Euratex is keen to prevent textiles and clothing from being used as an "easy" political bargaining chip

Euratex is keen to prevent textiles and clothing from being used as an "easy" political bargaining chip

The impact of global trade policies, particularly free trade agreements, continues to preoccupy the European Apparel and Textile Confederation (Euratex). Its just-released annual report points out that pacts with key markets around the world remain a priority. And a conference last week continued the debate, looking at the benefits of existing FTAs and the potential impact of those in the pipeline.

Euratex, the Brussels-based European Apparel and Textile Confederation, invests a lot of energy in trying to influence European Union trade negotiations.

And there are good reasons for doing so, as was explained to an audience of 140 people at last week's Euratex Conference on 'Free Trade and International Agreements.' Extra-EU textile and apparel exports were worth EUR42.4bn (US$57.5bn) in 2013 and, at represent a 25.5% - and growing - share of total sector sales.

Euratex, as president Alberto Pacannelli stressed, wants to make sure that free trade agreements create opportunities for the sector by making trade cheaper and faster and the policy environment more predictable.

The association also wants to prevent textiles and clothing from being used as an "easy" political bargaining chip in international trade negotiations.

This was the case recently, it believes, when the EU temporarily lifted duties on 75 products from Pakistan - the majority of which were textiles, apparel and footwear until the end of 2013. And despite strong Euratex opposition, the country was also granted GSP+ status as of 1 January this year, enabling the country to have duty-free access to the EU market.

Impact of trade agreements
European Commission negotiators may indeed tend to underestimate the possibly negative impact of trade agreements on all or some segments of the European textile and apparel sector.

Lauro Panella of the EC's Directorate-General for Enterprise and Industry, pointed out that before 2012, when the Commission adopted a communication on creative industries in Europe, "fashion" was never mentioned in any Commission document. 

However, according to Signe Ratso, director of trade strategy and market access at the EC, even if the Commission considers textiles and clothing as "a traditional" sector, it is fully aware of its social importance as an employer of 1.66m people in 2013, its innovation and remarkable resilience. 

Ratso also believes the sector has benefited from the Commission's market access strategy. Since 2000, numerous trade barriers have been removed, which may have resulted in EUR2bn more extra-EU exports of textiles and clothing per year. Free trade negotiations are also underway with Canada, Mercosur, Vietnam, Thailand, India, and the US and Japan.

Francesco Marchi, director general of Euratex, underlined that the EU FTAs currently in place absorbed more than 44% of the eur42.4bn extra-EU sector exports in 2013.

Win-win testimonies
Director BH Kim of the Korean Federation of Textile Industries (KOFOTI), concluded that the EU-Korea Free Trade Agreement, in force since July 2011, was a win-win situation. Since 2011, Korea's textile and clothing imports from the EU have increased by 12%, while imports from US fell by 12% and those from Japan by 6.8%. European retailers like H&M and Zara are successfully catering to the growing Korean fashion market, which was worth US$36bn in 2013.

Rajeev Arora, executive director of ACTIF, the African Cotton & Textile Association, boasted that Sub-Saharan Africa is offering great market access to the US and EU, thanks to AGOA (the Africa Growth and Opportunity Act) and EPA (Economic Partnership Agreements). He signalled to potential European investors that Asian and Turkish groups are taking the lead. Among them is the Indian company Kanoria Chemicals & Industries, setting up a US$30m denim plant in Ethiopia with a capacity of 12m metres.

In spite of Japan's widening textile and clothing trade deficit, Hideshi Ueda, executive vice-president of the Japan Textile Association (JFT), is very positive towards further expansion of Japan's FTA-network. He believes a free trade agreement with the EU will offer the Japanese industry, a leader in high-end textiles, a platform for various types of R&D cooperation. 

Also Rahul Mehta, president of CMAI, the Clothing Manufacturers' Association of India, hails a future FTA with the EU. He's sure that, with the new Prime Minister Modi at the helm, Indian retailers and exporters alike will increase their competitiveness when markets open up.

And Fernando Pimentel, director general of ABIT, the Brazilian Textile and Apparel Industry Association, declared that the group has always been in favour of a FTA between Mercosur (the customs union encompassing Brazil, Argentina, Uruguay, Paraguay and Venezuela) and EU. While optimistic that Mercosur-EU co-operation would offer an alternative to some Asian textile and apparel business, he said Argentina is holding up a Mercosur-EU Free Trade Agreement.

Fears and complaints
Jean-François Gribomont, president of the Belgian textile association Fedustria, is firmly opposed to FTAs between countries with a different level of economic development and different political rules. He believes an FTA with India will be negative for the EU textile industry and that the FTA with Vietnam will destroy what remains.

Kenan Koç, board member of the Turkish Textile Employers' Association, complained about the frustrating position of his country within the Turkey-EU Customs Union. While Turkey is not a member of EU and has no voice in the numerous FTA negotiations launched by the EU, it is affected by EU enforced FTAs.

And in his testimony from an EU company exporting worldwide, Bernd Stadtler, head of international customs affairs at Hugo Boss, said FTAs have a negative impact on production and sub-contracting decisions. Management of duty preferences is nearly impossible, he said, adding that complicated rules of origin constitute a huge risk for making errors and incurring heavy fines.