increase  in  their  exports.  Among  the  major  EU  suppliers  China  stands  out,  with  a
textile  and  clothing  industry  which  enjoys  a  huge  production  capacity,  combined
with a very large labour force and labour costs substantially lower than those of the
EU as well as those of most of its other important competitors.

Since  joining  the  WTO  in  2001,  China  has  benefited  from  the  progressive
elimination of quotas in accordance with the Agreements on Textiles and Clothing.
In 2002, imports of product categories liberalised for China under the 3rd stage of the
ATC  increased  by  46%  in  value  and  192%  in  volume  terms,  with  an  average  unit
price drop of 50% 7.

7

In all those product categories, EU imports from all the world minus China dropped by 13 % in value and
11 % in volume, with a drop in unit prices of 2 %, and this evolution has been more significant in certain
product categories. The share of China in those products in value terms has passed from 25 % in 2001 to
38 % during the first half of 2003; in volume, China's share of less than 14 % in 2001 has gone to 37 % in
the first half of 2003.

12

                                                
Since  almost  half  of  Chinese  textile  and  clothing  imports  are  currently  still  under
quota,  and  of  the  42  Chinese  quotas  which  will  be  eliminated  in  2005  25  are
currently very highly  utilised  (90  %  or  more),  a  very  substantial  rise  in  the  market
share of Chinese products may occur after 2005. This would impact not only on EU-
25 production, but also on that of smaller (and poorer) 3rd countries, some of which
risk being squeezed out of the markets in certain market segments.

In  parallel,  China  is  experiencing  fast  economic  development  that  makes  it  a
potentially  very  interesting  market  for  EU  and  third-country  textiles  and  clothing
exports, particularly as China opens its markets and implements its WTO obligations
in respect among others of retail and distribution liberalisation.

3.3. 

Competitiveness Issues

3.3.1.  Research and Development efforts.

Although the textiles and clothing is traditionally not a technology-generating sector,
this  situation  has  evolved  over  the  last  years.  Enterprises  which  have  invested  in
research and new processing methods have been successful and been able to stand up
against  international  competition.  Hence,  the  sector  should  continue  to  be
encouraged to invest in research and development which will lead to new intelligent
materials,  to  new  and  more  efficient  processing  methods  and  will  allow  to  bring
creative products at competitive prices on the market.

It  is  important  that  further  investment  efforts  in  research  are  taken  by  the  public
authorities  as  well  as  the  industry  itself.  In  this  respect,  it  is  worth  recalling  the
Commission's  Communication  "Investing  in  research:  an  action  plan  for  Europe",
adopted  on  30  April  2003,  aiming  at  increasing  investment  in  European  R&D  to
approach 3% of GDP by 2010. For the actions taken at EU level, see chapter 4 of this
Communication.

Although  the  textile  and  clothing  sector  is  marked  by  small  and  medium  sized
enterprises and local developments, it is important that research efforts take place in
a  more  integrated  way  so  as  to  achieve  a  critical  mass  and  be  competitive  on  the
global market. Networking as well as integrated research projects, in which research
centers, industry and universities join forces towards the same goal: increase quality
and competitiveness. Given that industrial production in the enlarged Europe, with a
new trading environment, becomes more and more difficult, the European textile and
clothing  sector  should  continue  to  develop  highly  specialised  products.  This  is  the
case,  for  example,  in  medical  textiles  based  on  biomaterials,  interactive  and
intelligent textiles providing for textile sensors and improving test methods.

In chapter four of this Communication, actions taken at European level to encourage
integrated  projects  and  networking  are  explained  with  a  special  attention  for  small
and  medium  sized  enterprises.  Integrated  projects  allow  to  bring  together  several
disciplines  necessary  to  come  up  with  new  products  and  processing  methods:
information  technology,  new  materials,  skilled  personnel,  awareness  of  intellectual
property rights.

13

3.3.2. 

Innovation

Innovation in all areas of textile and clothing activities is essential if the sector is to
remain  competitive.  Within  the  sector,  individual  companies  expend  an  enormous
amount  of  effort  on  innovation  and  creation  activities  related  to  products,  quality,
production processes and organisation. At the same time, a huge potential in similar
activities  lies  with  institutions  such  as  universities  and  technological  institutes.
However,  there  is  a  large  communication  gap  between  the  activities  of  companies
and  these  institutions.  Initiatives  to  bridge  this  gap  could  result  in  substantial
multiplier effects in the development and dissemination of innovation among SMEs.

The textiles and clothing industry has also found it hard  to  bridge  the  gap between
pure  research  on  the  one  hand  and  the  launch  of  new  technologies,  products  or
processes on the market on the other hand. An action line for innovation is available
under the 6th Framework Programme for Research and Development. However, there
are only limited funding opportunities at EU level for non-technological innovation.

3.3.3. 

Information and communication technologies

Within the textile and clothing sector, effective information management has become
a  key  to  retaining  competitiveness,  for  example  to  improve  supply  chain
management, exchange information, create virtual networks, handle smaller batches
and reduce lead times.

Business-to-business  (B2B)  e-commerce  is  currently  restricted  mainly  to  large
companies in the sector. It is here that some of the greatest advantages of information
and communication technologies (ICT) may be seen. For this reason, SMEs need to
harness  B2B  e-commerce  to  enable  them  to  pool  their  fragmented  activities  and
search  globally  for  suppliers  and  markets.  In  addition,  it  is  essential  that
interoperable  systems  are  developed  and  deployed  to  permit  SMEs  to  take  full
advantage of these benefits.

Some  successful  projects  have  been  financed  under  the  “User-friendly  information
society”  (IST)  thematic  programme  of  the  5th  Framework  Programme  for  Research
and Development, notably the cluster around the “E-Tailor” project8. However, many
user-driven  proposals  have  been  difficult  to  accommodate.  As  the  textiles  and
clothing sector is a user of ICT, rather than a developer of software, project proposals
have  often  had  a  lower  pure  technology  research  level,  although  at  the  same  time
potentially  providing  a  high  economic  impact,  or  providing  for  new  organisational
models.

The  6th  Framework  Programme  for  Research  and  Development  also  offers
opportunities  for  the  sector,  in  particular  to  SMEs,  to  benefit  from  the  strategic
objectives  “Networked  businesses  and  governments”,  “Products  and  services
engineering 2010”, and “Micro-nano systems”9.

8

9

For project details see: http://www.atc.gr/e-taylor/
These  cover  respectively:  the  development  of  ICTs  supporting  interoperable  networking,  process
integration  and  sharing  of  resources,  to  enable  networked  businesses  to  build  faster  and  more  effective
partnerships  and  alliances,  to  re-engineer  and  integrate  their  processes,  to  develop  value-added  products
and  services  and  to  share  experiences;  the  development  of  new  information  technologies  for  the
optimisation  of  value  creation  processes  in  manufacturing  and  extended  services;  and  the  integration  of
micro-nano systems into a wider range of new intelligent products, such as intelligent textiles.

14

                                                
The available data on ICT take-up in the textile and clothing sector is fairly limited10,
but  it  appears  that  the  situation  is  similar  to  that  of  other  manufacturing  sectors,
where SMEs have been reluctant to invest in ICTs. Activities to inform SMEs of the
benefits of ICTs need to be stepped up.

3.3.4.  Vocational training

In  highly  specialized  products  and  processing  methods,  skills  become  very
important. In the past the textile and clothing sector has been hampered in finding a
workforce with adequate qualifications by its image as a ‘traditional’ manufacturing
industry,  combined  with  relatively  low  wage  levels.  Many  enterprises  are
experiencing  difficulties  in  recruiting  staff  with  specialised  skills,  such  as  a
traditional textile knowledge-base, and there is a particularly acute need for ICT and
e-business  skills,  which  are  becoming  increasingly  indispensable.  Young  people
entering the industry need high-quality training that is relevant to the new profile of
the  sector.  In  addition,  in  view  of  the  technological  changes  and  modernisation  of
production  processes  experienced  by  the  sector,  better  training  of  the  existing
workforce  is  needed,  to  upgrade  their  qualifications  and  skills  and  to  help  them  to
adapt to new working environments. A better match between supply and demand at
all levels should also be ensured.

At  EU-level, the  Leonardo  da  Vinci  II  vocational  training  action  programme  is  the
main  instrument  for  the  period  2000-2006  for  supporting  innovative  transnational
initiatives for promoting the knowledge, aptitudes and skills necessary for successful
integration  into  working  life,  and  is  already  open  to  the  acceding  and  candidate
countries.

Textile  projects  funded  under  Leonardo  have  permitted  the  development  of  useful
tools for the  sector. However, they have  not been  sufficient  to  surmount  several  of
the  sector’s  weaknesses  in  the  area  of  qualifications  and  training.  In  general,
programmes  and  funding  at  EU  and  national  level  often  require  initiatives  of  too
large  a  scale  for  individual  SMEs,  which  are  in  turn  badly  informed  of  the
opportunities.

3.3.5.  Employment

The European textile and clothing sector lost nearly a million jobs between 1990 and
2000,  and  the  challenges  on  the  horizon  make  further  job  losses  appear  highly
probable.  In  Europe,  the  sector’s  only  sustainable  strategy  is  to  concentrate  on
innovation,  research,  fashion  and  design,  creation  and  quality,  and  the  use  of  new
technologies, together with positive industrial relations. In this respect it is important,
however, to realize that new processing methods should not lead to less employment
but  better  employment  in  a  more  friendly  working  environment  with  different
working  methods.  Hence,  it  is  important  that  education/availability  of  skills  and
organisation of the employment market are well co-ordinated.

10

The recent inclusion of textiles and clothing in the list of industry sectors to be covered in the next phase of
the  market  observatory  "e-Business  w@tch"  will  allow  for  sector  and  country  comparisons  of  key  e-
business  indicators,  with  a  particular  emphasis  on  the  SME  dimension.  See:  http://www.ebusiness-
watch.org/marketwatch/

15

                                                
3.3.5.1.  Equal opportunities

Due to the large proportion  of female workers in the sector, which  reaches 74%  in
the  clothing  sub-sector,  the  promotion  of  equal  opportunities  is  all  the  more
important.  The  European  social  partners11  for  the  textiles  and  clothing  sector  have
been studying the question of employment for women for a number of years. Under
the  framework  of  the  sectoral  social  dialogue,  and  with  financial  aid  from  the
Commission,  they  have  recently  produced  a  guide  for  employers,  workers’
representatives  and  their  respective  organisations,  setting  out  innovative  good
practices in terms of equal opportunities.

3.3.5.2.  Managing change

The  capacity  of  enterprises  and  workers  to  anticipate,  trigger  and  absorb  change  is
essential  for  achieving  higher  levels  of  economic  growth,  employment  and  social
cohesion.  Social  dialogue  and  social  partnership  at  all  levels  are  essential  in
anticipating  and  managing  positively  change  in  general  and  restructuring  in
particular.

At the Barcelona Social Summit in 2002, at the invitation of the European Council,
the European social partners decided to start discussions to explore the potential for
social  dialogue  on  restructuring.  Following  three  seminars  in  autumn  2002  and
spring  2003,  which  focussed  on  concrete  cases  of  restructuring,  the  social  partners
successfully negotiated a joint text entitled “Orientations  for  reference in  managing
change and its social consequences”.

The text consists of a series of recommendations, affirming the need for a ‘climate of
confidence’  and  a  ‘positive  attitude  to  change’  and  for  avoidance  of  ‘uncertainties
and excessive delays’ in the procedures for informing and  consulting  employees.  It
invites employers to explain and justify the changes and their possible consequences
to  their  employees  and/or  their  representatives,  in  good  time.  The  importance  of
partnership  between  employers,  employees  and  local  authorities  in  dealing  with
restructuring is emphasised, particularly where this has repercussions across a whole
region, as is the need to maintain the employability of employees through continuous
development of skills and competencies,  and the specific problems of  SMEs  in  the
context of restructuring.

The  European  interprofessional  social  partners’  initiative  is  a  first  significant  step
towards  defining  and  developing  the  best  practices  on  anticipating  and  managing
restructuring,  and 
its  visibility  and  effective
implementation  at  all  levels.  Social  partnerships  are  a  fundamental  element  of
successful  restructuring.  In  the  field  of  information  and  consultation  of  employees,
the  existing  Community  provisions  should  be  fully  applied  and  developed  at  all
appropriate levels.

they  should  seek 

to  ensure 

3.3.5.3.  European Sectoral Social Dialogue

Ensuring  the  sustainable  development  of  the  textile  and  clothing  sector  in  Europe
will require a commitment from all – including policy makers and social partners –
to  a  continuous  improvement  in  managing  economic,  environmental  and  social

11

Euratex, and the EUTF:TCL

16

                                                
resources. Social dialogue at European level plays a key role in the management of
change in industrial relations, as well  as providing  a platform for  consultation on a
wide  variety  of  issues.  The  European  textiles  and  clothing  industry  was  one  of  the
first sectors to have a social dialogue at the European level and has been a successful
example of the European sectoral social  dialogue's  great potential for development.
Initiatives launched by the social partners within this framework include the signing
of a joint Code of Conduct and the production of a guide on public procurement for
the  sector,  as  well  as  projects  concerning  vocational  training  and  preparing
enterprises in the acceding and candidate countries for accession.

Both  the  ILO  and  the  Commission  have  recognised12  that  although  the  tripartite
interprofessional  social  dialogue  is  making  progress  in  the  acceding  and  candidate
countries,  autonomous  sectoral  social  dialogue  in  these  countries  is  still  almost
inexistant and needs to be promoted.

3.3.6.  Environment

The EU is committed to ensuring a high level of  environmental protection. Two of
the crucial issues for the textile and clothing industry are the need to reduce both the
amount of waste water discharged after many processes such as dyeing and finishing,
as well as the chemical load this waste water carries. At the same time, the industry
is being challenged to take a life-cycle approach to the environmental impact of the
products it manufactures.

The main piece of legislation at EU level affecting the textile and clothing industry is
the  Integrated  Pollution  Prevention  and  Control  (IPPC)  Directive13  of  1996,  which
aims  to  achieve  integrated  prevention  and  control  of  pollution  arising  from  a  wide
range  of  industrial  and  agricultural  activities,  including  pre-treatment  or  dyeing  of
fibres or textiles14.

The Commission expects that the implementation of this Directive will speed up the
modernisation  process  and  lead  to  considerably  less  pollution  by  the  affected
installations.  It  recognises  that  implementation  could  have  considerable  socio-
economic impacts and is aware that many small textile processing companies fear an
unsustainable  increase  in  costs15.  SMEs  make  up  a  significant  part  of  all  IPPC
installations  in  Europe16.  Given  that  the  majority  of  SMEs  are  “vulnerably
compliant”  as  far  as  the  existing  environmental  legislation  and  regulations  are
concerned17,  Member  States  may  need  to  give  special  assistance  to  operators  who
lack  the  resources  to  cope  with  the  administrative  burden  of  the  IPPC  Directive,
while  respecting  EU  rules  on  state  aid.  For  its  part,  the  Commission  intends  to
examine  the  design  of  the  threshold  criteria  for  the  textile  finishing  sector  and  to
review  whether  the  Directive  covers  the  appropriate  range  of  installations.  At  the

12

13

14

15

16

17

See Commission Communication of 26 June 2002 “The European social dialogue, a force for innovation
and change.”, COM(2002) 314 final
Council Directive 96/61/EC of 24 September 1996, OJ L 257 of 10.10.1996, p. 26-40
For  information  about  the  best  available  techniques  (BAT)  in  the  textile  finishing  sector,  see  the  BAT
Reference Document (European Commission, July 2003): http://eippcb.jrc.es.
See  Commission  Communication  of  19  June  2003  “On  the  road  to  sustainable  production.  Progress  in
implementing Council Directive 96/61/EC concerning integrated pollution prevention and control.”
ibid
Report  “European  SMEs  and  Social  Environmental  Responsibility”  (Observatory  of  European  SMEs,
2002), available: http://europa.eu.int/comm/enterprise/enterprise_policy/analysis/observatory.htm

17

                                                
same  time,  the  Commission  is  also  co-funding  research  projects  under  the  5th
Framework  Programme  for  Research  and  Development  to  specifically  address  the
environmental problems of the textile industry18.

The textile industry faces environmental challenges that are similar to those of other
industries,  and  the  technologies  to  address  these  are  often  very  similar.  However,
each  sector  has  its  own  research  community,  with  very  little  communication  and
collaboration between them. The Commission is therefore supporting an initiative19
under the 5th Framework Programme for Research and Development to improve the
exchange  of  information  between  research  communities  for  the  textile,  leather
tanning  and  pulp  and  paper  sectors,  in  order  to  enable  them  to  respond  in  a  more
efficient way to the environmental needs of these sectors.

At  the  same  time,  the  Commission’s  strategy  to  stimulate  greener  products,  as
outlined  in  its  Communication  on  Integrated  Product  Policy20  (IPP),  is  pertinent  to
the textiles and clothing sector, covering such issues as sourcing decisions, duration
of use, or supply chain management. From a textiles and clothing point of view, the
various  tools  which  already  exist  –  including  environmental  management  systems,
labelling schemes, and improving the availability of information to all stakeholders –
need  to become more  product-focused  and  user-friendly  for  the  sector.  In  addition,
further efforts by industry players and national authorities are needed to harness the
potential of such tools to create competitive advantage for the sector at the same time
as improving environmental performance.

3.3.7.  Chemicals

A further challenge on the horizon for the textile and clothing sector is posed by the
EU’s  new  chemicals  policy.  The  texts  for  a  future  draft  Regulation  on  REACH21,
which follows the 2001 White Paper on the strategy for a future chemicals policy22,
prepared by Directorates General Enterprise and Environment, stipulate that  certain
chemical substances used or placed on the market in the EU above certain volumes
will  in  future  be  subject  to  a  registration  and  –  where  necessary  –  evaluation  and
authorisation/restriction procedure.

Whilst the  REACH package  aims to establish an  overall balance  between the  three
pillars  of  sustainable  development  (economic,  social,  environmental),  it  may  have
implications  for  some  manufacturers/importers  in  certain  sectors.  There  is  the
possibility of price increases  for some  chemical  substances and preparations.  Some
withdrawal of low-value preparations is also foreseeable.

Industry  has  responded  to  the  public  consultation  by  pointing  out  that  it  is  an
important  downstream  user  of  an  extremely  wide  variety  of  chemical  preparations.
For example, a typical recipe for dyeing fabric contains 5 preparations, each made up

18

19

20

21

22

For  example,  under  the  5th  Framework  Programme  for  Research  and  Development,  the  key  action  on
Sustainable Management and Quality of Water is supporting the project TOWEF0 which is evaluating the
effects of the implementation of IPPC on the sustainable waste management in textile installations.
For more information, see: http://www.patantex.net
Commission  Communication  of  18  June  2003 on  “Integrated  Product  Policy:  Building  on  environmental
life-cycle thinking”, COM(2003) 302 final
See: http://europa.eu.int/comm/enterprise/chemicals/chempol/whitepaper/reach.htm
COM(2001) 88 final, adopted  27.2.2001

18

                                                
of ten chemical substances, and a textile finisher uses hundreds of recipes each year.
The Commission has taken account of the views expressed by the textiles industry in
finalising its REACH proposal. The significant reduction in testing requirements for
low tonnage and the substantial reduction in the administrative burden have largely
reduced any potential adverse effects such as the  withdrawal of substances used  by
the textile industry.

3.3.8.  Consumer affairs and public health

There is a rising awareness among some consumers of the potential health impact of
the products that they eat or come into contact with, and this is an area of particular
concern to consumer associations throughout Europe. From the point of view of the
textiles industry, this concerns primarily clothing, household textiles and, to a lesser
extent, carpets. Garment manufacturers are increasingly responding by examining the
chemicals  contained  in  clothing,  and  which  may  potentially  be  released  during
washing and wear, especially when this involves prolonged contact with the skin. As
with regulations pertaining to environmental protection, this issue should not be seen
as a threat to the sector, but rather as  an opportunity  for EU producers to  advertise
the high level of consumer protection offered by their products.

Advertising  for  textile  products  should  not  be  misleading  in  the  sense  of  Directive
84/450/EEC as amended by Directive 97/55/EC, and textile labelling should provide
clear,  accurate  and  understandable  information  in  a  language  easily  understood  by
the consumer.

3.3.9.  Corporate social responsibility (CSR)

There  is  an  increasing  awareness  both  among  the  business  community  and  among
consumers  that  enterprises  can  contribute  –  at  least  partially  –  to  sustainable
development  by  integrating  environmental  and  social  concerns  into  both  their
business operations and their interaction with stakeholders.  It  is also  acknowledged
that this kind of responsible behaviour can support sustainable business success and
can therefore contribute to competitiveness.

In  its  Communication  on  Corporate  Social  Responsibility23,  the  Commission
supports the promotion of CSR as an important voluntary contribution of businesses
to sustainable development

In  this  context,  the  Commission  has  launched  a  multi-stakeholder  forum  to  which
business associations, trade unions and NGOs active in the textile and clothing sector
have  contributed.  The  Commission’s  strategy  also  includes  as  one  of  its  priorities
fostering CSR among SMEs, which is highly relevant if the concept is to find further
acceptance in the sector.

In  the  textile  sector,  the  CSR  approach  is  promoted  mainly  by  and  for  large
multinational enterprises involved in the clothing trade. Today and in the future, the
most  significant  pressure  on  SMEs  to  adopt  CSR  practices  and  to  report  on  their
performance  is  likely  to  come  from  their  large  business  customers.  In  view  of  the
complex  and  highly  internationalised  textile  and  clothing  supply  chain,  the  CSR

23

Corporate Social Responsibility: A business contribution to sustainable development, COM(2002)347 final,
adopted 2.7.2002

19

                                                
issue is likely to become increasingly important in the sector. At European level the
social partners of the textile and clothing sector adopted a CSR charter in 1997.

However, lack of awareness seems to be a significant obstacle to the take up of CSR
approaches  among  SMEs  of  the  sector.  Employers’  organisations  and  trade
associations have an important role to play in raising awareness about CSR through
the  provision  of  information,  user-friendly  tools  and  the  dissemination  of  good
practices.  The  Commission  itself  is  organising  an  awareness  raising  campaign  on
CSR particularly targeted at SMEs, which will run throughout the EU, acceding and
candidate countries during 2004.

In addition, bearing in mind the specific constraints SMEs have to face  in  terms  of
resources,  it  is  critical  for  them  to  be  in  a  position  to  assess  the  likely  gains  to  be
derived from their involvement in CSR practices and to measure the extent to which
such  gains  will  allow  them  to  cover  the  monitoring,  reporting  and  promotion  costs
associated with CSR activities. This is particularly true in  the  context of the  textile
and clothing sector, in view of the complex and internationalised supply chain.

3.3.10.  Intellectual property rights

The advantages enjoyed by the European textiles and clothing sector due to its ability
to  innovate  and  create  new  products  are  under  threat  from  counterfeit  products.
Despite Community protection of both trademarks and designs, brands, designs and
models are systematically copied to the detriment of their owners24. Many SMEs in
particular have difficulties in fighting this threat, as they often lack the resources to
engage the services of IPR experts or to embark on complex court cases.

The  Commission  has  recently  tabled  two  proposals  that  will  make  a  substantial
contribution towards reinforcing the protection of intellectual property rights (IPR).
The  proposed  Directive  on  the  enforcement  of  IPR25  aims  to  harmonise  national
provisions  in  this  area.  A  parallel  Regulation26,  which  was  adopted  in  July  2003,
concerns  customs  actions  against  merchandise  which  infringes  intellectual  property
rights.  Although  these  are  two  essential  instruments  to  tackle  counterfeiting  within
the Community and at its external border, they cannot address this problem at one of
its major sources, i.e. in the third countries typically manufacturing the goods. This is
why  additional  measures  will  be  necessary  to  improve  the  protection  and
enforcement of IPRs in certain third countries where it is deficient. At the same time,
it  is  important  to  ensure  the  diffusion  of  information  to  textile  and  clothing  SMEs
concerning their rights and possible means of recourse in this area. Finally, effective
enforcement by the Member States’ national authorities will be vital.

24

25

26

For example, 4.7 million items of clothing and clothing accessories were seized by customs at the external
borders  of  the  EU  in  2001,  and  half  of  all  EU  customs  procedures  for  2001  (i.e.  2628  procedures)
concerned textile and clothing products. See:
http://europa.eu.int/comm/taxation_customs/customs/counterfeit_piracy/statistics/statistics_en_2001.pdf
Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  measures  and  procedures  to
ensure the enforcement of intellectual property rights of 30 January 2003, COM(2003) 46 final
Council Regulation (EC) 1383/2003 of 22 July 2003 concerning customs action against goods suspected of
infringing  certain  intellectual  property  rights  and  the  measures  to  be  taken  against  goods  found  to  have
infringed such rights, OJ L 196 of 2 August 2003

20

                                                
3.3.11.  Regional aspects

The  textiles  and  clothing  industry  in  Europe  is  characterised  by  geographic
concentration of SMEs in a number of regions which are highly dependent upon the
sector for employment and socio-economic cohesion. These are often regions where
other employment opportunities are limited. In addition, women account for a large
proportion of the workforce, especially in the garment sub-sector. For these reasons,
any downturn in the economic situation of the sector and the resulting job-losses can
have a disproportionately negative effect on certain regions – both in the EU-15 and
in the future Member States.

This situation requires the capacity to anticipate industrial change, and to attract new
investment  to  diversified  economic  activities.  Moreover,  most  workers  losing  their
jobs  in  textiles  and  clothing  will  be  unable  to  find  new  employment  in  the  sector.
Those opportunities that will  continue  to exist in future are likely to be  at  a  higher
educational  level.  For  these  reasons,  regional  training  programmes  are  needed  to
focus on updating skills and re-training for redeployment.

Financing  under  the  Structural  Funds  is  administered  by  means  of  horizontal
multiannual  regional  development  programmes,  proposed  by  the  regions  and
approved by the Commission.

3.3.12.  Competition policy, state aid and Internal Market issues

In  a  sector  such  as  textiles  and  clothing,  which  is  experiencing  a  continuous
adjustment process, in particular in the form of closing down and/or modernisation of
installations, the provision of state aid can be particularly disruptive. In this context,
compliance  with  the  rules  in  place  for  granting  state  aids  to  the  sector  is  of  great
importance.  Furthermore,  taking  into  account  the  fact  that  the  investment  levels
required  by  many  textile  activities  and  most  types  of  clothing  production  are
significantly lower than those of other sectors, the textiles and clothing sector would
appear to be a suitable candidate in the  foreseeable  future  for  any  tightening of the
state aid rules.

There  are,  however,  a  number  of  areas  where  state  aid  may  be  looked  at  more
favourably as it can have an overall positive impact in the EU. In order to clarify the
state aid policy in these areas, the Commission has adopted a number of  guidelines
and  frameworks,  including  areas  of  high  importance  for  the  textile  and  clothing
industry  such  as  research  and  development,  employment  and  training,  SMEs,
protection of the environment and rescue and restructuring of firms in difficulty.

Any  future  initiative  at  national  and  Community  level  in  this  area  need  to  be  fully
consistent with competition rules and will aim at improving market performance by
fostering  integration  and  the  efficient  allocation  of  resources  within  and  across
sectors  and  regions  of  the  Internal  Market  without  introducing  any  distortion  of
competition.

4. 

PROPOSALS  TO  STRENGTHEN  THE  SUSTAINABLE  COMPETITIVENESS  OF  THE
TEXTILES AND CLOTHING SECTOR IN THE EU

Strengthening  the  sustainable  competitiveness  of  the  textiles  and  clothing  sector  in
the  enlarged  European  Union  is  associated  with  the  re-enforcement  of  the  factors

21

linked to the present and anticipated competitive advantages of the  EU  textiles  and
clothing industry.

While companies are responsible for establishing adequate strategies and adapting to
a changing competitive environment, Member States and European Union authorities
need  to  ensure  a  coherent  policy  mix  and  the  adequate  availability  of  instruments
which – by promoting improvements in the areas of research and innovation, quality
and  creation  and  training  –  would  enhance  the  competitive  capabilities  of  the  EU
textiles and clothing industry.

Since  July  2003,  the  new  European  Employment  Strategy  is  in  force,  providing
guidelines  for  the  Member  States’  employment  policies.  By  adopting  these
guidelines, Member States have undertaken inter alia to strengthen the development
of human capital and lifelong learning, to improve adaptability in the labour market,
to  foster  entrepreneurship  and  job  creation,  and  to  address  regional  employment
disparities.  Many  of  these  ambitions  are  particularly  relevant  for  the  textile  and
clothing sector, a principal  aim being the smooth  transition of the economy to  new
conditions.  Improving  governance  and  strengthening  partnerships  by  closely
involving  parliamentary  bodies,  social  partners  and  other  relevant  actors  is
highlighted as an overall objective, and attention is drawn to the need for an effective
delivery  system  through  the  operational  services,  including  public  employment
services.

At the same time, ever increasing access to the European Union market, which will
move  a  step  forward  on  1st  January  2005  with  the  full  dismantling  of  quantitative
restrictions,  needs  to  be  matched  by  equivalent  access  by  EU  textiles  and  clothing
exports to world markets. The investments made to cope with  the  rapidly  changing
combination  of  competitiveness  factors  in  the  EU,  implying  an  almost  permanent
process  of  restructuring  and  modernisation,  require  a  level  playing  field  at  the
international  level  in  order  to  provide  an  economic  rationale  for  the  often  painful
restructuring and modernisation processes.

With the increased liberalisation of access to the EU market, it is also  important to
grant to LDCs and small producers preferential margins that may help prevent them
from being crowded out of the market.

Finally,  in  the  framework of  integrated  regional development  instruments,  it  would
be  important  to  anticipate  industrial  change,  when  it  exceeds  the  adaptation
capabilities  of  a  region.  Different  sectors  in  the  enlarged  EU  industry,  and  among
them  textiles  and  clothing,  regularly  go  through  processes  of  restructuring  and
modernisation  which  impact  on  employment,  on  the  enterprises  themselves  and  on
the  socio-economic  situation  of  the  regions.  It  is  important  to  attract  investment  to
these  regions,  to  train  people  to  enable  them  to  find  a  job  in  different  economic
activities,  and  to  re-train  employees  within  the  same  sectors  in  order  to  respond  to
demands for ever higher skills.

4.1. 

Actions at EU level

4.1.1.  Trade policy

The  EU  has  in  this  sector  a  number  of  objectives  that  are  not  easy  to  combine:
promotion  of  its  own  industry  in  the  context  of  greater  international  competition,

22

development concerns, making a success of the DDA, balance between multilateral
liberalisation  and  preferential  treatment,  and  promotion  of  sustainable  development
and trade conditions. Available trade policy instruments have been re-examined with
a  view  to  providing  a  response  to  the  challenges  of  quota  liberalisation  and
increasing  globalisation  of  trade,  and  in  order  to  devise  for  EU  industry  and  other
concerned parties a clear, predictable and coherent framework in which to plan their
business strategies, investment and training.  It  could be composed  of  the  following
elements:

4.1.1.1.  Improving  market  access  conditions  in  third  countries  –  The  Doha  Development

Agenda

In the face of global competition, in particular for low-price goods, it will be critical
for  the  European  textile  and  clothing  sector  to  enjoy  real  access  to  the  markets  of
third countries for its products. For this reason, the EU has been seeking in the DDA
negotiations to obtain conditions of access to third country markets that are both fair
and  comparable  across  the  world.  The  EU  considers  that  the  quota  elimination  in
2005  should  be  accompanied  with  better,  comparable,  market  access  to  the  textile
and  clothing  markets  of  the  other  countries.  Otherwise,  the  resulting  imbalance  in
market access would be very difficult to accept, especially if some of the largest and
more  competitive  textile  and  clothing  exporters  in  the  world  still  maintained
significant barriers to access to their markets. It is a point of concern that the signals
given by some of the largest textiles and clothing exporting countries regarding their
readiness to stop protecting their industry in the DDA have not been so far positive;
this  raises  the  question  whether  firms  in  those  countries  might  use  their  protected
access  to  their  domestic  market  to  engage  in  more  aggressive  international
expansion.

The  current  EU  proposal  in  the  negotiations  on  market  access  calls  on  all  WTO
members  –  with  the  exception  only  of  the  least  developed  countries  –  to  cut  their
customs  duties  to  the  lowest  possible  common  level  and  to  eliminate  non-tariff
barriers.  This  should  enable  EU  industry  to  compete  in  other  countries  under
conditions  that  are  similar  to  those  the  EU  offers  to  third  countries.  All  countries
would  have  to  contribute,  including  of  course  those  which  have  very  competitive
textile and clothing exports. The EU will not make further reductions in its already
fairly  low  customs  duties  if  they  are  not  matched  by  equivalent  access  to  external
markets.  To  take  proper  account  of  development  concerns  –  affecting  both  non-
preferential  and  preferential  countries  –  which  have  been  expressed  by  developing
countries and the impact on EU industry, the application of new, lower levels should
be phased in, with transition periods to allow time to adjust.

The  persistence  of  non-tariff  barriers  to  trade  (NTBs)  –  which  the  EU  seeks  to
eliminate  but  which  are  also  of  concern  to  other  countries  –  represents  a  serious
problem  for  European  industry.  In  the  textiles  and  clothing  sector  they  concern
mainly  additional  taxes/duties  or  other  import  charges,  minimum  import  prices  or
customs  valuation  practices  not  based  on  the  price  paid  for  the  imported  good,
onerous  or  de  facto  discriminatory  labelling  or  marking  requirements,  import
authorisation schemes, burdensome certification procedures, etc. Dealing with them
requires surmounting a number of difficulties. In some cases it may happen that such
barriers are clearly contrary to existing WTO rules, and these  could be  handled via
the WTO dispute settlement mechanism if evidence can be provided. However, there
are  many  cases  where  the  compatibility  with  WTO  obligations  is  not  clear,  and  in

23

addition  conclusive  evidence  for  some  is  difficult  to  obtain  –  for  instance  when
NTBs concern administrative practices.

The DDA negotiations provide the opportunity to carry out a comprehensive review
of  all  alleged  NTBs,  possibly  through  procedures  such  as  cross-notification  and
negotiations  based  on  requests  and  offers,  aimed  at  reaching  an  agreement  to
eliminate or not to apply any such measures. Such negotiations could take place on a
bilateral basis, but the objective would be the multilateralisation of the commitments
that  would  result.  In  its  recent  bilateral  textiles  agreements,  the  EU  has  included
comprehensive  lists  of  types  of  NTBs,  which  could  be  used  as  a  standard  for  the
commitments  not  to  apply  NTBs  and  for  their  examination.  Such  a  one  by  one
examination of NTBs will be a time-consuming task, for which additional input from
the  industry  in  preparing  lists  of  documented  NTBs  in  priority  countries  will  be
necessary.

4.1.1.2.  Achieving the Euro-Mediterranean Zone

As  part  of  the  Barcelona  Process,  a  free  trade  zone  is  being  created,  which  will
embrace the EU and the Mediterranean countries. One of the main priorities for the
textile  and  clothing  sector  in  setting  up  such  a  zone  is  the  extension  of  the  Pan-
European system of diagonal  cumulation  of  origin27,  which  already  covers  the  EU,
the  EFTA  countries,  the  CEECs  and  Turkey,  to  the  Mediterranean  countries.  In  its
final stage, this cumulation zone is expected to include the Balkan countries as well.

Within  such  a  free  trade  area,  it  will  be  possible  for  economic  operators  to  use
intermediate  products  from  the  entire  area  without  hindrance.  This  will  enable  the
competitive  advantages  of  different  regions  to  be  exploited  more  intensively,  and
will  also  allow  the  textile  and  clothing  sector  to  maintain  the  whole  chain  of
production  close  to  the  European  market,  combining  the  advantages  of  reasonable
costs,  quality  and  proximity.  The  zone  will  also  mitigate  to  a  certain  extent  the
negative  effects  of  the  abolition  of  import  quotas  in  2005,  and  for  this  reason  its
speedy implementation is essential.

After  the  agreement  on  the  Protocol  of  Origin  reached  among  Euro-Mediterranean
Trade  Ministers  in  Palermo  on  7  July  2003,  the  most  important  remaining  step  to
achieve such cumulation of origin is the conclusion of free trade agreements (FTA)
among  the  concerned  countries28.  The  Commission  considers  that  further  efforts  in
this  respect  should  be  made  by  the  countries  concerned.  In  order  for  diagonal
cumulation  to  work,  all  partners  must  have  identical  rules  of  origin  as  well  as  an
agreed system of administrative cooperation, which are defined in detail in the origin
protocol of the FTA. Since textiles and clothing play a crucial role in the economies
of the southern and eastern Mediterranean countries, there is a particular urgency to

27

28

Diagonal cumulation in the Euro-Mediterranean context refers to the cumulation possibilities when several
countries are party to an agreement or linked by several similar agreements and where the use of materials
originating  in  any  of  the  countries  concerned  is  permitted.  An  example  is  a  fabric  originating  in  the
Community,  used  in  the  making  up  of  a  shirt  in  Poland;  this  shirt  can  be  exported  towards  Switzerland
enjoying  the  benefit  of  the  preferential  treatment,  as  in  any  other  countries  benefiting  from  the  pan-
European cumulation system.
To give an example, Morocco will be able to import a fabric from Egypt, transform it into a garment and
export it to the EU free of duty. However, in order for it to benefit from diagonal cumulation, Morocco and
Egypt  must  have  concluded  a  FTA  between  themselves,  otherwise  such  a  garment  would  be  subject  to
customs duty in the EU.

24

                                                
complete  the  zone  by  2005,  and  ways  to  accelerate  the  effective  introduction  of
cumulation  of  origin  within  the  area  should  be  considered.  The  Commission  will
further examine, if there are demands within the region or from industry, alternative
means  to  the  requirement  of  free  trade  agreements  among  these  countries.  The
conclusion of such free trade agreements however remains the Community's priority
and  final  objective  to  achieve  the  Euro-Mediterranean  free  trade  zone.  Where
proposed, alternative means would have to provide results that are equivalent to free
trade  agreements  regarding  both  the  enhanced  Euro-Med  economic  integration
expected  from  the  Pan-Euro-Med  cumulation  system,  and  the  determination,  proof
and  control  of  the  origin  of  the  products  benefiting  from  cumulation.  They  would
have to offer a fully WTO-compatible framework and enforceable rules and methods
of administrative cooperation for this purpose.

In more general terms, in the creation of the zone especial effort should be put in the
enforcement  of  core  labour  and  environment  standards,  involvement  of  social
partners and promotion of sectoral social dialogue.

4.1.1.3.  Vulnerability of certain textile and clothing producing countries

Some  developing  countries,  especially  a  number  of  LDCs,  smaller  suppliers  and
Euro-Mediterranean  countries  will  suddenly  be  subject  from  2005  to  stiffer
competition from countries which until then were restrained by quotas. From 2005,
their  only  preferential  treatment  will  reside  in  the  differentiation  in  customs  duties
that the EU will apply. Those, depending on the outcome of the DDA, may be further
reduced  towards  harmonised  levels  still  not  determined.  At  the  same  time,  these
countries are faced with a situation where, partly because of current rules of origin, a
substantial part of their garment exports to the EU does not qualify to benefit from
any tariff reduction – whilst their largest developing country competitors can benefit
from tariff  reductions because their products  qualify  for  such  treatment  thanks  to  a
greater  integration  of  their  textile  and  clothing  sector.  This  could  be  addressed,
although only partially, in three ways:

a)

b)

Customs duties. The EU is interested in promoting common duty levels which
are as low as possible, i.e. the lowest that all WTO Members are ready to agree
on  and  to  apply.  If  such  ‘common  ranges’  of  duty  levels  agreed  in  the  DDA
were  below  the  current  EU  duties,  this  would  imply  that  LDCs  and  Euro-
Mediterranean countries would have their preferential margins further reduced,
and this would be all the more the case, the lower the level at which the agreed
duties were fixed. To deal with this potential problem, convergence towards a
‘common range’ of duty levels could be achieved after a transitional period that
would give those countries some years to adjust.

Concentration  of  EU  unilateral  preferences.  At  present  EU  unilateral
preferences  –  the  Generalised  System  of  Preferences  (GSP)  –  are  generally
given in textiles and clothing to all developing countries in the form of a 20 %
cut  in  tariffs,  and  to  LDCs  in  the  form  of  duty  free  treatment.  When  certain
objective criteria are met, showing that a country is already very competitive in
one  sector,  that  country  may  be  ‘graduated’  and  lose  the  preference  for  that
sector.  In  view  of  the  impact  of  quota  elimination  especially  on  LDCs  and
small textile and clothing suppliers, the importance of limiting the preferences
to those countries which are more vulnerable needs to be taken into account in
establishing  a  new  GSP  regime  to  apply  after  2006,  while  respecting  the
principle of non-discrimination.

25

c)

Improving  the  use  of  preferences  –  cumulation  of  origin.  At  present  many
preferential countries  do  not make full  use of preferences  granted  by the  EU,
and in particular GSP preferences and those granted to ACP countries. One of
the  reasons  is  that  EU  preferential  rules  of  origin  require  a  sufficient
transformation in the beneficiary country so that the product can be considered
as  of  preferential  origin29:  the  objective  of  such  a  rule  is  to  avoid  those
countries  become  mere  platforms  for  minimal  processing  of  goods  coming
from non-beneficiary countries, thus frustrating the purpose of the preferences
– to benefit the eligible countries and not others. Since many of those countries
- especially the least developed countries and small garment exporters - do not
have  a  competitive  domestic  textiles  industry,  they  have  typically  to  import
fabrics from other countries which are  then  converted into garments  but, as a
general rule, the result is that the final product is no longer considered as being
of preferential origin and comes into the EU with full duty. The question posed
here is how rules of origin (including cumulation of origin) could be adjusted
in a way that may improve the  competitive position of those more vulnerable
countries by actually contributing to their development through a better use of
the preferences granted by the EU, without either opening the floodgates of the
EU to imports whose main value added originates in non-preferential countries,
or  without  in  fact  preventing  the  possible  development  of  a  domestic  textiles
industry which would not resist the competition of the largest textiles exporting
countries.

A  substantial  change  in  the  rules  of  origin  –  such  as  scrapping  the  current
double transformation rule – would have the effect that the main beneficiaries
of  the  change  might  be  those  which  are  currently  non-preferential  countries,
whilst too little value added would be generated in the country of production.
This would frustrate the objective stated in point (b) above to concentrate the
preferences on  those  countries  that  most  need  it.  When  considering  measures
based  on  giving  preferential  countries  wider  choice  for  sourcing  intermediate
products, one option would be to facilitate cumulation of origin within groups
of  preferential  countries  having  a  sufficient  coherence  in  geographical  and
economic  terms.  Another  option  would  be  to  allow  cumulation  among
neighbouring preferential regions, provided there is sufficient complementarity
in  their  textile  and  clothing  production.  To  be  acceptable,  such  an  option
should  however  not  weaken  the  economic  integration  within  the  regions
concerned  and  must  include  a  fully  WTO-compatible  framework  and
the
enforceable  rules  and  methods  of  administrative  cooperation  for 
determination, proof and control of the origin of the products benefiting from
cumulation.

When  considering  such  measures,  in  addition  to  the  impact  that  they  may  have  on
EU  textiles  and  clothing  industry,  it  will  be  necessary  to  take  into  account  their
effects on the development of the whole chain of the textile and clothing industry in
these countries.

29

For e.g. for a garment manufactured in such countries to be considered originating in those countries it is
generally required that a ‘double transformation’ takes place there, which implies that they use competitive
fabric either domestically produced (which many often do not have) or imported from countries with which
cumulation of origin is permitted.

26

                                                
4.1.1.4.  Addressing sustainability issues

Increased  competition  and  trade  liberalisation  should  contribute  to  the  overall
objective  of  sustainable  development  in  all  its  dimensions  (economic,  social,  and
environmental). This poses challenges, such as how to avoid a race to gain or defend
market shares resulting in a deterioration of the working conditions – already fragile
–  of  some  of  the  poorer  people  in  the  poorer  countries:  such  non-respect  of  basic
labour rights or a worsening of environmental standards should not be considered as
part  of  the  comparative  advantages  of  any  country.  But  reconciling  trade
liberalisation with the principles of sustainable development also offers opportunities
for  enhanced  sales  and/or  better  margins  for  products  manufactured  in  the  EU  or
elsewhere under sustainable conditions, as measures could be taken to enhance their
visibility  and  attractiveness  to  consumers  and,  in  respect  of  imported  products,  to
grant them preferential market access conditions.

The  promotion  of  sustainable  development  should  be  done,  as  far  as  possible,
through  specialised  international  institutions  where  they  exist  (such  as  the  ILO  or
UNEP)  through  enhanced  cooperation  between  the  EU  and  these  institutions,  and
using incitative means and compliance with international standards. The current EU
GSP  regime  already  contains  special  incentive  arrangements  for  the  protection  of
labour  rights,  providing  with  additional  advantages  to  qualifying  countries;  it  also
provides  for  the  possibility  to  withdraw  GSP  benefits  to  countries  which  engage  -
among  other  practices  -  in  serious  and  systematic  violation  of  the  freedom  of
association, the right of collective bargaining or the use of child labour.

However a lot remains to be done as the organisation of the employment and labour
relations in some cases is not yet in compliance with ILO core labour standards and
with the ILO objectives of decent work promotion. Therefore the implementation of
these  international  standards  and  objectives  will  require  genuine  efforts  by  the
countries concerned. The EU could support these efforts.

The business community should also contribute to sustainable development by CSR
initiatives such as the promotion of the ILO and OCDE principles and guidelines on
multinational enterprises covering also the entire supply chain.

Labelling schemes could also be considered so that consumers who wish can opt for
products which have been produced in a sustainable way. For consumers to use such
labels,  they  should  be  relevant,  credible  and  reliable.  In  addition,  they  should  be
market driven, non-discriminatory, proportionate and transparent; they could be used
as  a  first  step  to  grant  such  products,  in  conformity  with  WTO  rules,  better
conditions  of  market  access  under  the  future  GSP  regime.  They  could  be  based  on
internationally agreed  standards  where available30. They should  include  appropriate
certification  mechanisms  combined  with  sufficient  and  cost-efficient  control.
Existing  certification  organisations  and  bodies  could  be  entrusted  with  such  tasks

30

For instance, basic labour rights are defined in the ILO Declaration on Fundamental Principles and Rights
at Work, June 1998, as:
(a) freedom of association and the effective recognition of the right to collective bargaining;
(b) the elimination of all forms of forced or compulsory labour;
(c) the effective abolition of child labour; and
(d) the elimination of discrimination in respect of employment and occupation.

27

                                                
after  verification  of  their  capacity,  and  under  some  form  of  control  of  public
authorities insofar as there is a public recognition of their certification.

Labelling  may  help  create  niche  markets,  not  only  for  EU  but  also  third  country
producers, including developing  country manufacturers who may lose market share
following the elimination of import quotas in 2005. Consideration should be given to
the  provision  of  technical  assistance  to  facilitate  compliance  with  the  labelling
schemes  described  above.  Some  labelling  schemes  relating  to  the  production
methods of textiles and clothing already exist and any action at the EU level would
clearly need to take these fully into account.

Moreover, the  Commission  is engaged  in a  cooperation  with  the  Sustainable  Trade
and  Innovation  Centre  (STIC),  which  was  launched  as  a  type  II-initiative  at  the
Johannesburg Summit on Sustainable Development. STIC could play a useful role in
promoting  sustainable  production,  notably  in  developing  countries,  by  fostering
technology  transfer  and  providing  technical  assistance  through  the  creation  of
networks  of  stakeholders,  partnerships  or  “twinning  arrangements”  between
European  and  developing  country  companies.  STIC  could  also  play  a  role  in
promoting  trade  in  environmentally-friendly  products  from  developing  countries.
The textile sector has been identified as an area where globalised trade justifies such
action  at  international  level  to  reconcile  industrial  development  and  environmental
protection.

4.1.1.5.  Protecting intellectual property rights

As innovation, branding, fashion and design are some of the strong points of the EU's
textile  and  clothing  industry,  it  will  be  important  to  step  up  efforts  for  the
improvement  of  IPR  protection  and  enforcement  in  third  countries,  including  the
monitoring of compliance with the WTO TRIPs  Agreement,  to  render  fight against
trade in counterfeited goods more efficient.

The  Commission  services  have  recently  taken  the  initiative  to  prepare  a  survey  on
enforcement  issues  in  the  area  of  intellectual  property  rights,  with  the  objective  of
assessing,  in  a  detailed  manner,  the  current  situation  in  third  countries  and
consequently  identifying  the  most  problematic  IP  areas  and  countries.  The  survey
provided  a  diagnostic  tool  to  act  more  efficiently  by  developing  a  clear  strategy  to
tackle  the  growing  problems  caused  by  violations  of  IPR  and  by  the  deficient
enforcement  of  such  rights  in  third  countries.  As  a  preview  in  the  context  of  the
textiles  and  clothing  sector,  and  foreshadowing  the  Commission’s  intention  to
enhance  its  activities  in  the  area  of  enforcement  in  a  more  comprehensive  manner
covering  other  key  sectors  too,  it  is  submitted  to  work  on,  inter  alia,  the  following
actions as a matter of priority:

(cid:1)  Use of IPR mechanisms contained in multilateral (incl. the TRIPs Agreement) and
bilateral  agreements:  launching  of  an  initiative  in  the  TRIPs  Council;  refer  the
issue  to  bilateral  association  /  cooperation  Councils  emphasising  the  growing
dimension  of  the  problem;  strengthening  the  enforcement  clauses  in  bilateral
agreements.

(cid:1)  Make  active  use  of  both  incentive  and  sanction  mechanisms:  refer  to  existing
mechanisms  like  the  Trade  Barrier  Regulation  (TBR)  and  the  WTO  dispute
settlement mechanism, as appropriate, and develop new instruments as necessary.

28

(cid:1)  Awareness  raising:  raise  the  awareness  of  Community  right-holders  doing
business in “problematic” countries about the risks incurred. Stress that protection
is only available  after  appropriate steps  for the  registration  of  the  rights  (mainly
trademarks,  designs  and  models)  have  been  carried  out;  most  IPRs  can  only  be
enforced  after  they  have  been  appropriately  protected  (i.e.  registered)  in  the
country  were  the  infringement  takes  place.  It  is  also  important  to  raise  the
awareness of the public  in general about the  negative impact and  the dangers of
counterfeiting  (loss  of  foreign  investment  and  technology  transfer,  link  with
organised crime, etc.).

(cid:1)  Political  dialogue:  Stress  at  highest  political  level  vis-à-vis  our  trading  partners
that an effective protection of IP, at least at the level set in TRIPs, is essential.

(cid:1)  Technical  cooperation:  ensure  that  enforcement  is  a  key  component  of  existing
and new technical cooperation programmes in the field of IPR covering the most
problematic  countries  and  co-ordinate  activities  with  other  key  providers  of
technical assistance to the maximum extent possible.

(cid:1)  Creation  of  public-private  partnerships:  Companies  and  associations  which  are
very  active  in  the  fight  against  counterfeiting  constitute  an  invaluable  source  of
information,  but  also  a  privileged  partner  for  any  initiatives  in  the  area  of
awareness  raising.  Appropriate  mechanisms  of  partnership  or,  at  least,  of
exchange  of  information  (creation  of  contact  points,  periodical  meetings,  etc.)
should be envisaged.

4.1.1.6.  Increased international competition and available remedies

The elimination of quotas and the resulting increased competition is likely to lead to
adjustments in the relative position among EU and foreign suppliers, and one of its
natural effects may be further reduction of prices. Where such increased competition
is in conformity  with WTO standards of  fair trade practices, no  public  intervention
will normally be called for. But if the pressures of adjustment to quota abolition lead
to  unfair  trade  practices  in  the  sector,  such  as  dumping  or  subsidisation  or
exceptionally  high  import  increases,  then  –  as  in  the  past  –  the  industry  will  have
access to the full range of EU trade defence instruments, which  are consistent with
WTO  rules,  and  which  the  Commission  intends  to  apply  when  the  relevant
conditions  are  met.  In  certain  cases,  notably  that  of  China,  the  terms  of  WTO
accession include further specific and transitional instruments to deal with problems
of  increased  competition  and  market  disruption.  While  not  having  specifically
requested  such  provisions  in  the  past,  the  EU  cannot  ignore  their  existence  if  any
relevant cases arise.

The case of China is a particular focus of EU debate. The surge in Chinese exports in
categories  liberalised  in  the  3rd  stage  of  ATC  integration,  together  with  China’s
impressive  manufacturing  and  export  potential,  is  leading  to  concerns  among  the
industry both in the EU and in other countries  which supply  textile  and  clothing to
the EU. The sharp unit price drops and the expansion of market share, which in some
individual  categories  has  multiplied  several  times  over  with  average  unit  price

29

reductions of up to 75 %  31, deserve scrutiny as to the conditions under which such
performance  has  been  achieved,  and  create  concerns  that  a  similar  situation  might
take place in 2005 in the rest of the products.

These  concerns  cannot  be  ignored,  although  any  possible  response  from  the  EU
would need to be situated within the context of the more general framework of trade
relations  between  the  EU  and  China,  which  the  EU  is  interested  to  develop  in  a
harmonious  way.  Thus,  priority  should  be  given  to  dialogue  and  discussion  in
dealing with any potential problems that may arise in trade, and aiming at ensuring
that China continues to open its fast growing markets to EU and developing-country
products so that it becomes a real opportunity for their exports.

China  being  a  potential  important  market  for  the  EU  in  textiles  and  clothing,  there
should  be  a  close  monitoring  of  China’s  compliance  with  its  WTO  obligations.
Problems  of  WTO  compliance  can  be  raised  both  bilaterally  in  the  context  of  the
regular meetings between the Commission services and the Chinese authorities, and
in the multilateral context through the Transitional Review Mechanism set up in the
WTO  32.  To  this  end,  it  is  essential  that  the  relevant  information  is  transmitted  as
quickly  as  possible  by  the  industry  to  the  Commission  services  in  charge  of
monitoring  China’s  WTO  implementation.  To  this  effect,  the  Commission  will
continuously monitor the situation, with the involvement of industry  and  exporters,
focusing on barriers to market access and other trade practices in China in the textiles
and  clothing  sector,  their  compatibility  with  China’s  WTO  obligations,  and  any
openings for fresh initiatives to support the efforts of EU industry in this area.

On the basis of these preparations, the Commission will engage in a sustained policy
dialogue  with 
the  extraordinary
performance of Chinese textile and clothing exports in some product categories since
2002 and on the EU’s interest in better sales on the growing Chinese market.

the  Chinese  authorities,  focusing  both  on 

4.1.2.  Research and development actions

The 6th Framework programme for Research and Development33 adopted at the end
of 2002, consists of several funding possibilities of importance to textile and clothing
sector.  In  the  first  place,  there  is  the  thematic  priority  3  on  nanotechnologies  and
nanosciences,  knowledge-based  multifunctional  materials,  and  new  production
processes  and  devices  (NMP).  All  these  activities  are  relevant  to  improve  the
competitiveness  of  the  European  textile  and  clothing  sector.  There  is  also  priority
area  2  on  information  society  and  technologies  which  is  relevant  for  the  textiles
sector and priority area 6 relating to sustainable development. These priorities should
allow the sector to focus research areas to modernise, for example:

– 

the  introduction  of  ICTs  into  the  whole  textile  and  clothing  chain  from
production to distribution;

31

32

33

For  instance,  in  category  161  (other  garments)  Chinese  exports  in  2002  as  compared  to  2001  grew  in
volume  by  360  %  with  a  unit  price  reduction  of  75  %,  and  for  category  21  (anoraks,  parkas)  exports  in
volume grew by 291 % and average unit prices dropped by 48 %.
A  mechanism  foreseen  within  the  WTO  in  the  context  of  China’s  accession,  in  order  to  review  annually
China’s implementation of  her WTO obligations. The TRM takes place every  year in the  first 8  years of
China’s WTO membership and on the 10th year of membership.
See: http://fp6.cordis.lu/fp6/home.cfm

30

                                                
– 

– 

– 

the  development  of  new  materials  (including  technical  textiles)  to  address  in
particular the challenges of fighting counterfeit, creating more environmentally
friendly products and developing intelligent materials;

the  development  of  new  production  processes  including  mass  customisation
and a technological breakthrough for the clothing sector;

and  finally  the  development  of  clean  technologies  to  contribute  towards
sustainable development and to build confidence in the sector which is one of
the major consumers of large quantities of water and chemical preparations.

Increased actions to co-ordinate and create synergies between these priorities should
be promoted, as well as initiatives to sensitise players at national and  local  level to
research results, to enable their rapid dissemination. This is why the 6th Framework
Programme  is  designed  to  support  research  efforts  under  the  form  of  Integrated
Projects  or  Networks  of  Excellence.  It  is  important  to  note  that  under  thematic
priority 3, for example, there are in addition possibilities of Integrated Projects with a
special emphasis on SMEs, to stimulate the transition of less RTD-intensive sectors
towards  higher  value  activities.  At  the  same  time,  longer-term  research  will  be
facilitated by specific targeted research projects (STREPs).

In the more horizontal actions covered by the 6th Framework Programme, actions to
help  SMEs  in  traditional  or  new  areas  to  boost  their  technological  capacities  and
develop their ability to operate at European or even international scale, can help the
textile and clothing industry in networking with other industrial partners. Hence, the
activities under the co-operative and collective research schemes, dedicated to SMEs,
should  continue  to  open  up  a  variety  of  opportunities  for  the  textile  and  clothing
sector. The special programme for Human Ressources and mobility should help the
the training needs of the sector, in conjunction with other Community programmes.

Under the 6th Framework Programme, there is also the possibility to create an ERA-
NET, which is an instrument to step up the cooperation and coordination of research
activities  carried  out  at  national  or  regional  level  in  the  Member  States  and
Associated Countries through networking of research activities conducted at national
or regional level and the mutual opening of national and research programmes, which
will be part of the networking activities. Such an iniative could help the textile and
cloting  sector  in  concentrating  its  research  efforts  on  well  identified  technological
needs34.

A  technological  platform  for  the  sector  could  also  be  considered,  to  foster
marketplaces  for  cooperation  among  stakeholders,  work  out  a  long-term  strategic
plan  for  RTD  for  the  sector,  and  ensure  synergy  among  public  authorities,  users,
regulators, industry, consumers, and poles of excellence.

4.1.3. 

Innovation policy

In  the  framework  of  existing  programmes,  the  possibility  of  creating  a  specific
reference to non-technological innovation, for example in the area of creativity and

34 More  detailed  information  can  be  found  by  consulting  the  Background  Document  'Provisions  for
following  website:

the  ERA-NET  scheme'  which  can  be  downloaded  at 

implementing 
http://europa.eu.int/comm/research/fp6/coordination/era-net_en.html

the 

31

                                                
fashion, could be examined. Initiatives to raise the awareness of innovative activities
within  the  sector  could  also  be  promoted.  The  Commission  could  examine  the
feasibility  of  extending  modalities  similar  to  the  ones  available  in  the  IST  area  to
allow  SMEs  to  develop  marketable  prototypes  and  establish  business  cases  for  a
wider range of products and processes.

4.1.4.  Education and training policy

Actions are needed to support enterprises in those industrial sectors, such as textiles
and clothing, which require new skills and training programmes. The Commission is
exploring ways of improving stakeholders’ awareness of the opportunities for sector-
specific projects already  available under the  Leonardo da Vinci  II  programme.  The
Commission  also  aims to  improve  SMEs’  access  to  existing  funding  opportunities,
and  will  consider  the  feasibility  of  further  simplifying  application  procedures.  The
diffusion  of  information  to  SMEs  will  be  promoted,  and  the  feasibility  of  an
information leaflet for the sector will be examined. An assessment of the textile and
clothing  sector’s  participation  in  the  Leonardo  da  Vinci  II  programme  will  be
necessary in order to take any difficulties into account in the process of the revision
of  the  Leonardo  da  Vinci  approach  for  the  period  beyond  2006.  The  Commission
will  also  encourage  players  to  establish  a  Europe-wide  approach  to  training  for
textiles and clothing, to identify best practices in this area, and to co-ordinate future
action so as to avoid duplication.

4.1.5.  Regional and cohesion policy

Industrial change across the whole of the enlarged Europe needs to be anticipated, to
create  new  employment  opportunities  in  the  regions  dependent  upon  the  sectors  in
question,  and  to  establish  re-training  and  redeployment  programmes  for  those  no
longer  able  to  find  employment  in  textiles  and  clothing.  These  objectives,  already
considered  in  regional  programmes  of  the  Structural  Funds,  could  be  achieved  by
means  of  integrated  multisectoral  regional  programmes  and  initiatives  for  regions
particularly  dependent  upon  certain  sectors  undergoing  industrial  transformation.  It
would be important to consider these aspects within the framework of the discussions
on the future of the Structural Funds both after enlargement, and from 2007 when the
Funds will be reviewed under the new Financial Perspectives 2007-2013.

Specific actions at regional level should be encouraged, and these could include the
strengthening  of  existing  clusters  and  regional  networks  of  enterprises  by
encouraging the creation of virtual (on-line) networks and communication platforms.
The  use  of  information  and  communication  technologies  (ICTs),  especially  by
SMEs,  could  be  supported.  Particular  attention  will  be  paid  to  the  opportunities
already offered by Objective 3 of the Structural Funds as well as the European Social
Fund  for  modernising  and  adapting  national  education,  employment  and  training
programmes  in  order  to  (re-)train  those  affected  by  industrial  change,  in  co-
ordination with the social partners.

In  addition,  the  Commission  is  examining,  in  the  context  of  the  new  financial
perspectives (2007), possible ways in which the structural funds could respond in a
targeted  manner  to  significant  shocks  on  the  socio-economic  situation  of  a  given
region. The objective would be to facilitate the re-adaptation of workers to the labour
market  and  provide  mainly  technical  assistance  to  companies  in  the  process  of
restructuring  as  a  consequence  of  a  severe  sectoral  shock  caused  by  the

32

implementation  of  an  international  agreement.  One  question  to  address  is  whether
appropriate action to facilitate transition to the new economic situation resulting from
2005 could be envisaged, insofar as it fits within the current framework of structural
funds and with requests for fund intervention made by Member States.

4.1.6. 

Industrial Cooperation

The  Commission  has  recently  launched  an  industrial  policy  dialogue  with  China,
within  which  a  working  group  on  textiles  was  set  up.  The  main  objective  is  to
increase  the  awareness  and  understanding  of  legislation  related  to  textiles  products
safety. The extension of this dialogue to key issues on industrial competitiveness of
the textiles and clothing sector will be considered.

The  Commission  services  will  also  examine  the  feasibility  of  promoting  industrial
cooperation initiatives between enterprises in the EU and in other major textiles and
clothing producing countries in order to contribute to the development of smooth and
sustainable  relations  in  the  textiles  sector.  These  could  consider  both  industrial
competitiveness and social issues of importance for the textile and clothing sector.

4.1.7.  Other measures - consumer issues

An  important  part  of  EU  production  corresponds  to  the  higher  quality  and  fashion
segments  of  textiles  and  clothing,  where  EU  industry  is  the  world  leader  and  has
therefore  a  comparative  advantage.  Due  to  its  long  tradition,  diversity  of  products
and constant innovation, European textiles and garments are often associated in the
minds of the public with excellence and high-class design.

A  "Made  in  Europe"  label  could  help  increase  the  confidence  of  consumers,  that
when they are purchasing a garment they are paying a price that corresponds to the
highest standards of production and style expected from European manufacturing.

As is the case  in  some major EU partners  such  as  the  US,  Japan  or  China,  the  EU
could consider, as part of its policy aim at providing better and more information to
consumers, the introduction of a labelling of origin for textiles and clothing products
marketed  in  the  EU.  This  would  need  to  be  done  in  WTO  consistent  and  non-
discriminatory way, in conformity with the principles of the internal market, and in a
non-burdensome and cost effective way. The Commission intends to examine these
issues further.

4.2. 

Actions at Member State level

It  could  be  appropriate  to  examine  how  value-added  for  the  textile  and  clothing
sector  could  result  from  better  co-ordination  of  activities  at  Member  State  and  EU
level.  This  is  particularly  the  case  in  the  areas  of  innovation,  research  and
education/training, where the sector lacks an overview both of what is already being
undertaken at regional, national and EU-level, and of the opportunities available for
the sector.

A more systematic information of the Commission services of specific initiatives for
the  textiles  and  clothing  sector  would  facilitate  the  dissemination  of  best  practices
and would help stakeholders and public administrations to explore the possibility of
establishing or developing networks in areas of interest for the industry, and to avoid
duplication.

33

New training courses, appropriate for the changing needs of the textile and clothing
sector  and  promoting  life-long  learning  for  existing  workers,  could  be  developed.
These  would  aim  to  bridge  the  gap  between  the  potentially  high  levels  of
redundancies on the one hand and shortages of skilled staff on the other. Centres of
excellence  for  the  textiles  and  clothing  sector  could  be  set  up  in  areas  where  the
sector  has  a  strong  presence  to  combine  high-quality  training  with  employment
opportunities.  It  would  be  important  to  ensure  that  these  initiatives  occur  within  a
framework of cooperation with other Member States and with EU-level programmes,
to co-ordinate actions and avoid duplication.

In the area of research, national or regional research bodies could take advantage of
the ERA-NET35 scheme under the 6th Framework Programme to set up cooperation
and co-ordination networks of research activities for the textiles and clothing sector.

In the small sub-sectors, the creation of one European centre of excellence per sub-
sector could create important synergies and critical mass.

With  respect  to  the  protection  of  intellectual  property  rights  (IPR),  EU-wide
provisions  are  progressively  being  put  in  place.  In  the  Member  States’  legislation
important differences currently exist concerning IPR enforcement. These differences
have  played  to  the  advantage  of  counterfeiters  and  pirates.  In  order  to  ensure  the
achievement of the objectives intended at EU level, a quick adoption of the proposed
Directive  on  ‘measures  and  procedures  to  ensure  the  enforcement  of  intellectual
property  rights’36  and  a  rapid  and  effective  enforcement  of  the  legal  provisions  are
crucial. The proposed  Directive  is based on  best practices  in  the  Member  States.  It
will also send a political sign that is expected to encourage national courts to apply
sanctions and remedies more vigorously.

Few Member States have developed mutual guarantee schemes for SMEs, micro loan
systems and measures to finance start-ups.  In recent years,  financial  problems have
become  more  acute  for  small  and  medium  enterprises,  partly  as  a  result  of  the
deteriorating  economic  situation,  but  also  to  shake-ups  in  the  banking  sector.
Although  progress  has  been  made  to  improve  the  availability  of  finance  and  credit
for  SMEs,  there  appears  to  be  a  need  to  increase  efforts  in  this  area  as  SMEs
complain  of  the  difficulties  in  presenting  the  loan  guarantees  required  and  some
banks have withdrawn from low-margin SME lending.

Increased  attention  could  be  paid  at  Member  State  level  to  regions  particularly
dependent upon the textile and clothing sector. This could include specific  regional
initiatives to limit the socio-economic fall-out from industrial transformation.

Export  promotion  schemes  of  Member  States  could  also  pay  more  attention  to  the
needs  of  textile  SMEs,  particularly  in  small  sub-sectors  such  as  embroidery,  or  for
furnishing fabrics. These could be targeted at important third country markets such as
China and India. Joint action between several Member States on this issue could be
considered.

35

36

For more information, see: http://www.cordis.lu/coordination/home.html
See footnote 23

34

                                                
4.3. 

Actions at stakeholder level

The  modernisation  of  EU  textile  and  clothing  enterprises  has  been  achieved  by
focusing  on  high  value-added  products  and  services.  This  should  be  continued  and
accelerated. Further focus on clustering, innovation, technology, quality, flexibility,
and a variety of product types is necessary. The technological content of production,
especially  for  the  garment  sector,  should  continue  to  be  developed  and  improved.
Efforts  to  participate  in  national  and  European  programmes  for  research  and
innovation should be increased.

At the same time, it is doubtful whether sustainable development can be achieved by
the  sector  with  its  current  fragmented  structure.  SMEs  in  particular  should  be
encouraged  to  join  or  set  up  networks,  to  invest  in  cooperation  activities  and  joint
ventures, or even to undergo mergers, in order to attain a critical mass.

Corporate  social  responsibility  best  practices,  at  EU-level  and  globally,  should
continue to be developed. Social labelling is one of the tools within the framework of
CSR  which  textile  and  clothing  enterprises  could  consider  more  closely37,  perhaps
within  the  framework  of  the  sectoral  social  dialogue.  More  SMEs  in  the  sector
should  be  involved,  in  close  cooperation  with  large  companies  through  the  supply
chains. Promotion activities need to be launched to increase consumer awareness of
the  qualitative  aspects  of  their  purchasing  decisions  and  hence  to  create  stronger
demand for socially and environmentally friendly products.

In  order  to  improve  the  protection  of  IPR  for  the  textile  and  clothing  sector,
initiatives  could  be  taken  to  raise  the  awareness  of  the  importance  of  IPR  for  the
textiles and clothing sector. In addition, the creation of a European on-line database
of IPR-related information could constitute  a  particularly  useful  tool  for textile and
clothing SMEs.

Firms need to explore all financing schemes available within the Member States and
at EU level, including those offered by the European Investment Bank. The changes
in the finance world also require more flexibility from SMEs. SMEs need to become
more  open  and  transparent  when  providing  information  to  banks  and  financial
institutions. In some forms of financing, capital suppliers may want to participate in
the  company’s  decision  making  process.  These  major  changes  in  entrepreneurial
behaviour need to be integrated into the companies’ strategies.

The  development  of  increased  partnerships,  clusters  and  networks,  within  the
different  stakeholders  in  the  sector  could  also  play  to  the  advantage  of  the
competitiveness  of  the  textiles  and  clothing  sector.  In  particular,  retailers  and
distributors play for already a long time an increased role in the relations within the
textiles and clothing chain and with the consumers. Partnerships in this area could be
explored.

37

See the summary record of the proceedings of the Round Table on labelling issues for the textiles and
clothing sector, 30-31 May 2002, available in English on:
http://europa.eu.int/comm/enterprise/textile/documents/labelling_minutes_en.pdf

35

                                                
5. 

OPERATIONAL CONCLUSIONS

The textiles and clothing industry in the EU has already experienced a long history of
challenges  resulting  in  restructuring  and  modernisation.  In  its  response  to  these
challenges,  the  sector  has  developed  its  competitive  advantages  by  improving
creation  and  quality,  research,  innovation  and  labour  force  skills,  technological
content and value added, and also by developing a dynamic clustering behaviour.

In  the  context  of  the  sectoral  implementation  of  the  horizontal  industrial  policy
guidelines, the challenge for an SME-based sector lies in how to take into account its
characteristics  and  how  to  improve  its  participation  in  the  existing  instruments
available at the European, national and regional levels.

The EU’s trade policy should  play an  important role  by offering  to  the  EU  textiles
and clothing industry an appropriate framework of rules under which it can develop.
In  a  highly  globalised  sector  such  as  textiles  and  clothing,  a  level  playing  field  is
essential in international trade. An adequate response to the deep changes that have
occurred in the European textiles and clothing industry and the increased openness of
the EU market can only be ensured by an equivalent access to world markets by EU
textiles  and  clothing  exports,  and  by  taking  appropriate  action  to  ensure  that
international competition in the sector takes place under fair conditions and that it is
respectful of sustainable development criteria. Action to secure early completion of
the  Euro-Mediterranean  area  should  improve  the  competitive  position  of  the  EU
textiles and clothing industry.

Textiles and clothing remains a strong  European manufacturing industry.  However,
restructuring  and  modernisation  have  had  and  are  still  having  a  high  impact  on
employment across  different  EU  regions.  It  is  important  to  anticipate  the  industrial
change that accompanies these processes. Attracting investment to a wider range of
economic activities, and training and re-training the labour force appear to be  areas
to be explored in the framework of integrated regional development initiatives.

The  Commission  will  continue  preserving  free  competition  within  and  across
economic sectors as well as the functioning of the Internal Market rules in the textile
and  clothing  sector  as  this  will  be  an  important  contribution  to  improve
competitiveness  for  the  textile  and  other  economic  activities  in  the  enlarged
European Union.

Social  dialogue  is  a  driving  force  behind  successful  economic  and  social  reforms.
The Lisbon strategy emphasises its role in addressing key challenges facing Europe,
such  as  enhancing  skills  and  qualifications,  modernising  work  organisation,
promoting  equal  opportunities  and  diversity  and  developing  active  ageing  policies.
Negotiations  between  the  social  partners  are  a  suitable  way  forward  on  questions
related to modernisation and management of change.

The  debate  on  the  future  of  the  textiles  and  clothing  industry  in  the  enlarged
European  Union  must  not  remain  confined  to  the  Commission.  All  the  EU
institutions,  but  also  the  Member  States,  acceding  states  and  candidate  countries,
should  pick  up  the  challenge  in  their  turn.  Improving  EU  policy,  to  ensure  that  it
stimulates and sustains the competitiveness of industrial sectors such as textiles and

36

clothing, is a concern for us all. In this respect, the Commission invites all interested
parties to provide comments on the issues raised by this Communication38.

The  newly  established  Competitiveness  Council  will  have  a  key  role  to  play  in
pushing forward the process started with this Communication. It can help to ensure
coherence  between  policies  at  EU  and  at  Member  State  level  and  improve  their
interaction.  It  is  well  placed  to  review  the  competitiveness  situation  of  individual
industry sectors.

The  Commission  intends  to  set  up  a  high-level  sectoral  group  for  the  period
2004-  2006,  to  stimulate  debate  on  possible  initiatives  to  facilitate  the  textile  and
clothing  sector’s  adjustment  to  the  major  challenges  ahead  and  to  enable  its
sustainable development. This high level group will meet twice a year to take stock
of  the  economic  situation  of  the  textiles  and  clothing  sector,  and  to  make
recommendations to EU and national policy makers on the key competitiveness and
trade issues affecting the sector.

At  the  same  time,  the  Commission  will  continue  to  monitor  the  situation  of  the
textiles and clothing sector over the coming months, to draw further conclusions. In
particular, a more detailed analysis of the impact of the dismantling of quotas on 1st
January 2005 will be made available in early 2004. The Commission will report on
the implementation of the actions suggested above by spring 2005, and by the end of
2006, and may propose further initiatives.

38

Comments should be sent to the Commission preferably via e-mail to “entr-textile-COM2003@cec.eu.int”,
following the procedure set out on the following web-page:
http://europa.eu.int/comm/enterprise/textile/COM2003.htm

37

                                                
Annex
Examples of concrete actions at EU-level for the textiles and clothing sector

1. 

ENLARGEMENT

In  order  to  prepare  companies  in  the  acceding  and  candidate  countries  for  the  new
regulatory  environment  after  enlargement,  the  Commission  supported  a  socio-
economic forum organised by the sectoral social partners. This event for textile and
clothing  enterprises,  trade  associations  and  trade  union  representatives  was  held  in
2002 in Poland. A further forum is planned for early 2004 in Bulgaria.

Under the PHARE programme, the Commission is currently funding the PERFECT-
LINK  project39  for  the  textiles,  clothing  and  leather  sectors  in  the  acceding  and
candidate  countries  in Central and Eastern Europe. The objective  is  to  improve  the
capacities  and  skills  of  business  representative  organisations  in  retrieving  and
disseminating  to  their  members  relevant  information  on  the  European  acquis.  This
will  improve  the  state  of  preparation  of  local  companies  and  will  enable  them  to
operate and compete more successfully after accession.

The Commission is currently funding a project on environmental  awareness-raising
for  the  business  sector,  aimed  at  providing  support  in  understanding  EU
environmental legislation to SMEs in acceding and candidate countries. The outcome
–  a  training  package  –  will  serve  as  a  guide  to  EU  environmental  legislation  for
SMEs in these countries, focusing on directives with specific relevance for industry
and the private sector in general.

2. 

RESEARCH AND INNOVATION

The application of technologies from other sectors to textiles and clothing in order to
develop high value-added products may be seen in the results of the European Space
Agency’s  technology  transfer  programme.  This  has  enabled  for  example  the
development of clothing to monitor babys’ sleep to help prevent sudden infant death
syndrome (SIDS), suits to protect the skin of children suffering from the rare genetic
disorder xeroderma pigmentosa, super-insulating jackets for use in arctic conditions,
and undergarments incorporating integrated conditioning systems which are already
in use by a successful Formula 1 racing team. In addition, a recently launched project
under  the  same  programme  aims  to  apply  the  existing  technology  of  membrane
bioreactors  in  order  to  develop  compact  and  cost-effective  high  efficiency  waste
water treatment systems for textile finishing SMEs40.

The  e-TEN  programme  (formerly  TEN-Telecom)41  funds  projects  for  making
available  e-services  across  the  EU.  It  focuses  particularly  on  the  critical  validation
and  launch  phases  of  a  service  which  might  not  otherwise  be  set  up  because  of
difficulties  at  the  initial  investment  and  launch  stages.  The  textiles  and  clothing
sector has already benefited from funding for two projects, one to set up a business

39

40

41

For project details see: http://www.perfectlink.org/perfect.htm
For project details see: http://www.t4tech.com/space2tex/
There are also opportunities for funding environmental innovation under the LIFE programme. For further
details, see: http://europa.eu.int/comm/environment/life/life/environment.htm

38

                                                
information service for textile SMEs42 and the other to establish a virtual fair service
and  an  on-line  exchange  for  linen43.  There  are  also  opportunities  for  funding
environmental innovation under the LIFE programme44.

3. 

INFORMATION SOCIETY

In  the  clothing  sub-sector,  the  potential  opportunities  for  ‘mass  customisation’  of
garments  appear  to  be  promising.  Customised  clothing  responds  to  the  consumer’s
desire for a more individual look with an improved fit, but at lower cost than a made-
to-measure  item,  while  at  the  same  time  enabling  producers  to  benefit  from  their
expertise and technological know-how and to create added value. In addition, it has
positive  knock-on  effects  for  both  textiles  and  clothing  producers  in  Europe,  by
generating demand for weaving and garment make-up activities in close proximity to
the  consumer.  Some  companies  have  already  developed  a  variety  of  business
strategies  for  producing  and  marketing  customised  clothing.  The  recent  research
projects E-Tailor45, FashionMe46, eT-Cluster47 and FashionOnLine48 – co-funded by
the  Commission  under  the  IST  priority  of  the  5th  Framework  Programme  for
Research  and  Development  –  have  focused  on  moving  forward  the  necessary
technologies to make these activities more effective and profitable.

The  recently  concluded  TEX-MAP  project49  has  worked  to  establish  a  research
roadmap  for  the  European  textile  and  fashion  industry.  The  project’s  objective  has
been  to  develop  a  strategic  roadmap  leading  to  the  transformation  of  the  textile-
clothing-distribution (TCD) chain into a cross-sectoral, dynamic, innovative, flexibly
integrated and customer-orientated business network by the year 2010. The research
priorities  identified  will  allow  the  sector  to  focus  and  co-ordinate  future  research
efforts in this area and thus represent a highly useful tool.

4. 

VOCATIONAL TRAINING

Under  the  second  phase  of  the  Leonardo  da  Vinci  programme,  the  textile  and
clothing sector has so far benefited from funding for three sector-specific projects50.
The  UP-SKILLS  project  focused  on  the  training  needs  of  managers  in  textile  and
clothing  SMEs,  in  particular  management  skills  such  as  market  analysis,  strategic
planning and human resources management. A further project, ADVOTTEX, has set
up an interface between the textile and clothing industry and the relevant universities
and  training  institutes  (some  of  which  were  already  organised  into  the  AUTEX
network51)  to  establish  an  inventory  of  the  information  and  communication
technology (ICT) training needs and opportunities of the sector. It is hoped that this
will  enable  the  sector  to  ensure  a  better  match  between  the  specific  ICT  training

42

43

44

45

46

47

48

49

50

51

SOLEIL project, for further details see: http://www.ten-telecom.org/en/project.asp?LNK=SOLEIL
TES4TEX project, for further details see: http://www.ten-telecom.org/en/project.asp?LNK=TES4TEX
For further details, see: http://europa.eu.int/comm/environment/life/life/environment.htm
For project details see: http://www.atc.gr/e-tailor/
For project details see: http://www.fashion-me.com/
For project details see: http://www.atc.gr/eT-Cluster/index.htm
For project details see: http://www.atc.gr/Fol/
For full details see: http://www.atc.gr/Tex-Map/
For full details see: http://leonardo.cec.eu.int/pdb/
Association of Universities for Textiles. For further details see: http://textiles.rug.ac.be/autex/menu.htm

39

                                                
needs  of  companies  and  the  vocational  courses  on  offer.  A  third  project  aims  to
develop  a  standard  interactive  template  for  innovative  training  in  textiles,  focusing
on the requalification of the existing workforce.

5. 

ENVIRONMENT

One of the IPP tools for increasing consumer awareness of the ecological credentials
of a product is  environmental  labelling.  At  EU-level,  the European Eco-label52 is a
voluntary  scheme  to  identify  products  which  achieve  environmental  excellence
within a wide variety  of  product  groups.  Whilst  textiles  currently  form  the  product
group with the highest number of  eco-labelled products (46), this represents  only  a
very  small  proportion  of  the  vast  range  of  textile  products  on  the  market.  Many
textile and clothing manufacturers currently hold the view that the Eco-label does not
enjoy enough recognition and acceptance by consumers to justify the additional costs
involved  in  registration  and  compliance53.  Thus  more  concerted  efforts  at  national
and EU-level are necessary to increase consumer recognition of the label and thereby
increase its attractiveness for distributors and manufacturers.

In  addition,  the  fragmented  textile  production  chain  means  that  the  environmental
burden often falls on upstream producers, for example fabric manufacturers, whereas
the  benefits  are  more  often  reaped  by  the  end  producers,  for  example  the  garment
manufacturer, or distributors. A system based on environmental product declarations
by upstream producers could be helpful to provide information along the textiles and
clothing production chain.

6. 

CHEMICALS

The Commission’s website already allows access to a number of impact assessments
on  the  REACH  proposals54.  In  addition,  the  Commission  –  together  with
stakeholders – is carrying out a study on the impact of the new chemicals policy on
the textiles and clothing sector. The study aims to establish the direct registration and
testing costs for the main substances used by the sector, the economic impact of these
costs  on  substances  producers  and  on  the  downstream  users,  and  the  longer-term
effects  of  the  implementation  of  REACH  on  innovation  in  chemical  processes  and
product engineering in the  textile industry. A  stakeholder  workshop  on  this  subject
was held on 22 September 2003. It is hoped that the results of this study will enable
the  sector  to  better  anticipate  the  potential  challenges  that  may  result  from  the
introduction of REACH.

52

53

54

For further information, see: http://europa.eu.int/comm/environment/ecolabel/index.htm
See the summary record of the proceedings of the Round Table on labelling issues for the textiles and
clothing sector, 30-31 May 2002, available in English on:
http://europa.eu.int/comm/enterprise/textile/documents/labelling_minutes_en.pdf
http://europa.eu.int/comm/enterprise/chemicals/chempol/bia/index.htm

40

                                                
7. 

CONSUMER AFFAIRS AND PUBLIC HEALTH

The  Commission  is  currently  undertaking  a  research  project,  entitled  ‘EIS-
chemrisks’,  to  examine  consumer  exposure  to  chemicals from a  number of product
groups,  including  textiles.  The  aim  of  the  project  is  to  collate  and  develop  the
available  data  on  the  release  of  chemicals  from  articles.  It  will  also  work  towards
developing  Europe-wide  standards  for  test  methods  and  for  assessing  human
exposure to chemicals. This  will  enable policy makers to base  any  future decisions
on the risk of specific chemicals in consumer articles on sound scientific data. At the
same time, manufacturers will be able to access a large body  of information on the
human health implications of the chemical substances released from the articles they
produce. This will be of particular importance to the textiles and clothing sector, as
the data currently available in this area is rather limited, and will help manufacturers
to comply with the likely requirements of REACH.

41