Textiles and clothing industry in Eastern Europe: pressure following expiry of the quota system
published: cw 30, 2005 in Global Trade & LogisticsThe textiles and clothing industry has a long tradition in the countries of Central and Eastern Europe. German companies in particular began transferring labour-intensive activities to these countries some decades ago to exploit cost advantages. Often this was in the form of so-called outward processing trade, with semifinished textiles being exported at favourable tariffs from Western to Eastern Europe, where they were made up into finished garments and then re-exported to Western Europe. This led to intensive trade relations between the old EU member states and the new EU entrants and candidate states. As a result, the countries of Eastern Europe as well as North Africa and Turkey are therefore not only among the top suppliers of clothing to Western Europe but also among the top markets for textiles produced in Western Europe.
These trade relations face tough strains in the coming years. The clothing industry not only in Eastern Europe but also in Turkey and
North Africa will come under increasing pressure. Obviously, this holds for a number of countries in Southern Europe, too, where
garment manufacture especially still plays an important role today (e.g. Italy, Portugal, Greece). This is due to the expiry of the
Agreement on Textiles and Clothing (ATC) at the end of 2004. This liberalisation of world trade has hugely intensified competition on the world market for textiles and clothing. Unlike before, the big Asian producers ? especially China ? are no longer subject to any volume restrictions on their textiles and clothing exports to the EU (or the US).
Deutsche Bank Research give us three strategic advices:
1. In future, Eastern Europe’s textiles and clothing industry will need to focus more strongly on its specific advantages over the
competition from China.
2. End of the ATC: challenges for the Eastern European textiles and clothing industry
3. Return to textile quotas makes little sense ? press for reciprocal liberalisation
Read the full DB Research Report
Read full report
print terms
