MEETING OF THE 133 (TEXTILES) COMMITTEE
PRESENTATION
TO 133 TEXTILES COMMITTEE
10th October 2006
Held in Brussels – Council Justus Lipsius Building
Chairman,
Ladies and Gentlemen,
Thank you very much for this further opportunity to address the 133 Textiles Committee under the Finnish Presidency. I do hope that everyone around the table had a quieter summer break than can have been the case last year. And in that respect, I think it important to stress once again that the problem was not created by European industry but by those who sought to break a bilateral agreement.
On an equally serious note, I hardly need to repeat just how important it is for us that member-states’ representatives should be prepared to devote part of one of their meetings to EURATEX, and that these regular addresses to your Committee are crucial opportunities for us to explain why it is that we adopt the positions we do, and hopefully too to convince you that we are right. For us then, this is not just any old speech; it is one of the opportunities of the year.
We know that in spite of, or indeed perhaps because of, the end of the ATC, trade policy remains one of the fundamental ingredients of the Table d’Hote menu we hope will be served in what might be called the Overall Policy Framework Auberge, cooked up by the Commission, spiced up or otherwise by member-states, and containing too the occasional additional condiment from industry itself.
But before turning to external trade policy, let me first attempt to review where we stand today and what industry itself has done in recent months to forward its own Agenda, and to make sure that the dishes on our particular menu will provide adequate nourishment for our industry over the years to come, and will also be as distinctive and of an equally high standard to those to which you have become accustomed when coming into our restaurant. After all, Europe’s textile and clothing industry does not do cheap and cheerful.
To continue the restaurant metaphor, I hope that everyone around this dinner table has already received a copy of the report adopted by the High Level Group for textiles and clothing on 18th September this year and has had an opportunity to digest it, because there is no doubt in my mind that the chapter setting out a Vision for the Industry to the year 2020 includes in it the meat and potatoes of what will be required in order to achieve the leaner, meaner, innovation and technology driven, fashion and industrial sector of activity towards which we must now firmly set our minds.
Even before the September report was adopted, EURATEX itself had taken the decision to set up an Implementation Committee to ensure that wherever possible industry itself will fulfil the obligations which that Vision places upon it. If I may here take a few section headings to refresh our memories: the fragmented supply chain – meaning the need to enhance co-operation, move towards larger units with the necessary critical mass, and make much greater use of standardisation; technology and innovation; fashion and image; IPR – the rule of law to replace the law of the jungle. In all of these areas, there is much that industry itself can and must do in order to achieve these goals.
One clear example is how we can persuade many more of our own companies to do something which they may often have felt to be against their own best interests and instincts: that of coming much closer together, creating critical mass, and achieving economies of scale, as well as easier access to credit. It will be clear here that it is difficult enough for me and my colleagues to voice such considerations alone, but I suspect that it would be even more counterproductive for the authorities to tell companies that this was the solution.
Let me give you a further example, in this case, of something we ourselves have achieved against the odds.
On June 7th of this year, the Technology Platform for the Future of Textiles and Clothing unveiled its Strategic Research Agenda. I believe that we sent a copy of this document to each of you, another major breakfast in its own right, and we do have further copies available for wider distribution among your colleagues. I view this work as a major contribution to the future of the industry, involving concentrated work by close to 300 company, institute and university experts, brought together by EURATEX in an industry-driven initiative in close co-operation with DG Research and DG Enterprise. We are concentrating here upon the three pillars we identified at the outset, involving respectively:
• A move from commodities to specialities
• New textile applications and
• Mass customisation in the apparel industry.
These areas of progress offer the prospect of a safer and more comfortable world around us, energy-saving solutions in transport and related fields, and the opportunity for the consumer to make a real and advised choice on the style, fabric and shade which he or she genuinely wants when choosing a garment. Here the retailer should go to the customer – not the opposite. I hope in due course to have further opportunities to speak to you of breathtaking new ideas in other areas too which could, for example, revolutionise container shipping.
Our potential customers, the larger retailers and distributors, then should have a role to play here, as long as the only stake that they claim to hold in our industry is not one which is pointed, vampire-killer like at the heart of EU manufacturing. When they speak to you next month in that part of your Agenda termed “dialogue with stakeholders”, why don’t you ask them what they are doing to enhance the competitiveness of the European textile and clothing industry?
But the point I really wanted to make here was that few would have given us credit for the capacity of bringing together in the Technology Platform so many companies, institutes and universities, motivated by one clear commitment: to make tomorrow’s textile and clothing industry in Europe and the pan euro Mediterranean area dynamic, progressive, and still the undisputed leader of fashion, image, technology and productivity.
I must add however, in saying this, that if it is to benefit properly from these three innovative
development areas, Europe’s industry is entirely justified in insisting that the authorities provide us with the necessary legislation to protect our intellectual property rights, including our non-technological innovations. I know and accept fully that counterfeiting and piracy occurs within the frontiers of the EU, and on goods entering the EU too. But this is no excuse not to tackle effectively those areas where legal loopholes exist in third countries and thus permit or indeed encourage counterfeiters of EU and other designs and models to carry out their work over there.
I believe that in this context this Committee should take upon itself to closely examine issues involving the implementation of Article 25.2 of the WTO TRIPS agreement which, frankly, has been limping along for twelve years with little information or confirmation as to which WTO members have brought their legislation into line with that agreement. Moreover, the least developed have been given further periods of time in which to adapt their legislation to TRIPs, in conformity we are told with the EU’s policy on development.
Ladies and Gentlemen, this is not a healthy dish to serve to those countries. It simply adds insult to injury, by potentially depriving rights holders in those countries of the necessary legal protection to which they too have a right, and stifling any incentive they might have to develop their own indigenous products, brands and designs. Has any genuine debate on the practicalities of EU policies in this field ever taken place, or have we all blindly accepted the teachings in other fields of the Gospel according to St. Thomas (Ostros) and Blessed Margaret (Wallstrom), which seem to suggest that the only form of international regulation which is acceptable should bear down upon EU companies, and that all others should have no constraints, even if such constraints are in this particular case, believe it or not, in their own longer-term interest.
Here I might too be tempted to add a word on the issue of preferential origin rules. It may be understandable that development-gurus who have never been actively involved in the industry should suggest that modifications to such rules need to be made in the interest of the most vulnerable and least developed producer countries. Before any change is made, however, is it not worth asking some searching questions, bearing in mind that the objective of preferences themselves is not to boost trade per se, but to enhance industrial development:
• Who will actually benefit?
• Can such new rules be effectively implemented and policed?
• What is the impact upon EU manufacturing activity as such?
If you were to ask me these questions, I would reply in brief that: major beneficiaries would be producers of fabric such as India and China, together with large European distributors. The least developed will not benefit to any significant extent. Rules will be incapable of effective control and impact on EU spinning and weaving activity in particular could prove substantial. Do we really need this to occur merely to satisfy the development beliefs of the uninformed?
In one other important context, however, we do already know the answer. We know that to date lower import prices have not been translated into lower consumer prices across the EU. There may be exceptions, but what concerns us as a European body, and you as representatives on an EU committee is surely what is happening across the EU as a whole. The figures on the screen point to incontrovertible facts, and cover a sufficiently long period of time for there to be no possible doubt about the situation.
Over the period 2000 to 2005 consumer prices for clothing and footwear across the EU-25 fell by less than 1%. At the same time clothing import prices fell by no less than 24%. The consumer does not benefit. We all then have a right to know who does. DG Trade will certainly have some answers in a few months’ time. Will it be prepared to release the conclusions of the report it is commissioning? But in the meantime, please do not allow yourselves to be fobbed off by anything less than the simple facts that consumer prices have not fallen whilst import prices have.
Earlier in this address I attempted to provide some indications of the kinds of activity in which EURATEX is leading the way for industry self-help policies. Let me now turn to those areas where you, the authorities, can and really ought to help us and this with specific reference to external trade policy.
I believe that ab urbi condita EURATEX, now one decade old, has constantly stressed the need for genuine market access to third countries. Certainly in the more than six years that I have had the privilege to speak to this Committee, there has not been one occasion when I have not mentioned just how much this issue is central to our future well-being. Let me repeat here too that when I mention market access I mean more than just tariff reductions down to our present EU levels on the part of all major and potentially major markets, but I also mean the removal of non-tariff barriers in all their forms. The end object of this is to ensure that if we in Europe have the right (quality) product at the right price, then we can sell it abroad as we can sell it on our domestic market – and by the way just as easily as others export their often inferior goods to us.
The suspension of talks in Geneva is therefore more than a minor irritant. Market access is crucial to us, even if in all logic we see no need to give proportionately more in tariff terms than those whose markets remain obstinately closed. The current DDA situation signifies a further delay in the opening up of those third markets, even as we prepare to offer our competitors free gifts in the form of modified origin rules and the like. Is this really the way to achieve market access? Should we then abandon the WTO route and go bilateral?
Here I believe that the EU has to become as opportunistic and hard-headed as its major competitors. Bilaterals per se cannot achieve the same overall result as a good multilateral agreement can. Nonetheless, if we see a genuine opportunity for a good bilateral deal – the FTA with Chile comes to mind here – then we should take it. Similarly, should circumstances arise in which a productive and balanced WTO deal emerges, then we should take that too.
But here I believe that we need to be cautious. The EU will gain no advantage in either economic or political terms if it seeks to negotiate a deal for the sake of a deal. Nobody will thank us for being overgenerous; concessions are pocketed and their beneficiaries come back for more. Those of you who lived through the WTO Ministerial Conference in Hong Kong will be only too aware of what I mean.
In spite of the generosity of its past policies, and of what it had already put on the luncheon menu, the EU found itself isolated and pilloried. I would humbly suggest that if one is to be isolated, if one is to be considered less than generous by other countries, then ones negotiating position should justify that.
As an industry, even if we have a major stake in the outcome of the DDA, we have to admit that the solution does not lie in our hands. It lies collectively in yours. I can only then for the moment commend the external trade aspects of the High Level Group Report of 18th September to you and re-state the importance that they continue to have in our eyes. In so doing, and in the light of the Commission Communication on external competitiveness which has just seen the light of day, I would stress in particular the value of input from industry itself in highlighting specific cases where European exports are being held up at the borders of their country of destination, even when we have a Free Trade Agreement with that country, or paying a much higher price than they should in order to achieve entry.
If our companies are to continue to find advantage in drawing cases of abuse to our and to your notice, they have to see concrete results. And industry needs to feel that there is in this context and others a sense of partnership and common purpose.
The same should apply by the way in respect of Trade Defence instruments. If dumping or subsidies do harm EU manufacturers, they must continue to trust those instruments to work on their behalf. It is all very well for importers to complain that such actions disrupt their profit-margins. The closure of an EU textile company means permanent job losses.
I began with a reference to China and the summer of 2005. I close by quoting that part of my President’s statement on that same subject to the High Level Group on 18th September of this year. “Here, if only in terms of equity, we need to be aware that of those countries which have applied safeguard measures or reached other forms of agreement with China, we in the EU are alone in facing the bleak prospect of a year 2008 without quantitative limitations, as if at end 2003 the EU had decided to abolish the ATC quotas one year earlier than our American and Canadian friends.”
At all events, Mr. Chairman, I am grateful for this further opportunity to speak to you today, and we will of course be happy to reply to any questions you may have. We hope too that you will be able to join us at a special event to be held here in Brussels on the evening of November 30th 2006.
Thank you for your attention.
PRESENTATION
TO 133 TEXTILES COMMITTEE
10th October 2006
Held in Brussels – Council Justus Lipsius Building
Chairman,
Ladies and Gentlemen,
Thank you very much for this further opportunity to address the 133 Textiles Committee under the Finnish Presidency. I do hope that everyone around the table had a quieter summer break than can have been the case last year. And in that respect, I think it important to stress once again that the problem was not created by European industry but by those who sought to break a bilateral agreement.
On an equally serious note, I hardly need to repeat just how important it is for us that member-states’ representatives should be prepared to devote part of one of their meetings to EURATEX, and that these regular addresses to your Committee are crucial opportunities for us to explain why it is that we adopt the positions we do, and hopefully too to convince you that we are right. For us then, this is not just any old speech; it is one of the opportunities of the year.
We know that in spite of, or indeed perhaps because of, the end of the ATC, trade policy remains one of the fundamental ingredients of the Table d’Hote menu we hope will be served in what might be called the Overall Policy Framework Auberge, cooked up by the Commission, spiced up or otherwise by member-states, and containing too the occasional additional condiment from industry itself.
But before turning to external trade policy, let me first attempt to review where we stand today and what industry itself has done in recent months to forward its own Agenda, and to make sure that the dishes on our particular menu will provide adequate nourishment for our industry over the years to come, and will also be as distinctive and of an equally high standard to those to which you have become accustomed when coming into our restaurant. After all, Europe’s textile and clothing industry does not do cheap and cheerful.
To continue the restaurant metaphor, I hope that everyone around this dinner table has already received a copy of the report adopted by the High Level Group for textiles and clothing on 18th September this year and has had an opportunity to digest it, because there is no doubt in my mind that the chapter setting out a Vision for the Industry to the year 2020 includes in it the meat and potatoes of what will be required in order to achieve the leaner, meaner, innovation and technology driven, fashion and industrial sector of activity towards which we must now firmly set our minds.
Even before the September report was adopted, EURATEX itself had taken the decision to set up an Implementation Committee to ensure that wherever possible industry itself will fulfil the obligations which that Vision places upon it. If I may here take a few section headings to refresh our memories: the fragmented supply chain – meaning the need to enhance co-operation, move towards larger units with the necessary critical mass, and make much greater use of standardisation; technology and innovation; fashion and image; IPR – the rule of law to replace the law of the jungle. In all of these areas, there is much that industry itself can and must do in order to achieve these goals.
One clear example is how we can persuade many more of our own companies to do something which they may often have felt to be against their own best interests and instincts: that of coming much closer together, creating critical mass, and achieving economies of scale, as well as easier access to credit. It will be clear here that it is difficult enough for me and my colleagues to voice such considerations alone, but I suspect that it would be even more counterproductive for the authorities to tell companies that this was the solution.
Let me give you a further example, in this case, of something we ourselves have achieved against the odds.
On June 7th of this year, the Technology Platform for the Future of Textiles and Clothing unveiled its Strategic Research Agenda. I believe that we sent a copy of this document to each of you, another major breakfast in its own right, and we do have further copies available for wider distribution among your colleagues. I view this work as a major contribution to the future of the industry, involving concentrated work by close to 300 company, institute and university experts, brought together by EURATEX in an industry-driven initiative in close co-operation with DG Research and DG Enterprise. We are concentrating here upon the three pillars we identified at the outset, involving respectively:
• A move from commodities to specialities
• New textile applications and
• Mass customisation in the apparel industry.
These areas of progress offer the prospect of a safer and more comfortable world around us, energy-saving solutions in transport and related fields, and the opportunity for the consumer to make a real and advised choice on the style, fabric and shade which he or she genuinely wants when choosing a garment. Here the retailer should go to the customer – not the opposite. I hope in due course to have further opportunities to speak to you of breathtaking new ideas in other areas too which could, for example, revolutionise container shipping.
Our potential customers, the larger retailers and distributors, then should have a role to play here, as long as the only stake that they claim to hold in our industry is not one which is pointed, vampire-killer like at the heart of EU manufacturing. When they speak to you next month in that part of your Agenda termed “dialogue with stakeholders”, why don’t you ask them what they are doing to enhance the competitiveness of the European textile and clothing industry?
But the point I really wanted to make here was that few would have given us credit for the capacity of bringing together in the Technology Platform so many companies, institutes and universities, motivated by one clear commitment: to make tomorrow’s textile and clothing industry in Europe and the pan euro Mediterranean area dynamic, progressive, and still the undisputed leader of fashion, image, technology and productivity.
I must add however, in saying this, that if it is to benefit properly from these three innovative
development areas, Europe’s industry is entirely justified in insisting that the authorities provide us with the necessary legislation to protect our intellectual property rights, including our non-technological innovations. I know and accept fully that counterfeiting and piracy occurs within the frontiers of the EU, and on goods entering the EU too. But this is no excuse not to tackle effectively those areas where legal loopholes exist in third countries and thus permit or indeed encourage counterfeiters of EU and other designs and models to carry out their work over there.
I believe that in this context this Committee should take upon itself to closely examine issues involving the implementation of Article 25.2 of the WTO TRIPS agreement which, frankly, has been limping along for twelve years with little information or confirmation as to which WTO members have brought their legislation into line with that agreement. Moreover, the least developed have been given further periods of time in which to adapt their legislation to TRIPs, in conformity we are told with the EU’s policy on development.
Ladies and Gentlemen, this is not a healthy dish to serve to those countries. It simply adds insult to injury, by potentially depriving rights holders in those countries of the necessary legal protection to which they too have a right, and stifling any incentive they might have to develop their own indigenous products, brands and designs. Has any genuine debate on the practicalities of EU policies in this field ever taken place, or have we all blindly accepted the teachings in other fields of the Gospel according to St. Thomas (Ostros) and Blessed Margaret (Wallstrom), which seem to suggest that the only form of international regulation which is acceptable should bear down upon EU companies, and that all others should have no constraints, even if such constraints are in this particular case, believe it or not, in their own longer-term interest.
Here I might too be tempted to add a word on the issue of preferential origin rules. It may be understandable that development-gurus who have never been actively involved in the industry should suggest that modifications to such rules need to be made in the interest of the most vulnerable and least developed producer countries. Before any change is made, however, is it not worth asking some searching questions, bearing in mind that the objective of preferences themselves is not to boost trade per se, but to enhance industrial development:
• Who will actually benefit?
• Can such new rules be effectively implemented and policed?
• What is the impact upon EU manufacturing activity as such?
If you were to ask me these questions, I would reply in brief that: major beneficiaries would be producers of fabric such as India and China, together with large European distributors. The least developed will not benefit to any significant extent. Rules will be incapable of effective control and impact on EU spinning and weaving activity in particular could prove substantial. Do we really need this to occur merely to satisfy the development beliefs of the uninformed?
In one other important context, however, we do already know the answer. We know that to date lower import prices have not been translated into lower consumer prices across the EU. There may be exceptions, but what concerns us as a European body, and you as representatives on an EU committee is surely what is happening across the EU as a whole. The figures on the screen point to incontrovertible facts, and cover a sufficiently long period of time for there to be no possible doubt about the situation.
Over the period 2000 to 2005 consumer prices for clothing and footwear across the EU-25 fell by less than 1%. At the same time clothing import prices fell by no less than 24%. The consumer does not benefit. We all then have a right to know who does. DG Trade will certainly have some answers in a few months’ time. Will it be prepared to release the conclusions of the report it is commissioning? But in the meantime, please do not allow yourselves to be fobbed off by anything less than the simple facts that consumer prices have not fallen whilst import prices have.
Earlier in this address I attempted to provide some indications of the kinds of activity in which EURATEX is leading the way for industry self-help policies. Let me now turn to those areas where you, the authorities, can and really ought to help us and this with specific reference to external trade policy.
I believe that ab urbi condita EURATEX, now one decade old, has constantly stressed the need for genuine market access to third countries. Certainly in the more than six years that I have had the privilege to speak to this Committee, there has not been one occasion when I have not mentioned just how much this issue is central to our future well-being. Let me repeat here too that when I mention market access I mean more than just tariff reductions down to our present EU levels on the part of all major and potentially major markets, but I also mean the removal of non-tariff barriers in all their forms. The end object of this is to ensure that if we in Europe have the right (quality) product at the right price, then we can sell it abroad as we can sell it on our domestic market – and by the way just as easily as others export their often inferior goods to us.
The suspension of talks in Geneva is therefore more than a minor irritant. Market access is crucial to us, even if in all logic we see no need to give proportionately more in tariff terms than those whose markets remain obstinately closed. The current DDA situation signifies a further delay in the opening up of those third markets, even as we prepare to offer our competitors free gifts in the form of modified origin rules and the like. Is this really the way to achieve market access? Should we then abandon the WTO route and go bilateral?
Here I believe that the EU has to become as opportunistic and hard-headed as its major competitors. Bilaterals per se cannot achieve the same overall result as a good multilateral agreement can. Nonetheless, if we see a genuine opportunity for a good bilateral deal – the FTA with Chile comes to mind here – then we should take it. Similarly, should circumstances arise in which a productive and balanced WTO deal emerges, then we should take that too.
But here I believe that we need to be cautious. The EU will gain no advantage in either economic or political terms if it seeks to negotiate a deal for the sake of a deal. Nobody will thank us for being overgenerous; concessions are pocketed and their beneficiaries come back for more. Those of you who lived through the WTO Ministerial Conference in Hong Kong will be only too aware of what I mean.
In spite of the generosity of its past policies, and of what it had already put on the luncheon menu, the EU found itself isolated and pilloried. I would humbly suggest that if one is to be isolated, if one is to be considered less than generous by other countries, then ones negotiating position should justify that.
As an industry, even if we have a major stake in the outcome of the DDA, we have to admit that the solution does not lie in our hands. It lies collectively in yours. I can only then for the moment commend the external trade aspects of the High Level Group Report of 18th September to you and re-state the importance that they continue to have in our eyes. In so doing, and in the light of the Commission Communication on external competitiveness which has just seen the light of day, I would stress in particular the value of input from industry itself in highlighting specific cases where European exports are being held up at the borders of their country of destination, even when we have a Free Trade Agreement with that country, or paying a much higher price than they should in order to achieve entry.
If our companies are to continue to find advantage in drawing cases of abuse to our and to your notice, they have to see concrete results. And industry needs to feel that there is in this context and others a sense of partnership and common purpose.
The same should apply by the way in respect of Trade Defence instruments. If dumping or subsidies do harm EU manufacturers, they must continue to trust those instruments to work on their behalf. It is all very well for importers to complain that such actions disrupt their profit-margins. The closure of an EU textile company means permanent job losses.
I began with a reference to China and the summer of 2005. I close by quoting that part of my President’s statement on that same subject to the High Level Group on 18th September of this year. “Here, if only in terms of equity, we need to be aware that of those countries which have applied safeguard measures or reached other forms of agreement with China, we in the EU are alone in facing the bleak prospect of a year 2008 without quantitative limitations, as if at end 2003 the EU had decided to abolish the ATC quotas one year earlier than our American and Canadian friends.”
At all events, Mr. Chairman, I am grateful for this further opportunity to speak to you today, and we will of course be happy to reply to any questions you may have. We hope too that you will be able to join us at a special event to be held here in Brussels on the evening of November 30th 2006.
Thank you for your attention.