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The Rupp Report

The Rupp Report: Closer Cooperation Between The United States And Europe (?)

Jürg Rupp, Executive Editor

This year marks the 20th anniversary of the Marrakesh Agreement, which established the World Trade Organization (WTO). In 2005, import quota restrictions were removed, and since then, textiles and apparel have been subject to the organization’s general rules.
 
According to the WTO, global textile and clothing export revenues, excluding trade within the European Union and re-exports, grew from US$240 billion in 2000 to US$547 billion in 2012. The WTO’s rules of trade had a huge impact on the EU, the second-largest exporter of textile and apparel products.
 
Multilateral Trade Negotiations
The General Agreement on Tariffs and Trade’s (GATT’s) multilateral trade negotiations and the growing importance of free trade agreements (FTAs) also speeded up the pace of globalization. Since the WTO was established, more than 400 agreements covering trade in goods or services have gone into effect. In addition, the EU has started FTA negotiations with more and more trading partners. As EURATEX, the Brussels-based European Apparel and Textile Confederation, mentioned recently, “This is the right moment to evaluate the impact of the current and potential FTAs on the companies and SMEs in textile and clothing sector.”
 
For many years, the United States and Europe have been trying to get a firm new agreement on free trade issues — but not always with success: One of the obstacles is certainly genetically modified food, which is banned all over Europe. Another one is recent turmoil among Europeans about the behavior of the U.S. National Security Agency (NSA). The Transatlantic Trade and Investment Partnership (TTIP) should now be the kickoff for new negotiations.
 
Last week, the Washington-based National Council of Textile Organizations (NCTO), whose members span the entire U.S. textile sector, presented its position as a stakeholder at the fifth TTIP negotiating round in Arlington, Va. NCTO President and CEO Augustine “Auggie” Tantillo emphasized the U.S. textile industry’s positions with regard to the need for a yarn-forward rule of origin, and the preservation of the Berry Amendment and other U.S. government procurement regulations. These so-called “preservations” are another problem between the two partners.
 
Negotiations
NCTO staff also met with officials from EURATEX, which represents the European textile and apparel sector, whose workforce totals more than 1.6 million people. The two organizations discussed their overall objectives related to TTIP as well as the possibility of reaching a joint industry position on specific TTIP issues.
 
The U.S. textile and apparel industry in 2013 employed nearly 499,000 workers, of whom 231,000 workers were employed by textile companies. According to U.S. government estimates, each textile job supports three other jobs. U.S. textile shipments in 2013 were worth more than US$56.6 billion.
 
The size and cost structure of the U.S. and EU textile and apparel markets are comparable. However, the U.S. recorded a deficit of nearly US$3 billion in 2013 in textile and apparel trade with the EU.
 
 “The effort to establish a comprehensive free trade agreement between the United States and the European Union marks the first time U.S. manufacturers and exporters may be able to enjoy FTA access to an overseas market that rivals our own,” Tantillo said. “We look forward to a productive and collaborative relationship with EURATEX and other European industry groups in hopes of reaching mutually beneficial positions under the TTIP.”
 
Big Players
The U.S. textile industry ranks third globally in textile products exports, which were worth nearly $17.9 billion in 2013. Textile and apparel 2013 exports combined totaled a record $23.7 billion. The U.S. shipped nearly two-thirds of its 2013 textile exports to its Western Hemisphere free trade partners. U.S. textile exports went to more than 170 countries, with 23 countries buying more than $100 million. Annually, more than 8,000 different U.S.-made textile products are supplied to the U.S. military.
 
Within the EU-27, household consumption of textile and apparel products totals nearly 500 billion euros, making that region the largest market globally for those products. In addition, it ranks second globally in textile and apparel exports.
 
According to EURATEX, “The EU textile and apparel industry, including man-made fibers, is an essential pillar of the local economy across the EU regions and is competing intensively at international level while striving for a level playing field with the rest of the world.” EURATEX preliminary estimates for 2013 indicate that the 173,000 EU-28 textile and apparel companies achieved a turnover of 166 billion euros and created 44 billion euros of added value. Outside the EU, 2012 exports totaled 42.4 billion euros or 25.5 percent of global sales, and that share is growing.
 
NTCO claims that “the U.S. is the world leader in textile research and development, with private textile companies and universities developing new textile materials such as conductive fabric with antistatic properties, electronic textiles that monitor heart rate and other vital signs, antimicrobial fibers, antiballistic body armor for people and the machines that carry them and new garments that adapt to the climate to make the wearer warmer or cooler.” This statement would probably be questioned in Europe and Japan.
 
According to NCTO, “the U.S. textile industry invested $17.7 billion in new plants and equipment from 2001 to 2011. And recently producers have opened new fiber, yarn and recycling facilities to convert textile waste to new textile uses and resins. The U.S. textile industry has increased productivity by 24 percent over the last 10 years, making textiles one of the top industries among all industrial sectors in productivity increases. In 2013, textile workers on average earned 145 percent more than apparel store workers ($577 per week versus $235) and received health care and pension benefits.”
 
International Textile And Clothing Conference
Almost at the perfect time in light of further TTIP negotiations, Free Trade and International Agreements, an international textile and clothing conference hosted by EURATEX, will be held June 5, 2014, in Brussels. According to EURATEX, “the conference is aimed to initiate the open debate on Free Trade and International Agreements’ influence on the world markets of the textile and clothing sector.”
 
The conference will convene “policymakers, experts and stakeholders to start a debate on the impact of global trade policies, particularly FTAs, on textile and clothing sector. About 20 prominent speakers from 20 different countries across the world will come to Brussels to discuss the current challenges and opportunities for the national industries and international brands.”
 
It will be interesting to see if a special session, focused on evaluating the impact of the currently enforced FTAs, will help to bring about a conclusion, or at least a consensus. As EURATEX mentions, “The high-level representatives of Turkish, Korean and African national textile and clothing federations and leading companies will ensure a valuable and motivating exchange of views.”
 
May 27, 2014
 
 
 




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