The European Parliament adopted a resolution based on the own-initiative report drafted by Tokia SAÏFI (EPP-ED, FR) and expressed its concern at the abnormally high growth in the amount of non-EU textile products, especially from China, imported into the EU since the WTO Agreement on Textiles and Clothing expired on 1 January 2005 and quotas were abolished. (Please see the summary of 14/06/2005.) World trade, including trade with China, can only be regarded as a ‘challenge’ rather than as a ‘threat’ by the European textile sector if there is a level playing field and both sides play according to the rules of trade, which has hitherto certainly not been the case.

Parliament felt that the central problem concerning trade with China is that China is by no means a free market and that most textile firms are still State-owned, receive interest-free loans via State banks, as well as systematic export subsidies, covert State aid and free electricity, which does not amount to a smooth functioning of the market.

Moreover, 70% of all counterfeit goods dumped on the European market come from China, and half of all European customs procedures against counterfeiting relate to textiles and clothing, with nearly 5 million counterfeit articles and accessories of clothing being confiscated by customs annually.

Parliament took note of the ‘Memorandum of Understanding’ concluded between the Commission and China on 10 June 2005, with regard to the limitation of certain Chinese textile exports. However, it called on the Commission and the Council to extend the coverage of that agreement to other categories of textiles where necessary and to ensure transparency as to the basis for the calculation of the export limitations. The safeguard clauses must be applied in the event of an inappropriate application of the agreement.

At the same time, the Commission is asked to protect intellectual property rights more securely in accordance with the WTO TRIPS Agreement so as to enable effective steps to be taken to combat counterfeiting and piracy. The Commission needed to take a forceful attitude so as to ensure compliance with the TRIPS Agreement (in particular Article 25(2)) as regards textile designs and models on markets outside the Community, and to provide for strict retaliatory measures in the event of non-compliance.

Parliament pointed to the importance of consolidating the principle of corporate social responsibility, strict respect for International Labour Organization rules and conventions on the environment and human rights. It called on China as a member of the ILO to comply with the agreed labour directives and basic environmental imperatives, and to punish infringements. It asked the Commission to propose that any enterprise wishing to export to the EU must declare its respect for international social and environmental rights, and that any imports into the EU of products that infringe such rights, particularly products made by prisoners, children or forced labour by workers without trade union rights will be prohibited.

Parliament also asked the Commission to do the following:

-to propose an amendment to Council Regulation 2913/92/EEC with a view to introducing customs checks to identify products accompanied by false declarations of origin;

-to maintain, after 2006, the European Structural Funds in all European textile-producing regions, intended to provide aid for research, innovation, vocational training and SMEs;

-to use any reserve in the Structural Funds for resolving unexpected local and sectoral crises and for facilitating business start-ups and supporting SMEs in the affected regions, in order to encourage job creation in other sectors;

-to conduct a new study to determine what measures might be taken to support the textile industry in developing countries and LDCs, for which textile exports are vital, to increase their production and boost their national and regional markets.

Parliament pointed out, as regards the GSP, that, to preserve the production and export capacity of the most vulnerable countries, preferences must continue to operate in their favour. There should be graduation mechanisms to withdraw tariff advantages from products originating in a beneficiary country which has reached a high level of competitiveness in a given section, precisely with the aim of helping the most vulnerable countries in the world textile and clothing trade.

Parliament advocated a Euro-Mediterranean partnership to boost cooperation in, and the competitiveness of, the sector by means of a pro-active policy in support of training, R & D, technological innovation, the dissemination of good practice, and the exchange of market intelligence. It called for a Euro-Mediterranean production area to be established, since this is the only way to ensure that countries on the southern as well as the northern shore of the Mediterranean will be able to stand firm against the American and Asian regional blocs and protect industrial manufacturing and jobs. Finally, Parliament stated that there should be adopted incentives and specific aid programmes to encourage SMEs in the textile and clothing sector to invest in their own R & D and non-technological innovation activities.

The European Parliament adopted a resolution based on the own-initiative report drafted by Tokia SAÏFI (EPP-ED, FR) and expressed its concern at the abnormally high growth in the amount of non-EU textile products, especially from China, imported into the EU since the WTO Agreement on Textiles and Clothing expired on 1 January 2005 and quotas were abolished. (Please see the summary of 14/06/2005.) World trade, including trade with China, can only be regarded as a ‘challenge’ rather than as a ‘threat’ by the European textile sector if there is a level playing field and both sides play according to the rules of trade, which has hitherto certainly not been the case.

Parliament felt that the central problem concerning trade with China is that China is by no means a free market and that most textile firms are still State-owned, receive interest-free loans via State banks, as well as systematic export subsidies, covert State aid and free electricity, which does not amount to a smooth functioning of the market.

Moreover, 70% of all counterfeit goods dumped on the European market come from China, and half of all European customs procedures against counterfeiting relate to textiles and clothing, with nearly 5 million counterfeit articles and accessories of clothing being confiscated by customs annually.

Parliament took note of the ‘Memorandum of Understanding’ concluded between the Commission and China on 10 June 2005, with regard to the limitation of certain Chinese textile exports. However, it called on the Commission and the Council to extend the coverage of that agreement to other categories of textiles where necessary and to ensure transparency as to the basis for the calculation of the export limitations. The safeguard clauses must be applied in the event of an inappropriate application of the agreement.

At the same time, the Commission is asked to protect intellectual property rights more securely in accordance with the WTO TRIPS Agreement so as to enable effective steps to be taken to combat counterfeiting and piracy. The Commission needed to take a forceful attitude so as to ensure compliance with the TRIPS Agreement (in particular Article 25(2)) as regards textile designs and models on markets outside the Community, and to provide for strict retaliatory measures in the event of non-compliance.

Parliament pointed to the importance of consolidating the principle of corporate social responsibility, strict respect for International Labour Organization rules and conventions on the environment and human rights. It called on China as a member of the ILO to comply with the agreed labour directives and basic environmental imperatives, and to punish infringements. It asked the Commission to propose that any enterprise wishing to export to the EU must declare its respect for international social and environmental rights, and that any imports into the EU of products that infringe such rights, particularly products made by prisoners, children or forced labour by workers without trade union rights will be prohibited.

Parliament also asked the Commission to do the following:

-to propose an amendment to Council Regulation 2913/92/EEC with a view to introducing customs checks to identify products accompanied by false declarations of origin;

-to maintain, after 2006, the European Structural Funds in all European textile-producing regions, intended to provide aid for research, innovation, vocational training and SMEs;

-to use any reserve in the Structural Funds for resolving unexpected local and sectoral crises and for facilitating business start-ups and supporting SMEs in the affected regions, in order to encourage job creation in other sectors;

-to conduct a new study to determine what measures might be taken to support the textile industry in developing countries and LDCs, for which textile exports are vital, to increase their production and boost their national and regional markets.

Parliament pointed out, as regards the GSP, that, to preserve the production and export capacity of the most vulnerable countries, preferences must continue to operate in their favour. There should be graduation mechanisms to withdraw tariff advantages from products originating in a beneficiary country which has reached a high level of competitiveness in a given section, precisely with the aim of helping the most vulnerable countries in the world textile and clothing trade.

Parliament advocated a Euro-Mediterranean partnership to boost cooperation in, and the competitiveness of, the sector by means of a pro-active policy in support of training, R & D, technological innovation, the dissemination of good practice, and the exchange of market intelligence. It called for a Euro-Mediterranean production area to be established, since this is the only way to ensure that countries on the southern as well as the northern shore of the Mediterranean will be able to stand firm against the American and Asian regional blocs and protect industrial manufacturing and jobs. Finally, Parliament stated that there should be adopted incentives and specific aid programmes to encourage SMEs in the textile and clothing sector to invest in their own R & D and non-technological innovation activities.

The committee adopted the own-initiative report by Tokia SAÏFI (EPP-ED, FR) on the future of the textiles and clothing industry after 2005. MEPs called for a level playing field between the EU and China for textile exports, and urged Chinese manufacturers to observe international labour and environmental standards. The report also called on China to do more to combat the production of counterfeit goods.

MEPs stressed that they were not seeking protectionism but simply equal terms for EU manufacturers. They welcomed the Memorandum of Understanding concluded between the EU Commission and China on 10 June 2005 aimed at limiting Chinese textile exports. But they wanted to go further, and called on the Commission and Council to "extend the coverage of the agreement to other categories of textiles where necessary and to ensure transparency as to the calculation basis used for the export limitations".

MEPs also called for the introduction of measures in accordance with the WTO TRIPS agreement on combating counterfeiting and pirating, and for the Commission to ensure that such measures are implemented by the Chinese Government. The Commission was also urged to enforce the terms of trade agreements under which exporters to the EU must comply with international norms on workers' rights and environmental standards.

The report called on the Commission to conduct a new study on measures that could be taken to support the textile industry in the developing and least-developed countries (for which textile exports are vital), to boost their national and regional markets and improve their capacity to compete on international textile markets. As far as the Generalised Scheme of Preferences (GSP) was concerned, the committee repeated the position adopted by Parliament in a resolution in March 2005 that preferences should continue to operate in favour of the most vulnerable countries and that graduation mechanisms should be envisaged to withdraw tariff advantages from products originating in a beneficiary country which had reached a high level of competitiveness in a section.

To address the slow-down in the European textile industry and safeguard its future and competitiveness, the committee would like to see a Euro-Mediterranean production area established. It said that this was the only way to ensure that countries on both shores of the Mediterranean would be able "to stand firm against the American and Asian regional blocs". MEPs advocated support for programmes for research, innovation and cooperation in this connection, as well as a common customs framework.

Lastly the committee called for a European textile plan to assist in restructuring and retraining for the entire textile and clothing sector, especially aimed at small and medium-sized firms. It added that, as well as the interests of the European manufacturing industry, the long-term interests of European importers also needed to be taken into account.

PURPOSE : to improve the framework enabling competition in the textile and clothing industry.

CONTEXT : the economic situation of the textiles and clothing sector in the EU continues to be difficult. After substantial falls in production and employment in the past three years, it is estimated that in 2003 production fell by a further 4.4% and employment by 7.1% (EU-25, source: Eurostat). This is due to a complex combination of factors. First, the sector has felt the full impact of the economic slowdown in the EU and in its major export markets. Second, the evolution of the US-dollar and Euro exchange rate has continued to have a negative impact on the price competitiveness of several

types of product. And, finally, the development of the Euro-Med Zone and preparations for the new economic realities post 2005 in the wake of quota elimination, has led to further relocation of production within and outside the EU-25.

CONTENT : with a view to eliminating quotas on the 1 January 2005 and following the report from the High Level Group for textiles and clothing, the Commission is proposing a series of actions in order to :

- stimulate research and innovation : the Commission should react positively to the proposal to consider setting up a European Technology Platform, to draw up and implement a strategic research agenda, whilst stressing the need for clear stakeholder commitment to lead and follow through such an initiative;

- improve social dialogue : the Commission recognises the importance of social dialogue as a driving force behind successful economic and social reforms and will continue to promote it.

In addition, as far as education and vocational training is concerned, the Commission can agree with the High Level Group's analysis of a need for a Europe-wide lifelong training strategy for the sector and to ensure a better match between supply and demand for training;

- examine the impact of the proposed new chemicals policy (REACH) on this sector is being closely examined by the Commission and, in co-operation with the textile and clothing industry, it is launching an impact assessment study on the potential impacts of REACH on the textile industry and its chemical suppliers. The results of this study are expected to be available by mid-2005;

- examine the area of intellectual property rights (IPR) : the Commission acknowledges the importance of improving the protection of rights and their enforcement in third countries, and to raise right holders' awareness of counterfeiting and the risks involved. The High Level Group calls for effective awareness raising activities, education of right-holders and for the provision of appropriate tools to combat counterfeiting and piracy.

- encourage the conclusion of agreements between partners in the Euro-Med zone and to strengthen the cooperation with China.

Lastly, the actions foreseen in the areas of research, education and training, and trade policy meet the competitiveness challenges faced by the EU textiles and clothing sector. However, the actions in the areas of research, education, training and employment in particular, need to be complemented by adequate support at national and regional levels to further the same competitiveness factors.

PURPOSE : to improve the framework enabling competition in the textile and clothing industry.

CONTEXT : the economic situation of the textiles and clothing sector in the EU continues to be difficult. After substantial falls in production and employment in the past three years, it is estimated that in 2003 production fell by a further 4.4% and employment by 7.1% (EU-25, source: Eurostat). This is due to a complex combination of factors. First, the sector has felt the full impact of the economic slowdown in the EU and in its major export markets. Second, the evolution of the US-dollar and Euro exchange rate has continued to have a negative impact on the price competitiveness of several

types of product. And, finally, the development of the Euro-Med Zone and preparations for the new economic realities post 2005 in the wake of quota elimination, has led to further relocation of production within and outside the EU-25.

CONTENT : with a view to eliminating quotas on the 1 January 2005 and following the report from the High Level Group for textiles and clothing, the Commission is proposing a series of actions in order to :

- stimulate research and innovation : the Commission should react positively to the proposal to consider setting up a European Technology Platform, to draw up and implement a strategic research agenda, whilst stressing the need for clear stakeholder commitment to lead and follow through such an initiative;

- improve social dialogue : the Commission recognises the importance of social dialogue as a driving force behind successful economic and social reforms and will continue to promote it.

In addition, as far as education and vocational training is concerned, the Commission can agree with the High Level Group's analysis of a need for a Europe-wide lifelong training strategy for the sector and to ensure a better match between supply and demand for training;

- examine the impact of the proposed new chemicals policy (REACH) on this sector is being closely examined by the Commission and, in co-operation with the textile and clothing industry, it is launching an impact assessment study on the potential impacts of REACH on the textile industry and its chemical suppliers. The results of this study are expected to be available by mid-2005;

- examine the area of intellectual property rights (IPR) : the Commission acknowledges the importance of improving the protection of rights and their enforcement in third countries, and to raise right holders' awareness of counterfeiting and the risks involved. The High Level Group calls for effective awareness raising activities, education of right-holders and for the provision of appropriate tools to combat counterfeiting and piracy.

- encourage the conclusion of agreements between partners in the Euro-Med zone and to strengthen the cooperation with China.

Lastly, the actions foreseen in the areas of research, education and training, and trade policy meet the competitiveness challenges faced by the EU textiles and clothing sector. However, the actions in the areas of research, education, training and employment in particular, need to be complemented by adequate support at national and regional levels to further the same competitiveness factors.