ECONOMY

No more quotas on textiles, clothing

The demand by the Association of Hellenic Weaving and Ready-to-Wear Enterprises (SEPEE) for a three-year extension of import volume quotas is impossible to fulfill, the government has said, increasing worries about the sector’s viability. In a letter dated August 6, the secretary-general of the Ministry of Economy and Finance, Giorgos Mergos, informed SEPEE that its demand to extend the quotas beyond December 31, 2004, is impossible, as the agreement on textile and clothing products signed by all World Trade Organization (WTO) members does not allow for an extension of the present regime. Even if there was an extension provision, it would require the unanimous agreement of WTO members, something considered impossible. Mergos added in his letter that a group of high-level officials from EU member states, industry representatives and the European Commission has been formed since March in order to present proposals on how the EU’s textile and clothing industry can adapt to the deregulated trade conditions that will exist from the beginning of 2005. In order to protect Europe’s textile and clothing industries, the Commission can make use of «trade defense» measures, such as anti-dumping, countersubsidies and the lifting of artificial obstacles to trade in order to counter unfair trade practices. It is a measure of the Commission’s concern that it has already embarked on negotiations with China in order to make the transition to a deregulated trade regime smooth, without excessive upheaval for European firms. In China’s WTO induction protocol, a clause has been added regarding anti-dumping measures and the EU is expected to monitor closely China’s textile exports in order to impose swift countermeasures, if necessary. Mergos has told SEPEE that the next session of the WTO’s Goods Council on October 1 will discuss any problems that could arise from deregulation and seek solutions. Nonetheless, the textile and clothing sectors are worried about their future, despite the fact that they, together, are Greece’s most important exporters of manufactured goods, with a total export value of 2.5 billion euros in 2003, accounting for 22.5 percent of all Greek exports. Last year was one of the most difficult for the sector across Europe since the early 1990s, with reduced production and profits and a 1.1 percent decline in consumption, the first year of decline since 1995. SEPEE’s quarterly magazine Greek Fashion remarks that international demand for European products fell because of the euro’s relative strength against the dollar and a global trend toward lower prices. Investment declined for the third year in a row and the cumulative decline since 1990 is 31 percent. This has led to job losses and, more worryingly, job losses have been accelerating since 1998. The current year is no exception for the EU’s textile and clothing sectors. In the first quarter, production fell 5 percent in textiles and 2.2 percent in clothing. The reasons are to be found in a continuing decline in demand in industrialized countries, the currency exchange rate, increased competition from China and the increasing relocation of production facilities. The need for fast restructuring of the sector across Europe is now pressing.