Textiles brace for China imports

The Chinese government’s recent decision to impose tariffs on its exports of textiles and apparel as of January 1, seen by some as a measure designed to prevent the appreciation of its currency, the yuan, is causing some relief among other textile-producing nations, including Greece. However, most see the development as the result of strong pressure brought to bear by a host of governments worldwide and the industry’s international associations – such as Committee of the Cotton and Allied Textile Industries (Eurocoton), representing textile companies in the European Union, Turkey and Switzerland, and the European Apparel and Textile Organization (Euratex) – which fear that the lifting of quota restrictions on imports in a few days’ time will cause a further influx of Chinese goods and massive losses in domestic production and jobs. According to a press release by Greece’s Hellenic Fashion Industry Association, the Chinese government’s move is aimed at dampening the fast growth rates of its exports and preventing likely measures against it. A recent study by the High Level Group set up by the European Commission to make recommendations on the problem said that bolstering the existing competitive advantages of the European textile industry is the most appropriate strategy. Before year’s end, the Commission plans to issue directives which will contain procedures and criteria for the application of protection rules for textiles included in China’s Accession Protocol to the World Trade Organization (WTO). According to Yiannis Akkas, president of Hellenic Fabrics SA and Greece’s representative at the High Level Group, the financial situation in the EU textile and apparel sector continues to be difficult. Production and jobs have been steadily falling in the last four years. In 2003, the respective rates of decline were 4.4 percent and 7.1 percent and the situation has deteriorated further this year, largely due to the appreciation of the euro against the US dollar. The High Level Group’s initial report, «The Challenge of 2005 – The European Textile and Apparel Industry in an Environment Without Quotas,» presented on June 30, paid particular attention to small and medium-sized enterprises – to which almost all Greek firms belong – and particularly to the difficulties in accessing credit. Proposals More recently, the European Commission adopted a proposal according to which member states will devote 1 percent of their annual subscriptions to the Structural Fund for Convergence and 3 percent of their spending on regional competitiveness and employment schemes to a fund which would cover unforeseeable local or sectoral crises related to economic or social restructuring or the consequences of trade liberalization. The gradual creation of a Euro-Mediterranean free trade zone is considered crucially important to the EU textile and apparel sector, as it will enable it to maintain intact the production chain close to the European market, combining advantages regarding cost, quality and proximity. The High Level Group called for a system of close monitoring of Chinese imports into the EU, which will regularly gather data on quantities and average unit prices for the main product categories, will examine the conditions of textile and apparel production in China, and keep track of whether China observes its obligations to WTO. Other measures proposed by the Commission for the protection of Europe’s textile industry include support for research and innovation, expanding life-long training programs in order to assist employees in adapting to industrial changes and technological developments, strengthening the fight against pirate products through the creation of an Internet site with information on copyrights, improving access to third-country markets and eliminating non-tariff barriers, and strengthening cooperation with China.