EURATEX Charts out Trade Policy Priorities for 2024–29, Says Next 5 Years Critical

REVISION OF THE EU-TÜRKIYE CUSTOMS UNION : The EU-Türkiye Customs Union, established in 1995, has been instrumental in boosting trade between the two regions. It is evident that rather than merely updating the existing Customs Union between Türkiye and the EU, expanding and transforming it into a revised Customs Union will yield more satisfactory results for both parties.

Regulatory alignment: Revising the Customs Union to include enhanced regulatory alignment on emerging issues like sustainability and environmental regulations for facilitating smoother trade is needed.

• As these regulations require data and accumulation of knowledge of companies deal with green, digital and circular transformation, a coordinated approach with Turkish authorities within the customs union will be highly welcomed.

Expanded and deepened coverage: The removal of transport quotas, simplified visa processes for the business sector, Türkiye's inclusion in expert working groups, and the establishment of effective consultation and dispute resolution mechanisms are key areas for a possible expansion of the CU.

• Addressing issues arising from Free Trade Agreements (FTAs), developing a common approach to trade defence instruments, and creating regional trade clusters to enhance industry resilience should also be prioritised during the revision of Customs Union modernisation.

Addressing trade disputes: Mechanisms for the swift and effective resolution of trade disputes should be strengthened.

• This will ensure that trade flows remain uninterrupted and that businesses can operate with greater certainty and stability.

BALANCED FREE AND FAIR TRADE AGREEMENTS, FOCUSING ON THE EU-INDIA FTA: Increasing prosperity in Indonesia, Thailand and the Philippines, along with India, with its vast market and growing economy, present significant opportunities for the EU textile sector. However, a balanced approach is crucial to ensure that the agreement is both free and fair:

Market access: The EU must not only negotiate for tangible market access opportunities, such as reducing high tariffs, but also ensure that EU textile exports can enter the Indian market on equal terms with Indian exports entering the EU market.

• This includes requiring India to abolish all textile-related mandatory Quality Control Orders and BIS standards, such as those for polyester and cellulosic fibres. This must be a precondition for concluding the FTA negotiations.
• EURATEX stresses that the principle of reciprocity must remain central to trade liberalization.

Intellectual Property Rights (IPR): Ensuring robust IPR protection within the agreement is essential to safeguard the innovations and designs of EU textile companies. This will also encourage further investment in R&D and high-quality production.

Labour and environmental standards: The agreement should include provisions that promote high labour and environmental standards, a critical point for the textile sector.

TRADE FACILITATION WITH THE US: The US remains one of the EU's most significant trading partners, and enhancing trade facilitation measures can substantially benefit the textile sector.

• The economic relationship between the EU and the US is on an unstable trajectory, with its dynamics largely shaped by the elected presidents. Consequently, the future of the textile industry is closely tied to the positions of these leaders.
• EURATEX recommends prioritising the development of policies aimed at deescalating potential trade conflicts, ensuring that the EU textile industry can thrive independently.

Reducing trade barriers: Focus should be on reducing tariffs and non-tariff barriers that impede the flow of textile goods.

• This includes streamlining customs procedures and enhancing regulatory cooperation to avoid duplication and unnecessary delays.

Regulatory cooperation: Greater regulatory cooperation can help in aligning standards and testing requirements, making it easier for EU textiles to enter the US market.

• This can be achieved through mutual recognition agreements (MRAs) and joint standard-setting initiatives.

Sustainability collaboration: Enhancing collaboration in this area can promote the development and adoption of sustainable practices within the textile industry, benefiting the industry on both sides of the Atlantic.

STRENGTHEN MARKET SURVEILLANCE AND ENSURE REGULATORY COMPLIANCE: As the regulatory bar is raised in the EU, it needs to ensure that imported products (estimated at 23 billion pieces per year) comply with new legislation, without sacrificing flexibility.

• This requires a serious investment by member states in market surveillance, taking into account lessons learned from the REACH4Textiles project (notably on products checking and risk-based surveillance).

Strengthen enforcement: The European Commission must always consider enforcement and enforceability when making new laws; it should also take action together with the member states for a better coordination with harmonised criteria for action among customs authorities.

Addressing non-compliance: Non-compliance of imported products concerning product safety, chemicals and other standards, must be promptly addressed to safeguard the EU single market, EU citizens, and the environment, especially in e-commerce.

• EU trade policy must ensure a level playing field with third countries and impose penalties for noncompliance.

APPLY TRADE DEFENCE MEASURES WHERE NEEDED AND JUSTIFIED: EURATEX advocates for the benefits of free and fair trade.

• To unleash these benefits, it must make sure that its trading partners also abide by the rules. To this end, the European Union should make use of its trade defence instruments where needed to counter unfair competition from abroad, in particular by competitors operating with state subsidised overcapacities.
• In this context, trade defence instruments should safeguard fair competition and protect its value chains from disadvantages resulting from unfair practices by trading partners abroad.

CLOSER LINK BETWEEN TRADE, INDUSTRIAL AND ENERGY POLICIES: The EU textile industry has huge potential to seize new opportunities in markets outside the Union.

• Enhanced market access and regulatory cooperation are major prerequisites for the industry to thrive in a changing world market with intense global competition.
• To this end, the industry requires a powerful strategy for more competitiveness that considers external and internal economic policies in conjunction, as both are intrinsically linked.
• An integral and well-functioning single market is the foundation of Europe’s competitiveness. If this basic condition is not guaranteed, the EU industry will not be able to compete on the international stage, missing opportunities to grow and innovate.
• It needs more cohesion and less fragmentation inside the EU.
• To succeed, it also needs conducive industrial and energy policies.
• To ensure the industry's long-term viability and success, these need to be aligned with the EU’s external trade and foreign affairs policies.
• A coordinated approach should allow for the development of high-quality, energy-efficient textile production that adheres to the European environmental standards.
• Such integration should also ensure that energy policies support the EU textile sector in reducing costs and improving efficiency, which is essential for competing against low cost producers from abroad.
• Moreover, by thinking industrial and trade policies together, the EU can promote investment in advanced manufacturing technologies and workforce development, thereby increasing the industry's resilience and adaptability.

THE CONTEXT: EURATEX, as the voice of textiles and apparel manufacturers in Europe, supports an ambitious EU trade agenda.

• In the last five years, the world has been grappling with significant economic, military, political, and environmental challenges.
• Just when it was starting to recover from the COVID-19 crisis, the Russian invasion of Ukraine spread instability across Europe. Furthermore, ongoing issues in the Middle East have had global repercussions. As a result, disruptions have emerged in all strategic supply chains.
• The European textile and apparel sector faces multifaceted challenges and opportunities in the global market.
• A globalised industry with annual exports exceeding €60 billion and imports of over €110 billion, make it intensively inter-connected with other segments of the global and European economy and society.
• The textile industry covers a broad supply chain, from fibres to yarn to fabrics and finally to finished textiles and clothing.
• Representing almost 200.000 companies, generating a turnover of around €170 billion per year, and employing 1.3 million people, the industry produces products which are essential, energy saving, warming, protective and life-saving.