Source: EURLEX
Language: en
Format: md

***wppmpJPPII**

**COMMISSION OF THE EUROPEAN COMMUNITIES**

**Brussels, 29.10.1997**
**COM(97)** **454 final**

**COMMUNICATION FROM THE COMMISSION**

**TO THE COUNCIL, THE EUROPEAN PARLIAMENT,**

**THE ECONOMIC AND SOCIAL COMMITTEE**

**AND THE COMMITTEE OF THE REGIONS**

**Plan of action**

**to increase the competitiveness of the European textile and clothing industry**

###### **TABLE OF CONTENTS**

1. INTRODUCTION 3

2. RECENT TRENDS IN THE TEXTILE/CLOTHING INDUSTRY 5

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

POLICIES 6

3.1. **Structural adjustment and** competitiveness 6

_a)Innovation,_ _research and technological development._ _6_
_b) New qualifications and vocational_ _training._ _8_
_c)Integrated_ _structural initiatives_ _9_

3.2 The internal framework 10

_a) The single market_ _10_
_b) Discipline and transparency with regard to State aids_ _...11_
_c) Employment_ _11_
_d) Wage costs and social security charges_ _11_

3.3. External relations 12

_a) Promoting market access_ _12_
_b) Rules and disciplines_ _13_
_c) The environment_ _13_
_d) The social question_ _14_
_e) Internationalisation of firms and industrial cooperation_ _14_

4. CONCLUSIONS 16

Annex: 19

EUROPEAN PLAN OF ACTION TO INCREASE THE COMPETITIVENESS OF THE TEXTILE AND

CLOTHING INDUSTRY (1997 - 2000)

## **£**

**1.** **INTRODUCTION**

**1.1** **This communication is addressed to the Council and the European**
**Parliament, to the ESC and the Committee of the Regions, in the light of the**
**conclusions reached at the Industry Council meetings on 28 March and**
**14 November 1996. It falls within the context of the talks which have been**

**taking place, at the Commission's initiative,** between the parties involved in the
textile/clothing sector and in particular the national and Community public
authorities and both sides of the industry.

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

sector.

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

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

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

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

However, the drive towards modernisation in an increasingly competitive
international environment has meant a **considerable reduction in the number of**

jobs. This is particularly worrying in view of the regional concentration and
social impact of employment in the textiles/clothing industry.

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

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

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

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

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

The main priorities are as follows:

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

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

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

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

     **regional development** must involve giving special attention to viable firms
located in less-favoured areas of the Union so as to create conditions which

enable them to meet the challenge of competitiveness on an equal footing with
firms located in more developed regions.

_Industrial policy in an open and competitive environment_   - _Guidelines for a Community approach -_
COM(90)556 final. _An industrial competitiveness policy for the European Union_  - COM(94)319
final. _Benchmarking_ _the competitiveness_ _of European_ _industry_    - COM(96)463 final.
_Benchmarking - implementation of an instrument available to economic actors and public_
_authorities -_ COM(97)153 final.

**2.** **RECENT TRENDS IN THE TEXTILE/CLOTHING INDUSTRY**

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

According to the Observatoire Européen du Textile et de l'Habillement (OETH), [2 ]

this industry employs some 2.2 million persons in nearly 120 000 firms. It accounts
for 7.6% of all industrial employment and 4.2% of the added value. Furthermore, a
large proportion of the workforce is female and jobs are heavily concentrated in
certain regions.

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

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

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

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

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

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

_The EU textile and clothing sector -_ OETH, Brussels 1997.

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

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

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

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

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

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

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

   - to maintain an open approach to international trade and markets.

**3.1 Structural adjustment and competitiveness**

_(a) Innovation, research and technological development_

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

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

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

At the heart of the **4** **[th]** **RTD Framework programme** and within the specific
programme **"Industrial and Material Technologies", the targeted research**
**project,** _**Total Quality Textiles,**_ appeared to be an effective instrument in
strengthening the technological capacities of a structurally fragmented sector as well
as succeeding in increased participation from SMEs. Approximately 350
organisations of which 300 SMEs took part in research (with cofinancmg of ECU 40
million from a total cost of approximately 80 million) in this specific programme.
New machines ("ink jet", "plasma", "C0 2 supercritical"), new textile products whose
traditional sector was in the area of Clothing/Furniture now have additional
applications in the areas of transport, premises, health, leisure and have been
developed under numerous Community research projects.

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

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

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

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

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

_(b) New qualifications and Vocational training_

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

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

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

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

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

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

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

_(c) Integrated structural initiatives_

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

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

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

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

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

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

_The competitiveness of subcontracting in the textile and clothing industry in the European_ _Union,_
COM(96)210 final, 15 May 1996.

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

**3.2 The internal framework**

_(a) The single market_

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

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

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

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

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

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

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

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

**10**

_(b)_ _Discipline and transparency with regard to State aids_

**The completion of the internal market requires greater stringency in**
**competition policy.**

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

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

_(c)_ _Employment_

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

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

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

_(d) Wage costs and social security charges_

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

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

**11**

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

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

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

**3.3 External relations**

_(a) Promoting market access_

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

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

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

5 _White Paper: Growth, Competitiveness, Employment_ -Brussels 1993.

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

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

**12**

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

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

_(b) Rules and disciplines_

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

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

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

_(c) The environment_

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

strategy.

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

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

**13**

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

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

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

_(d) The social question_

The Commission has recognised the importance of respecting fundamental social
rights in international relations. It has already set out its position on the link between
trading agreements and internationally recognised labour standards, [9] both in a recent
Communication [10] and in the appropriate multilateral fora such as the ILO and WTO.

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

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

_(e) Internationalisation_ _of_ _firms and industrial cooperation_

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

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

9 There is now an international consensus on recognising a set of Conventions drawn up by the
International Labour Organisation (ILO).
10 _The trading system and internationally recognised labour standards,_ COM(96)402 final, 24 July

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

**14**

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

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

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

**15**

4. CONCLUSIONS

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

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

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

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

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

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

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

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

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

**16**

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

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

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

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

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

area.

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

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

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

Continued efforts must also be made **to include minimum environmental**

**standards and the respect for fundamental social rights in international**
**relations.**

**17**

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

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

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

**18**

**EUROPEAN PLAN OF ACTION**

**TO INCREASE THE COMPETITIVENESS**

**OF** **THE TEXTILE AND CLOTHING INDUSTRY**

**1997 - 2000**

_Recommendations from the two sides of_ _Action_
_industry_

INNOVATION AND INDUSTRIAL AND

INFORMATION TECHNOLOGIES

- The existing links between R&D,' • Steps have already been taken to
innovation and, new technologies develop new products, methods and
suggest that the complementarity equipment as well as the application of
between the various initiatives in this information technology and electronic
field should be exploited. commerce techniques in the sector.

- To co-ordinate and ensure the

dissemination of the results of research
and their application in practice remains • A thematic network is to be set up for
a priority objective. research purposes.

EMPLOYMENT, SOCIAL SECURITY AND

TAXATION

- Tripartite cooperation to be stepped up • An _ad hoc_ working group has been set
(Commission, Member States, the two up on the basis of the Report on the
sides of industry). development of tax systems in the
European Union. [1 ]

These topics will be tackled in the talks
between the two sides of the industry.

- More detailed talks on • A study on tax avoidance and the black
creating/maintaining jobs, economy have been promoted by the
reducing/reorganising working time, Commission.
training and flexibility in the internal A Green Paper on this subject is being
organisation of firms. drafted.

- Initiatives recommended in the field of • A forum has been held on the

tax legislation with regard to the transfer Recommendation on the transfer of
of family businesses. SMEs (OJ L 385/94). The results will
be summarised in a report. A
Commission communication on

follow-up action will be presented
shortly.

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

**19**

_Recommendations from the two sides of_ _Action_
_industry_

TRAINING

- Training needs for new qualifications. - Training requirements in the clothing
Internal training and retraining sub-sector have been examined in the
programmes. talks between the two sides of the
industry; a similar initiative is planned
for the textile sector. A number of

projects put forward by the two sides of
industry are being considered.

- SMEs in the sector must be given easier • The second stage of the ADAPT
access to the existing instruments. programme began in January 1997. In
autumn 1997, the new projects selected
by the Member States will be
implemented»

INDUSTRIAL COOPERATION BETWEEN

EUROPEAN UNION FIRMS < 

- Continuation and monitoring of the • Current action on technical relations
subcontracting programme between those who place the orders and
(Commission Communication those who make them up; promotion
COM(96)210 final of 15 May 1996 and (IBEX: International Buyers'
conclusions of the Council meeting on Exhibitions); information (SCAN:
14 November 1996. Subcontracting Assistance Network);

statistics.

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

ENVIRONMENT

Azo DYES - PCP

 - To ensure that ecological • The Commission will be involved in
considerations are taken into account in the exercise which the WTO's "Trade

making firms more competitive. and Environment" Committee has
recently begun. Its aim is to analyse
the environmental impact of the
liberalisation of trade and the

commercial impact of environmental
legislation in this sector.

**20**

_Recommendations from the two sides of_ _Action_
_industry_

_•_ To encourage harmonisation of the • The desirability and feasibility of
Member States' laws on azo dyes and harmonisation in this field is currently
pentachlorophenol so as to avoid being assessed. This assessment relates
creating obstacles to the correct to two matters, namely the health risks
operation of the internal market. arising from the use of these substances

and the effect which a ban on these

substances would have on the internal

market and in third countries. Directive

76/769 is to be revised.

PUBLIC PROCUREMENT

- Measures to make legislation more • A Green Paper entitled _"Public_
effective in practice _Procurement in the European Union:_
_exploring_ _the_ _way forward"_ was
published in November 1996.

- Action to ensure that the Member States • A communication is to be issued in

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

INDUSTRIAL AND COMMERCIAL PROPERTY

- Promoting measures to combat • On 13 March 1997, a common position
counterfeiting and the copying of was reached on the Directive:
designs and industrial models. COM(93)344 final. It will take between
nine and 21 months to complete the
codecision procedure.

STATE AIDS

- Introduction of a multisectoral • The multisectoral framework plan is
framework, with a notification threshold being considered in talks with the
suited to the particular characteristics of Member States.
the textile/clothing sector.

**21**

_**Recommendations from the two sides of**_
_**industry**_

COMMERCIAL POLICY

- Improving access to the markets of third
countries.

Compliance with the rules and
disciplines and continued efforts to
combat fraud.

- Measures to promote exports

More detailed discussion of issues

connected with the social label.

European firms to adopt a code of
conduct

_**Action**_

In its international relations, the

Commission will continue its efforts to

promote market access.

In collaboration with the Member States

and both sides of industry, the
Commission will apply the instruments
of commercial policy available to it,
whenever the situation so requires.

- The Commission will strive for a better

exchange of information with the
Member States: if necessary, a
coordination scheme will be introduced.

Any long-term proposal will be
examined in collaboration with the

economic operators. Consideration may
be given to setting up textile/clothing
industry representation offices in third
countries.

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

- The Commission is considering the
possibility of promoting a wide
dissemination of the code of conduct

among firms and consumers.

**22**

**ISSN 0254-1475**

### COM(97) 454 final

# **DOCUMENTS**

#### EN 10 08 04 13 Catalogue number : CB-C0-97-467-EN-C

##### ISBN 92-78-24599-2

Office for Official Publications of the European Communities

L-2985 Luxembourg

**o23**