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French Version

Clothing, textiles have a future in the Euro-Mediterranean area

On Dec. 31 the quotas on trade in textile and clothing products will finally disappear, in accordance with a 1995 decision taken during the last round of WTO (World Trade Organization) negotiations, the Uruguay round.

There are just three months to run until the December deadline and this understandably causes concern, even if we have been preparing ourselves for this event for 10 years.

There are mutterings about Chinese hegemony, outsourcing and unfair practices. These concerns are especially acute in the Mediterranean countries, where the textiles and clothing sector has a prominent place in terms of both employment (3.7 million people in Southern and Eastern Mediterranean Countries work in this sector) and exports. That is why we, trade ministers from the Euro-Mediterranean area, met in Tunis on Sept. 28 to see how we can jointly meet this new challenge.

The process now drawing to a close is irreversible and will continue to change the conditions of international competition in the textile and clothing sector. Since the 1980's, there has been a considerable regionalization of trade under the combined impact of the preferential policies set up by the EU and other industrialised countries and a shift in the way production is organized to allow textiles and clothing products to reach the markets "just in time." European imports from the Mediterranean countries grew fourfold between 1988 and 2003, from under 4 billion euros ($4.97 billion) to over 16 billion euros. Today these imports represent 23 percent of the EU market.

Does this mean that we have finally lost out to emerging economies endowed with unlimited reserves of cheap manpower and able to mobilise advanced technologies? I do not believe so.

The European and Mediterranean textile industries can and must take advantage of the opening up of markets worldwide. The ongoing negotiations at the WTO should make it possible to balance the conditions of trade by accompanying the removal of quotas with tariff cuts. That would apply to upscale markets such as the U.S. But I firmly believe that the future of the textile industry also lies in the conquest of new markets. We can increase not only north-south trade but south-south trade as well.

The Euro-Mediterranean textile industry has competitive assets and advantages. The Mediterranean region has production factors combining reasonable costs, quality, and proximity to the European market. On the other hand, it is not very good at attracting investment. In 2002, the Mediterranean countries took only 1.5 percent of the EU's direct foreign investment. We have to tackle the causes of this lack of attractiveness and create an environment conducive to investment by modernising infrastructure, opening up services, facilitating trade to allow better movement of goods in the area and improving access to finance for small and medium-sized firms. These developments are part and parcel of the necessary reform of economic and political governance.

The creation of a major Euro-Mediterranean free trade area should also expand trade, provided the necessary reforms are carried out. The EU is pursuing its policy of regional integration in the Mediterranean region via the Euro-Med process. The creation of a large integrated market is a sine qua non to encourage investment. An essential step was taken in July 2003 at the Euro-Med conference of trade ministers in Palermo with the adoption of a new "common passport" for all goods traded in the area. A common set of origin rules will allow supplies to be sourced in an area covering about forty countries. And another important step has been taken today with the initialling of the free-trade agreement between Tunisia and Turkey.

Increasing competition presents huge challenges in terms of sustainable development. The opening up of trade must not be at the expense of working conditions or the environment. Noncompliance with social and environmental standards must not be used as a competitive advantage. We therefore want to promote ways of producing textiles and clothing which respect environmental and social standards.

A last word in connection with China: We have recently set up a dialogue with the Chinese on trade in textiles to see how we can, as far as possible, avoid using the various safeguard measures at our disposal in the event of any disruption of the European market caused by the growth of Chinese exports, in the interests of both sides. In addition to the institutional dialogue, the Chinese and European business communities are also establishing increasingly close contacts.

We are also keenly aware of developments on the other side of the Atlantic, where reactions to the "Chinese syndrome" are increasingly vocal. If the U.S. adopts protectionist measures, some Asian exports, deprived of access to the U.S. market, could be deflected to Europe. Such U.S. action would obviously be detrimental to the multilateral trading system and the EU would be obliged to take certain measures. Rather than putting up the shutters, I would prefer to build an offensive strategy based on greater access to international markets coupled with fair competition, a level playing-field and common rules for all players.

This week's meeting gives us an excellent opportunity to see where we should go from here. For the Euro-Med area, the textiles and clothing industry is one with a future in tomorrow's global economy.

Pascal Lamy is the European Union Trade Commissioner.

Marseille,10 04 2004
Pascal LAMY
The Daily Star
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