Europeans Feel Price Pinch

EU industry groups project the first post-quota year to be marked by increased pressure on prices, mostly from a surge in imports from China.

GENEVA — European Union-based textile industry groups project the first post-quota year to be marked by increased pressure on prices, in great part from the expected surge in imports from China.

“The prospects are not good,” said Emmanuelle Butaud, director of economic and international affairs at Union des Industries Textiles, an umbrella group for 1,500 French companies.

Butaud said with the removal of quotas the expectations are there will be intense pressure on prices from the big retail conglomerates that account for about 73 percent of distribution in major EU markets.

Butaud also said she expects a “significant increase in imports, mainly coming from China, but we don’t know by how much.”

In 2003, imports of textiles and apparel from China totaled 12.3 billion euros, or $16.73 billion, accounting for 17.5 percent of total EU imports in the sector.

European Commission officials based in Brussels, however, are more optimistic.

“The community has stuck to its commitments under the Agreement on Textiles & Clothing, and we hope there will be a smooth transition in the coming year in the textiles and apparel sector,” said a senior Brussels-based EU official, who asked not to be named.

The EU’s new trade commissioner, Peter Mandelson, following a meeting on Dec. 22 with Filiep Libeert, president of Euratex, the association of European textiles manufacturers, said: “I believe that the European industry is able to compete in the global market. The industry has devoted huge resources to preparing for this change over the last 10 years.”

Mandelson said by investing in high-tech innovation and focusing on “traditional strengths in high-tech specialist fabrics and designer fashion,” the industry has a future.

Some industry experts feel that while the big European textile firms have prepared in the last decade for the post-quota world by making huge investments and internationalizing their operations, the same cannot be said for small and medium-size firms.

Industries based in the newly acceded countries to the EU, such as Poland, are also likely to be adversely affected, experts noted.

“Clearly, new member-state companies will have to continue to restructure and improve productivity,” said Francesco Marchi, director of economic affairs at Euratex.

This story first appeared in the January 3, 2005 issue of WWD.  Subscribe Today.

There also seems to be a wide divergence of views over the trade challenge posed by China.

Retailers and importers who have already benefited from big cuts in prices from products where quotas have been phased out are keen to facilitate more imports into the liberalized EU market. But EU manufacturers insist the main problem remains the pressure on prices, with China the principal threat.

“We fear overcapacity there will push prices further down; the question is by how much.” said Marchi.