Euratex, voice of the European textiles and clothing industry, says the European textiles and clothing industry is now deeply concerned with the current situation in the raw materials markets. The Brussels based organisation has urged the EU to take prompt action to reduce pressure in the markets which have lead to a lack of availability and price increases for the major textile raw materials.

When presenting the recent Position Paper on Raw Materials, Mr. Alberto Paccanelli, President of Euratex, recalled: “The steep growth of emerging economies like China, India or Brazil is creating increasing pressure in the markets leading to a lack of availability and price increases for the major textile raw materials. This problem is aggravated by the unilateral and restrictive measures taken by certain countries, like India, to limit exports of critical Raw Materials or Semi-Finished Products- this is the case of Cotton Fibre and Cotton Yarns. As a consequence the Price of Cotton which was 84.15 cent $ per pound in July 2010 reached 243.65 cents $ in March 2011”.

However, Euratex says, the problem is not limited to cotton and affects other textile raw materials, both natural and manmade. Overall price increases range from 35% to more than 100% between December 2009 and December 2010 and the situation has deteriorated further in 2011, the organisation says. Mr. Paccanelli mentioned other elements which are also playing a key role in the market disturbances:  “The financial capabilities of countries like China promote extensive buy and stock piling strategies to support local industries and the increasing speculation and intervention of the financial operators in the commodities market”

Euratex says that in this difficult environment textiles and clothing companies are facing huge cost increases that need to be passed on to their customers, being private or public, but in parallel Euratex demands for concrete actions to be taken at EU and International level. Among these actions Mr. Paccanelli highlighted that in the short term the EU should: “Address urgently the restrictive measures taken by Third Countries to prevent/limit our access to raw materials both at bilateral and multilateral levels; and implement strict market surveillance measures with the aim of limiting the intervention of speculators by improving information exchange and transparency regarding production, consumption and stocks and approaching the physical and derivative markets”.

Considering the complexity of this problem Euratex believes it should be dealt with in an integrated and coordinated way involving the EU Commission, Member States, the Industry and other relevant stakeholders. Euratex’ President made a clear statement in this respect by saying that: “In the short to medium term we should be able to develop a comprehensive policy approach covering trade, development, skills, research, innovation and internal market measures”.

Trade has a central role in the actions proposed by Euratex as the companies need to have consistent and secured access to raw materials. “To achieve this critical objective we need to prevent all measures taken by Third Countries to limit or restrain Raw Materials exports being those in the form of Export Duties or Export Quotas,” Euratex says. “It is of paramount importance to reinforce the GATT/WTO Rules, in particular Article XI, by limiting the scope of exceptions and by introducing provisions to prevent dual pricing policies adopted by some Governments to protect local industries. Moreover in all its FTAs the EU should include strict provisions to ban all export restrictions. ” said Mr. Paccanelli.

To address restrictive measures already in place the Euratex President proposes:

 “(a) take action at WTO level whenever a consensual approach is unsuccessful;

(b) Withdraw Preferential Treatment (GSP) when the beneficiary country refuses to remove the restrictive measures”.

Apart from Trade the EU should promote a consistent Development Policy aimed at implementing cooperation projects with Third Countries, especially LDCs, to promote investment, capacity building and technology transfer in Raw Materials and related infrastructure as a way to build and improve EU access to alternative sources of production, says Euratex.

In the domestic front, Internal Market, Mr. Alberto Paccanelli defended “An urgent renegotiation in the Public Contracts, under certain conditions, to allow a rebalancing of the situation which is unbearable for the companies that could not have reasonably anticipated these increases in Raw Materials Prices when preparing their tenders”. Euratex has already provided an endorsement letter for the attention of the public procurers to help companies obtaining success in such approach.

“Finally and preparing for the future we need EU Skills, Research and Innovation Policies to have recycling and development of substitute materials as a major priority in their projects,” Euratex says.

Full Euratex Position Paper on Raw Materials