Case studies on textile and machinery sectors

• Author: Development Solutions Europe Limited, Directorate-General for Trade (European Commission)
• Pages: 127-162

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5 Case studies on textile and machinery sectors

This section will provide an in-depth overview of the impact of the scheme on the textiles

and machinery sectors. It will seek to analyse the impact of the GSP on producers and

industries in the EU and in the beneficiary countries.

5.1 Impact of GSP on textile sector

This analysis will focus on the textile and clothing industry. Textile and clothing products

are accounted for under GSP Sections S-11a and S -11b for textiles and clothing,

respectively. They fall under the following HS Chapters:

Table 34: Designated HS chapters for textiles and clothing

HS

Description

S-11a

50

Silk

51

Wool, fine or coarse animal hair; horsehair yarn and woven fabric

52

Cotton

53

Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn

54

Man-made filaments

55

Man-made staple fibres

56

Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and

cables and articles thereof

57

Carpets and other textile floor coverings

58

Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings;

embroidery

59

Impregnated, coated, covered or laminated textile fabrics; textile articles of

a kind suitable for industrial use

60

Knitted or crocheted fabrics

S-11b

61

Articles of apparel and clothing accessories, knitted or crocheted

62

Articles of apparel and clothing accessories, not knitted or crocheted

63

Other made up textile articles; sets; worn clothing and worn textile articles;

rags

5.1.1 The textile and clothing sector in the EU market

In this section, we provide an overview of the textile and clothing sector in the EU

market, highlighting the overall contribution of the sector to economic growth and

development in the EU market.

The textile and clothing sector i s part of the manufacturing sector and covers a wide

range of activities from fibres tran sformation to the production of cl othing and home

textiles, technical textiles and industrial filters. In 2013, the EU textile and clothing

sector employed around 1.7 million persons, which accounted for 6 per cent of total

employment in the manufacturing industry. Around 90 per cent of the workforce in the

sector is employed in small businesses with less than 50 employees. These small

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businesses generate around 60 per cent of the value added i n the sector and are hence

the stronghold of the European textile and clothing industry.229

The European textile and clothing industry produces a variety of products, with its

largest product category being clothing and accessories. Products in this categ ory fall

under HS Chapters 61, 62, 42 and 65, and contributed to 36 per cent of the sector’s

turnover of EUR 171 billion in 2016.230 Fabrics is another i mportant product in the sector,

which contributed to 18 per cent of turnover in 2016, while industrial and technical

textiles, and home textiles both contributed to 15 per cent of turnover in the same year.

The textile and clothing sector is spread out over all EU Member States. However, there

are differences in terms of the scale of acti vities and specialisation employed in each

Member State. The largest producers are: Italy, which produces 45 per cent of all

clothing made in the EU; Germany, whi ch produces 24 per cent of all technical textiles;

and France, which specialises in the production of both textiles and clothing. Austria is a

leading producer of cel lulosic fibres and Belgium is an imp ortant producer of carpets and

home textiles.231

The sector has undergone significant changes over the past decades as a result of

different developments, i ncluding the increasingly interconnected global economy and

the large global differences in labour costs. In this context, the European textile and

clothing sector has strived to remain competitive by increasing its productivity and

competitive strength. The sector has heavily invested in innovation, quality, creativity,

and design and branding. Additionally, European companies have enhanced their market

position by focusing on higher-value added products, such as technical textiles, and

increased their competitiveness by expanding the variety of products. 232

The technological changes and increased importance of global value chains, as well as

the emergence of international competitors, have markedly shaped the industry in

Europe. It has contributed to the leading position of European companies as producers of

technical and industrial textiles, and non-woven products such as industrial filters and

hygiene products. Textiles produced in Europe are also used in the automotive and

medical sectors.233

5.1.2 EU trade in textile and clothing

In this section, we will explore the impact of the GSP arrangements on EU producers and

industries using or competing with goods imported under GSP preferences, as well on

their global competitiveness.

The EU i s the world’s second largest exporte r of t extile and clothing, following China. In

2015, it accounted for 24 per cent of global textile exports and 26 per cent of global

clothing exports.23 4 The main export desti nations for the EU’s textile products are the

United States, China, Turkey, Morocco, and Switzerland; while the main export

destinations for its clothing products are Switzerlan d, the United States, Russia, Hong

Kong and Japan.

229 European Commission. (2017). Textiles and clothing in the EU. Available at:

https://ec.europa.eu/growth/sectors/fashion/textiles-clothing/eu_en

230 Euractiv. (2017). European Textiles and Fashion: facts & Figures. Available at:

http://euratex.eu/pages/infographics/

231 Euractiv. (2016). European Textiles and Fashion: facts & Figures. Available at:

https://www.euractiv.com/section/innovation-industry/infographic/european-textiles-and-fashion-facts-figures/

232 European Commission. (2017). Textiles and clothing in the EU. Available at:

https://ec.europa.eu/growth/sectors/fashion/textiles-clothing/eu_en

233 European Commission. (2017). Textiles and clothing in the EU. Available at:

https://ec.europa.eu/growth/sectors/fashion/textiles-clothing/eu_en

234 EURATEX. (2015). Annual Report. Available at: http://euratex.eu/press/key-data/

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The top three exporting economies – China, the EU and India – account for almost two-

thirds of world exports. In recent years however, the top ten exporting countries have

experienced export decli nes. The largest exp ort decline was experienced by the EU, with

a decline by 14 per cent in 2015 as compared to 2014, and Turkey with a 13 per cent

decline.235

On the other hand, the EU is th e world’s top importer of textiles and clothing. In 2015,

EU imports represented 22.1 per cent of global textile and clothing imports. This was

followed by the US and China, whi ch respectively accounted for 9.6 and 6.1 per cent of

global imports.236 As shown in Figure 9 below, EU imports have been relatively volatile

since 2011, but have increased annually since 2014. Between 2011 and 2016, i mports of

textile and clothing (HS Chapters 50-63) increased by 15.7 per cent to EUR 106,869

million. The majority of these i mports were clothing, falling under GSP Section S-11b

(HS Chapters 61-63), while textiles under GSP Secti on S-11 (HS Chapters 50-60)

accounted for less than 20 per cent of total imports. Textile and clothing products are

mainly imported under MFN arrangements in the EU market imports. In 2016, MFN

imports accounted for around 40 per cent of total EU imports of t extile and clothing

products.

Figure 9: EU imports of textile and clothing products (2011-2016)237

Global value chains play a significant role in the Eur opean textile and clothing industry.

The industry is globally integrated and sources raw materials as well as fi nished products

from economies outside the EU market. The extent of integration vari es according to the

specific products and ranges from production sharing and supply chains to production

outsourcing and vertical integration. Due to the diversity of the industry, European

companies can either benefit from or compete with textile and clothing imports. 238

235 WTO. (2016). World Trade Statistical Review. Available at:

https://www.wto.org/english/res_e/statis_e/wts2016_e/wts2016_e.pdf

236 WTO. (2016). Statistical Tables. Available at:

https://www.wto.org/english/res_e/statis_e/wts2016_e/wts16_chap9_e.htm

237 Source: own calculations based on trade data supplied by the European Commission.

238 Stakeholder contribution, 6 February 2017

0

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40.000

60.000

80.000

100.000

120.000

2011 2012 2013 2014 2015 2016

IN MILLION EUR