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Changes Aim to Keep EU Competitive

BRUSSELS — With a little more than a year to go until global textile and clothing quotas disappear for good, the European Commission on Tuesday unveiled a series of measures including a new “Made in Europe” label aimed at preserving...

BRUSSELS — With a little more than a year to go until global textile and clothing quotas disappear for good, the European Commission on Tuesday unveiled a series of measures including a new “Made in Europe” label aimed at preserving the European Union’s competitive edge.

“It is an area where the EU is and wants to remain the main commercial player on the world stage,” EU Trade Commissioner Pascal Lamy asserted to journalists a day before the EU executive was set to rubber-stamp a 41-page report outlining the changes.

In January 2005, after a 10-year-long phaseout called for by the World Trade Organization’s Agreement on Textiles and Clothing, importing countries will no longer be allowed to discriminate against exporters. The Commission fears that the lifting of quotas will lead to increased competitive pressure for the current 15 EU members. Developing nations, especially WTO newcomer China, as well as other major manufacturers such as India and Pakistan, are seen as posing a strong competitive threat to most developed nations’ textile industries. At the same time, the WTO development round of talks in Doha, Qatar, seeks to promote market access by eliminating all nontariff barriers.

On top of this, the clothing and textile industries in the 10 countries set to join the EU next year are expected to experience huge costs and other difficulties in meeting EU environmental, health and safety requirements. Medium term, they also risk losing their labor cost advantages amid increased competition from low-priced Asian imports.

The EU is the world’s largest textile exporter, with a 15 percent market share, and the second-largest clothing exporter after China, according to Commission statistics. The EU’s textile industry currently employs 2.1 million people.

To ensure the enlarged EU remains a strong player in a post-quota world, the Commission is calling for limiting preferential trade treatment to the poorest countries, increasing vigilance against counterfeiting and unfair trade practices and the introduction of labels recognizing EU products manufactured in respect of international environmental and labor standards.

The report also suggests the use of a “Made in Europe” label of origin to promote European quality products.

“The European image is linked to quality and added value,” Lamy said. “We want to take advantage of that.”

He added that any new requirements would have to be discussed with the industry and not be too strict to be considered a trade barrier.

In industrial policy, the Commission suggested more research and development into new materials and new production processes, improving education and training for small and medium-size businesses and increased EU funding for regions particularly dependent on textiles.

Bill Lakin, director general of EU textile and clothing industry lobbying group Euratex, said the Commission’s report is timely.

“Overall, I find the general thrust of the document very positive,” he said in an interview.

Next up, the Commission plans to set up a high-level group with representatives from the Commission, member states and stakeholders to explore initiatives and make recommendations to EU and national policy makers and issue follow-up progress reports in 2005 and 2006.

It also plans to publish a report in January outlining the products most under threat with the end of quotas; the resulting effects on production and employment in the expanded EU, and the likely impact on textile-producing regions.