Communication from the Commission to the Council, the European Parliament, the European Economic and Social committee and the Committee of the Regions - Textiles and clothing after 2005 - Recommendations of the High Level Group for textiles and clothing {SEC(2004) 1240}
Date: 2004-10-13
Institutions: European Commission
Subjects: EU industrial policy, clothing industry, common commercial policy, corporate finance, innovation, market access, research and development, small and medium-sized enterprises, textile industry

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.10.2004 
COM(2004) 668 final 

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

Textiles and clothing after 2005 –  
Recommendations of the High Level Group for textiles and clothing 

{SEC(2004) 1240} 

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TABLE OF CONTENTS 

1. 

2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

4. 

Introduction .................................................................................................................. 3 

Economic situation of the EU textiles and clothing sector .......................................... 4 

Recommendations of the High Level Group for textiles and clothing ........................ 4 

Research and innovation .............................................................................................. 5 

Education, training and employment ........................................................................... 5 

Other competitiveness-related issues ........................................................................... 6 

Regional aspects........................................................................................................... 7 

Trade policy issues....................................................................................................... 8 

Conclusions .................................................................................................................. 9 

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1. 

INTRODUCTION  

On 29 October 2003 the Commission adopted the Communication “The future of the 
textiles  and  clothing  sector  in  the  enlarged  European  Union”1,  which  represented  a 
sectoral application of the EU’s industrial and trade policies, taking into account the 
particular  features  of  this  sector.  In  view  of  the  challenges  that  the  sector  is  facing 
and will continue to face over the coming years, the Commission carried out a review 
of its policies and instruments, with the objective of identifying measures or actions 
which could improve the competitive position of the sector. 

On 27 November 2003 the Competitiveness Council welcomed the Communication 
and  stressed  the  importance  of  ensuring  the  effective  interaction  of  policies  at  EU-
level.  In  its  conclusions,  it  emphasised  the  strategic  importance  for  the  sector  of 
improving competitiveness, notably via research, innovation, training measures and 
protection  of  intellectual  property  rights.  It  also  noted the  important  role  played  by 
better  access  to  markets  and  the  completion  of  the  Euro-Mediterranean  Free  Trade 
Area.  The  Council  welcomed  the  Commission’s  intention  to  set  up  a  High  Level 
Group for the textiles and clothing industry. 

The  European  Parliament  in  its  Resolution  of  21  January  2004  called  on  the 
Commission to establish a precise timetable and financial framework to enable rapid 
implementation of the ideas developed in the Communication. Among other points, it 
called for an adequately resourced EU-level programme for the textile and clothing 
sector, notably in regions particularly dependent on the sector, covering support for 
research, innovation, vocational training and SMEs, speeding up both the abolition of 
non-tariff  barriers  to  trade  and  the  creation  of  a  Pan-Euro-Mediterranean  free  trade 
area, as well as close monitoring of Chinese imports into the EU. 

To  follow  up  the  proposals  made  in  its  Communication,  the  Commission  set  up  a 
High Level Group (HLG) for textiles and clothing in early 2004, with a mandate to 
formulate recommendations on an integrated set of concrete initiatives that could be 
undertaken at regional, national and EU level to facilitate the sector’s adjustment to 
major challenges, and to suggest actions to improve its competitiveness. 

The  High  Level  Group  brings  together  top  EU  decision-makers  in  the  sector.  It 
comprises Commissioners, Government representatives from four EU Member States 
with a strong textiles and clothing presence, a Member of the European Parliament, 
industrialists, retailers  and importers, European trade associations, trade unions and 
representatives  of  local  textile  and  clothing  associations.  During  the  first  half  of 
2004, the High Level Group met three times. 

At  “sherpas”  level,  working  groups  were  set  up  covering  the  areas  of  trade  issues; 
intellectual  property  rights  (IPR);  research  and  innovation;  education,  training  and 
employment; regional issues; and competitiveness. Over twenty meetings were held 
at this level to elaborate recommendations for actions. 

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COM(2003) 649 final of 29.10.2003 

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In view of the very short period of time available for this first exercise of the High 
Level Group, many – but not all – of the issues raised by the Communication were 
covered  in  discussions.  Based  on  the  conclusions  of  the  working  groups,  the  HLG 
presented its first recommendations in the form of a report entitled “The challenge of 
2005  –  European  textiles  and  clothing  in  a  quota  free  environment”  on  30  June 
20042. 

The Competitiveness Council of 27 November 2003 also invited the Commission to 
report back on progress by July 2004. This Communication intends to respond to that 
request,  to  present  an  overview  of  the  follow-up  to  the  Communication  of  October 
2003, and to highlight several concrete proposals for action, which are described in 
more  detail  in  the  attached  Commission  Staff  Working  Document  on  the 
recommendations of the High Level Group for textiles and clothing3. 

2. 

ECONOMIC SITUATION OF THE EU TEXTILES AND CLOTHING SECTOR 

The economic situation of the textiles and clothing sector in the EU continues to be 
difficult. After substantial falls in production and employment in the past three years, 
it  is  estimated  that  in  2003  production  fell  by  a  further  4.4%  and  employment  by 
7.1%  (EU-25,  source:  Eurostat).  This  is  due  to  a  complex  combination  of  factors. 
First, the sector has felt the full impact of the economic slowdown in the EU and in 
its major export markets. Second, the evolution of the US-dollar and Euro exchange 
rate has continued to have a negative impact on the price competitiveness of several 
types  of  product.  And,  finally,  the  development  of  the  Euro-Med  Zone  and 
preparations  for  the  new  economic  realities  post  2005  in  the  wake  of  quota 
elimination, has led to further relocation of production within and outside the EU-25. 

3. 

RECOMMENDATIONS OF THE HIGH LEVEL GROUP FOR TEXTILES AND CLOTHING 

The High Level Group’s report4 confirms  that  the  most  appropriate strategic vision 
for  the  future  of  the  EU  textiles  and  clothing  sector  should  focus  on  the  current 
competitive  advantages  of  the  European  industry.  These  are  associated  with 
continuous  progress  in  the  areas  of  research,  innovation  and  training,  together  with 
the progressive building of the Pan-Euro-Mediterranean free trade area, and reaching 
a  level  playing  field  in  trade  issues,  in  particular  with  respect  to  access  to  markets 
and the effective protection of intellectual property rights. 

Furthermore, appropriate framework conditions need to be ensured, with a particular 
focus on SMEs, in order to enable the sector to fully exploit its competitive potential. 
In  this  respect,  the  difficulties  of  access  to  credit  by  SMEs  were  identified  by  the 
High Level Group as one area which needs more detailed examination and attention 
by public authorities and the stakeholders themselves. 

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The  full  text  of  the  Report  of  the  High  Level  Group  for  textiles  and  clothing  is  available  on: 
http://europa.eu.int/comm/enterprise/textile/documents/hlg_report_30_06_04.pdf 
SEC(2004) 1240 of 13.10.2004 
see footnote 2 

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It is clear from the High Level Group’s report that, while on the one hand different 
actions  can  usefully  be  taken  by  the  Commission  in  order  to  further  improve  the 
framework to foster competitiveness for the textiles and clothing sector, on the other 
hand,  success  for  the  sector  will  also  depend upon initiatives taken by the Member 
States at national and regional level, and on stakeholder actions. 

In all the different levels of action, several concrete initiatives are already underway, 
meeting some of the High Level Group’s recommendations. Others will be addressed 
in the near future, as proposed in this Communication. 

However,  a  few  recommendations  envisage  a  specific  strategy  to  approach  the 
problems  of  the  EU  textiles  and  clothing  sector.  The  Commission  considers  that 
these should not be followed. This is particularly the case concerning the call for a 
sectoral Community programme for textiles and clothing, and the call for a specific 
sectoral and regional initiative. 

3.1. 

Research and innovation 

In the area of research and development, the Commission should react positively to 
the proposal to consider setting up a European Technology Platform, to draw up and 
implement a strategic research agenda, whilst stressing the need for clear stakeholder 
commitment to lead and follow through such an initiative. In addition, stakeholders’ 
the  6th  Framework  Programme  for  Research  and 
project  proposals  under 
Development  have  been  welcomed  in  the  NMP  Programme5.  These  will  enable  a 
technology breakthrough for clothing manufacture and development of eco-efficient 
processes,  high  added  value  products  and  associated  markets  with  growth  potential 
for  textile  industry.  Furthermore,  to  complement  textile-related  projects  already 
underway, a specific call is foreseen in 2005 under this NMP Programme to promote 
applied  research  in  multi-functional  fibres  and  technical  textile-based  products  and 
related processes. There will also be opportunities for the sector to present proposals 
to  improve  supply  chain  management  under  the  IST  strategic  objective  “ICT  for 
networked  businesses”.  Under  the  7th  Framework  Programme,  details  of  which  are 
still under discussion, the Commission will propose a more bottom-up and problem 
oriented approach to SMEs, while lightening administrative and regulatory burdens 
whenever possible and appropriate. 

3.2. 

Education, training and employment 

The  Commission  recognises  the  importance  of  social  dialogue  as  a  driving  force 
behind successful economic and social reforms and will continue to promote it. The 
European  social  dialogue  in  the  textile  and  clothing  sector  plays  a  major  role  in 
addressing key challenges of the sector, such as enhancing skills and qualifications, 
modernising work organisation, promoting equal opportunities and developing active 
ageing  policies.  Social  dialogue  and  social  partnerships  are  also  a  fundamental 
element  of  efficient  and  responsible  restructuring.  In  this  context,  negotiations 
between the social partners are the most suitable way forward on questions related to 
modernisation and management of change. 

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As far as education and vocational training is concerned, the Commission can agree 
with the High Level Group’s analysis of a need for a Europe-wide lifelong training 
strategy for the sector and to ensure a better match between supply and demand for 
training.  At  EU-level,  the  Leonardo  da  Vinci  programme  and  “Article  6”  measures 
under  the  ESF  provide  the  framework  for  funding  sectoral  projects  with  European 
added  value  and  innovative  actions  in  the  area  of  employment  and  adaptation  to 
industrial change. 

3.3. 

Other competitiveness-related issues 

REACH 

The  textiles  and  clothing  industry  is  a  highly  intensive  downstream  user  of  the 
chemicals industry. The impact of the proposed new chemicals policy (REACH) on 
this  sector  is  being  closely  examined  by  the  Commission  and,  in  co-operation  with 
the  textile  and  clothing  industry,  it  is  launching  an  impact  assessment  study  on  the 
potential impacts of REACH on the textile industry and its chemical suppliers. The 
results of this study are expected to be available by mid-2005. 

Intellectual property rights 

In  the  area  of  intellectual  property  rights  (IPR),  the  Commission  acknowledges  the 
importance  of  improving  the  protection  of  rights  and  their  enforcement  in  third 
countries,  and  to  raise  right  holders’  awareness  of  counterfeiting  and  the  risks 
involved.  The  High  Level  Group  calls  for  effective  awareness  raising  activities, 
education  of  right-holders  and  for  the  provision  of  appropriate  tools  to  combat 
counterfeiting and piracy. The Commission will examine the feasibility of creating a 
user-friendly  European  website  on  IPR  and  will  promote  the  dissemination  of 
information through a series of seminars and networking meetings. 

“Made in” labelling 

The High Level Group was not in the position to put forward any recommendation 
on origin marking due to divergent views on this matter. Whilst some of the Group’s 
members indicated that this was a crucial area where the High Level Group should 
make  recommendations  for  actions,  others  were  of  the  opposite  view  as  they 
considered that the status quo in this matter should not be changed. The Commission 
is  ready  to  study  whether  initiatives  in  this  respect  could,  or  not,  improve  the 
competitive position of the EU industry on its home market.  

Access to finance 

The  textile  and  clothing  sector  is  dominated  by  SMEs  which  face  growing 
difficulties in obtaining credit. At the same time, several of the financial instruments 
are  not  necessarily  tailored  to  the  type  of  SME  in  the  textile  and  clothing  sector. 
According to the Fourth Report on the Implementation of the European Charter for 
Small Enterprises6,  access to finance  remains  an  important constraint  for enterprise 
across the whole EU despite some progress in this area. Developments over the past 
year  show  that  several  measures  to  improve  the  situation  have  been  taken. 

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Experiences from public sector actions aiming to improve small businesses’ access to 
finance  have  shown  that  best  results  are  achieved  when  the  public  sector  works  in 
close  co-operation  with  financial  markets  and  encourages  their  development.  The 
Commission  is  engaged  in  many  different  initiatives  to  improve  access  to  finance. 
The  Community  financial  instruments  provide  European  leverage  and  support  for 
SME  financing.  The  completion  of  the  Risk  Capital  Action  Plan7  is  a  major 
achievement, and completing the Financial Services Action Plan8 will lead to better 
availability of both bank lending and equity finance.  

3.4. 

Regional aspects 

The High Level Group recommends several actions regarding regional policy. First, 
it argues for a higher participation of the textiles and clothing sector in the national 
regional  programmes  of  the  Member  States  and  calls  on  regional  authorities  to 
establish  with  local  stakeholders  local  strategic  plans  to  improve  the  allocation  of 
public  resources.  At  the  same  time,  the  High  Level  Group  calls  for  a  sectoral 
Community  programme  for  textiles  and  clothing  and  a  specific  regional  initiative. 
Based  on  previous  experience,  the  Commission  does  not  consider  that  this  is 
appropriate and does not recommend these sector specific community programmes, 
which  would  risk  fragmentation  of  EU  industrial  and  regional  policies,  with  little 
significant  impact  on  the  sector  as  a  whole.  Instead,  the  participation  of  the  textile 
and  clothing  sector  in  multisectoral  programmes  provides  an  adequate  and  more 
efficient  framework  for  supporting  the  sector  and,  at  the  same  time,  allows  for 
diversification of production between various sectors and ultimately better serves the 
economic situation of the region(s) in question. 

However, there is a real need to anticipate developments in the textiles and clothing 
sector  over  the  coming  years.  While  the  Euro-Mediterranean  Zone  provides  the 
conditions  necessary  to  allow  the  sector  to  remain  an  important  contributor  to 
European industrial production, policymakers cannot ignore the fact that a permanent 
process  of  restructuring  and  modernisation  will  continue  to  lead  to  falling 
employment for some years to come. For this reason, appropriate programmes need 
to be in place, not only to tackle the issue of better training for textiles and clothing 
workers but also to mitigate the socio-economic impact on those regions where the 
sector is concentrated. In this context, it is relevant to note that the Commission has 
recently adopted a proposal9 that Member States should reserve an amount of 1% of 
the Structural Fund annual contribution for the “Convergence” objective and 3% of 
the  “Regional  competitiveness  and  employment”  objective  contribution  to  cover 
unforeseen local or sectoral crises linked to economic and social restructuring, or to 
the  consequences  of  trade  opening.  Like  other  sectors  in  unforeseen  or  sectoral 
crises, the textiles and clothing sector might be covered under this flexibility reserve. 

In regions highly dependent upon textile and clothing activities, the challenges raised 
by present and foreseeable developments need to be approached in an integrated way 
in  order  to  achieve  sustainable  solutions.  While  it  is  up  to  public  authorities  to 

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http://europa.eu.int/comm/economy_finance/publications/riskcapital_en.htm 
http://europa.eu.int/comm/internal_market/en/finances/actionplan/index.htm  
Proposal  for  a  Council  Regulation  laying  down  general  provisions  on  the  European  Regional 
Development  Fund,  the  European  Social  Fund  and  the  Cohesion  Fund,  COM(2004)  492  final  of 
14.07.2004 

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provide  adequate  framework  conditions  within  which  investment  can  be  attracted, 
employment  can  be  promoted  and  competitiveness,  training  and  re-training 
initiatives  can  be  enhanced,  local  players  and  other  stakeholders  need  to  come  up 
with appropriate concrete proposals to respond to the needs of specific regions. 

3.5. 

Trade policy issues 

From a strategic point of view, the rapid completion of the Pan-Euro-Mediterranean 
Zone is crucial for the EU textile and clothing sector, as it will enable the sector to 
maintain  the  whole  chain  of  production  close  to  the  European  market,  combining 
advantages involving costs, quality and proximity. The Commission recognises that 
progress  here  has  been  slow,  particularly  the  conclusion  of  free  trade  agreements 
(FTAs)  among  the  countries  concerned,  and  the  Commission  considers  that  further 
efforts in this respect should be made by the relevant parties.  

In order to accelerate the implementation of pan-Euro-Mediterranean cumulation, the 
textile  industry  representatives  in  the  High  Level  Group  recommend  the  flexible 
interpretation of the FTA requirement as a temporary arrangement, provided that the 
countries  concerned  adopt  identical  rules  of  origin,  that  proper  administrative 
cooperation is in place and provided that there is a sufficient degree of liberalisation 
among  the  countries  concerned  for  textiles  and  clothing.  The  Commission  will,  in 
accordance  with  the  conclusions  of  the  Fourth  Euro-Med  Trade  Ministerial 
Conference, examine this proposal of the High Level Group with the other pan-Euro-
Mediterranean  partners.  However  the  Commission  is  not  in  favour  of  a  sectoral 
approach  and  considers  that,  in  addition  to  the  conditions  set  by  the  High  Level 
Group, an FTA should at least be initialled and provisionally applied. 

The High Level Group’s recommendations also stress the need to improve access to 
markets. This is a long standing goal of EU trade policy with respect to textiles and 
clothing.  The  Commission  will  continue  to  promote  its  offensive  approach,  with 
regard  to  textiles  and  clothing  products  within  the  Doha  Development  Agenda 
negotiations, seeking to obtain conditions of access to third country markets that are 
both fair and comparable across the world for major textile and clothing producers. 
The Commission will continue to call on WTO members – with the exception of the 
least developed countries – to cut their customs duties to the lowest possible common 
level  and  to  eliminate  non-tariff  barriers.  Since  tariff  preferences  are  being  eroded, 
alternative  responses  to  the  concerns  of  developing  countries  heavily  dependent  on 
textile  and  clothing  exports,  such  as  development  co-operation  measures  on  the 
supply side, could be also developed. In the context of negotiations which take place 
on a bilateral basis,  the  Commission  will  continue to insist on a level playing field 
with  the  countries/regions  concerned.  On  7  July  2004  the  Commission  adopted  the 
trade  and  sustainable 
Communication  “Developing  countries, 
development:  the  function  of  the  Community’s  generalised  system  of  preferences 
(GSP)  for  the  ten-year  period  from  2006  to  2015”10.  Among  other  actions,  it 
proposes focusing GSP benefits on the countries in most need, such as LDCs and the 
most vulnerable developing countries. 

international 

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The textile and clothing sector is also seriously concerned about Chinese imports into 
the EU. The High Level Group calls for a monitoring system on Chinese imports to 
be  established,  which  would  regularly  gather  data  on  quantities  and  average  unit 
prices  of  main  product  categories,  examine  the  conditions  of  production  of  textiles 
and clothing in China, and regularly evaluate China’s respect of its WTO obligations, 
in particular its market access conditions. The Commission recognises such concerns 
and  considers  monitoring  of  imports  through  customs  declarations  as  another 
efficient option which could be used to provide import data after the end of the quota 
system.  The  Commission  Services  are  examining  the  different  options  available  in 
this  area.  The  Commission  has  also  taken  the  initiative  of  establishing  a  result-
oriented dialogue with the relevant Chinese authorities, also involving industry and 
other stakeholder representatives.  

Finally, with respect to trade defence instruments, the Commission Services plan to 
make available before the end of 2004 guidelines containing procedures and criteria 
that the Commission intends to follow, in conformity with the relevant Regulations 
adopted by the Council, for the application of safeguard clauses, in particular for the 
textiles-specific safeguard clause established in China’s Protocol of Accession to the 
WTO.  Furthermore,  practical  measures  to  facilitate  the  use  of  the  Trade  Barriers 
Regulation and trade defence instruments by sectors where SMEs predominate will 
be adopted before the end of 2004. 

4. 

CONCLUSIONS 

The High Level Group for textiles and clothing has successfully completed the first 
part  of  its  work,  reaching  within  a  very  tight  deadline  a  consensus  on 
recommendations  in  a  significant  number  of  areas  of  strategic  importance  for  the 
future  of  the  textiles  and  clothing  industry  in  the  enlarged  European  Union.  The 
actions  foreseen  by  the  Commission  as  a  follow-up  to  these  recommendations  are 
described in more detail in the attached Commission Staff Working Document11.  

It is evident that undertaking the substantial structural changes necessary requires in 
the first place the efforts and commitment of stakeholders, including social partners, 
and then of public authorities at European, national and regional levels. At European 
level,  this  Communication  shows  that  it  is  possible  to  take  specific  sectoral  needs 
into account within the implementation of EU horizontal policy guidelines. In all the 
areas  covered  by  the  recommendations  of  the  High  Level  Group,  on-going  actions 
already  address  the  foreseen  objectives,  and  other  actions  with  the  same  aims  are 
planned.  In  other  cases  the  feasibility  of  the  proposed  initiatives  is  under 
consideration.  

It is important to note that the actions proposed by the High Level Group and taken 
up  by  the  Commission  fall  within  the  strategy  described  in  the  Communication  on 
“The  future  of  the  textiles  and  clothing  sector  in  the  enlarged  European  Union”12. 
The  Commission  remains  convinced  that  sustainable  solutions  for  the  structural 
challenges  faced  by  the  textiles  and  clothing  sector  have  to  be  met  through  the 

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See footnote 1. 

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reinforcement of the European industry’s competitive advantages and the appropriate 
framework conditions.  

The actions foreseen in the areas of research, education and training, and trade policy 
meet  the  competitiveness  challenges  faced  by  the  EU  textiles  and  clothing  sector. 
However, the actions in the areas of research, education, training and employment in 
particular,  need  to  be  complemented  by  adequate  support  at  national  and  regional 
levels to further the same competitiveness factors. In this respect, several initiatives 
in  some  Member  States  offer  the  best  practices  of  sectoral  implementation  of 
horizontal policy guidelines, as they focus their strategies on the appropriate sectoral 
competitiveness  factors  while  providing  support  via  the  horizontal  instruments  in 
place. 

Within the short time available, the High Level Group was able to cover a substantial 
part  of  the  issues  relevant  for  the  competitiveness  of  the  European  textiles  and 
clothing sector. Some issues, however, would benefit from a further debate, notably, 
on non-technological innovation, access to finance and industrial cooperation within 
the  EU  and  with  non-EU  partners.  In  some  of  these  areas,  the  Commission  will 
nevertheless  propose  additional  initiatives.  For  example,  the  Commission  will 
examine the possibility of closer industrial co-operation with Mediterranean partners 
and  of  associating  them  with  initiatives  aimed  at  improving  skills,  promoting 
innovation and protection of intellectual property rights, in view of realising the full 
potential of the pan-Euro-Mediterranean market and to boost the competitiveness of 
the textile and clothing industry in the Euro-Mediterranean zone. 

In addition, the impact of the elimination of quotas in the sector after January 2005 
will require a closer observation. For these reasons the Commission recommends that 
the High Level Group continue the exercise at “sherpas” and working group levels 
over  the  coming  months,  and  during  2005,  with  the  High  Level  Group  itself  being 
convened before the end of 2005. 

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