Meeting Europe
November 20, 2014
Editorial
Towards a stimulating
European policy
Great things are expected from the new European Commission led by Jean-Claude Juncker. And rightly so, because Europe is lagging further and further behind, both socially and economically. The ongoing high unemployment rate is a permanent blot on Europe’s copybook. The fact that many EU Member States still have not returned to their prosperity level before the Great Recession of 2008-2009 says it all. What is more, 2014 threatens to be another year of zero growth (or not far off).
Fa Quix and Filip De Jaeger
Summary » Free trade agreement with Vietnam Is a balanced agreement possible?
» A retrospective
European Wood Action Days in Brussels
» Revision of Carbon Leakage
A penalty for the top of the class
» Price rises for dyestuff
Damaging to textile companies
» Environmental performance of building products Confusion over evaluation
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» Transatlantic Trade and Investment Partnership Yes to a free trade agreement with the United States
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Fedustria is the federation of the Belgian textile, woodworking and furniture industries.
We represent some 2,030 companies in Belgium (of which more than 90 % are SMEs), which create a total of more than 40,300 direct jobs and have a turnover of 10,300 million euros, of which about 70 % comes from exports. The textile industry has a turnover of 5,500 million euros spread over about 700 companies and around 20,700 employees. The woodworking and furniture companies create a turnover of 4,800 million euros and employ around 19,600 people in 1,330 companies.
In the agenda he set on 15th July 2014, Juncker listed ten priorities that do pay attention to more growth, investment and jobs. It is encouraging that the Commission President recognises that industry plays an essential role in this and that this role needs to increase even further. He wants to achieve this by stimulating investments in new technologies, improving the climate for entrepreneurship, facilitating access to financing, especially for SMEs, creating better skills on the labour market etc. And of course the trade in goods and services will have to help bringing this about. Trade will be stimulated by a deepening of the Single Market and balanced bilateral trade agreements. The fact that the Single Market is far from complete is something that our businesses experience almost every day, given the existence of different sets of regulations, testing methods and controls in the various Member States. Moreover, enough balance and reciprocity need to be obtained in free trade negotiations for our export opportunities to tangibly increase. The way to social and economic recovery is long and difficult. Let’s hope the Commission gets down to work straight away! Fa Quix, General Manager, and Filip De Jaeger, Deputy General Manager
Fedustria-Meeting Europe
Novembre 20, 2014
Free trade agreement with Vietnam
Is a balanced agreement possible? In 2012 the European Commission began negotiations with Vietnam, with a view to signing a free trade agreement. The textile and clothing sectors in the country currently already represent 25 % of industrial jobs and 30 % of exports, shares that the Vietnamese government wants to see grow considerably in the coming years. The sector receives extensive subsidies and includes many state-owned companies. With a labour cost of 0.74 US dollars per hour, Vietnam is among the countries with the lowest wage costs.
elizabeth.dewandeler@fedustria.be
These figures show that both parties, Europe and Vietnam, are extremely different. The export of Vietnamese textile and clothing products to the EU will continue to increase anyway, even without a free trade agreement, while our trade balance with the country already shows a considerable deficit. As to our exporters, they should not expect much new market opportunities, given the low purchasing power in Vietnam. To prevent the free trade agreement from becoming completely one-way traffic, the principle of double transformation (such as weaving plus garment manufacture) must be the basis for the rules of origin, in order to stop Vietnam from becoming a gateway for Chinese fabrics that are imported at zero duties in the EU after having being turned into clothes in Vietnam. Strict and effective customs inspections are necessary here. Moreover, the tariff dismantling must be completely reciprocal, i.e. the tariff dismantling schedule, which should be spread over a long period, must be identical. Enforceable commitments must also be made with Vietnam in terms of the abolition of State support in its many different forms and respecting intellectual property rights. Finally, Fedustria and Eurocoton believe that Europe may not under any circumstances be more generous than the US in the context of the TPP (Trans-Pacific Partnership). Otherwise Vietnam will transfer its export flow to the US to Europe, with all the consequences this entails!
A retrospective
European Wood Action Days in Brussels The policies priorities stated in the manifesto can be summarised as follows: 1. With respect to competitiveness:
© Fedustria
• Creation of a level playing field between wood and other materials;
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The “European Wood Action Days” were held in the European quarter in Brussels from 22 to 26 September. The organisers, CEI-Bois, EPF and EOS wanted this initiative to emphasise the importance of the European woodworking industry for the future of Europe. The Wood Box, a wooden container that serves as an exhibition space and provides an overview of the many ways wood can be used as a building material, was installed on the Place du Luxembourg for the occasion. These organisations also called upon the European policymakers in a manifesto to create the necessary policy environmental factors for the sector to be able to become even more of a source of prosperity and employment in future than it already is. If annual industrial wood processing were to increase by four per cent per year, this would result in an extra contribution of 2,350 million euros to European economy, 80,000 new jobs, 405 million extra tax income and a reduction of CO2 emissions by 150 million tonnes.
• Better access to capital for SMEs;
• Ensuring a more coherent EU policy. 2. With respect to the environment and climate: • Stimulation of the use of wood in construction; • Optimisation of the use of wood in all sectors; • Increase in the availability of wood as a raw material for the industry. 3. With respect to agriculture and rural development: • Encouraging forestation and reforestation in Europe;
• Avoidance of wood export without further processing; • A more stringent anti-dumping and anti-subsidy policy.
The full text of the manifesto can be found at www. woodforgrowth.eu.
Fedustria-Meeting Europe
Novembre 20, 2014
Selected key European figures
Revision of Carbon Leakage
A penalty for the top of the
The textile, woodworking and furniture industries are an important source of prosperity and employment in Europe. Here are a few telling figures:
class
The Commission has revised the list of sectors subject to Carbon Leakage for the period beginning in 2015. The woodbased panel sector is no longer on the list and will therefore no longer be allocated free emission allowances in the future. The reason given − a fallacious one − is over-allocation in the previous period. According to our calculations, however, the sector does meet the required criteria, with an induced carbon cost ratio of 7 % (>5 %) and a trade intensity ratio of 21.7 % (>10 %).
(Figures for the EU-28) Turnover (billion €) Employment (people) Export out of EU (billion €)
Textile and Woodworking clothing1 and furniture 166.5
218.02
1,664,000
2,040,0753
42.44
25.01
1
estimates for 2013 2011 3 2012 4 including artificial and synthetic fibre Source: Euratex and CEI-Bois 2
Emission allowances are determined on the basis of a heat benchmark. This compares the CO2 emission of the fuel used with the emission if natural gas were used. The Renewable Energy Directive (RED) states that burning biomass is CO2 neutral. The consequence of this is that the woodbased panel industry, which uses its own production waste as fuel with respect for ‘cascade’ use of raw materials, has very low carbon emissions. Another consequence is that burning biomass is promoted, leading to rising timber prices. This does not only mean higher costs for businesses that they cannot (always) pass on in the price of their products; they also see a large proportion of their raw material going up in smoke. The conclusion to this story is that the wood-based panel industry has put a lot of effort into making its production as energy-efficient as it can with CO2 emissions that are as low as possible. Investments are no longer rewarded due to its removal from the Carbon Leakage list and the higher cost price of timber as a raw material. This can be corrected by abolishing subsidies for burning wood as a raw material or by compensation for reducing CO2 emissions.
piet.vanthournout@fedustria.be
Price rises for dyestuff
Damaging to textile companies The European textile finishing industry has been beset by steep increases in the prices of colorants and associated raw materials since the summer of 2013. In one year, the price of certain dyestuffs − which are essential raw materials for the textile industry − rose by more than 100 %. These price rises have been attributed to stricter environmental legislation and controls in China, meaning that certain producers have been forced to close down − temporarily or for good. The result is a more limited supply, leading to shortages. These developments are extremely worrying for European textile companies. Given the extremely competitive environment in which they operate, it is impossible to pass these cost increases on to their customers.
bruno.eggermont@fedustria.be
Stricter environmental legislation and adequate compliance in China are obviously laudable and will certainly help to create a level playing field. However the textile sector does not believe that the price increases noted can be attributed exclusively to the stricter environmental legislation. Therefore it is also suspected that the European companies that distribute these dyestuffs have abused the price rise to increase their prices to their textile clients more than necessary. Euratex has already raised this problem with the European Commission. It has called upon the Commission to start an investigation into the possible formation of a cartel on the dyestuff and auxiliary market. It is important that enough businesses − in China as well −, dealing in dyestuffs and substances for these dyestuffs, including medium-sized businesses, stay active in order to prevent an oligarchy from arising between a few very large businesses.
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Fedustria-Meeting Europe
Novembre 20, 2014
Environmental performance of building products
Confusion over evaluation
On 1 July 2014, the European Commission published a communication on the resource efficiency opportunities in the building sector. It intends to create a policy to evaluate the environmental performance of buildings on the one hand and the recycling of building products on the other. The Commission wants the evaluation of the environmental performance of building products to be based on European standards.
The European woodworking industry believes strongly in European standards as a way of creating a transparent Single Market for building products. What is more, if environmental performance can only be evaluated and certified by European standards in the future, an easy-to-
understand parallel will be created with the evaluation and certification of technical characteristics (fire safety, stability etc.), as imposed by the Construction Products Regulation. Such an approach is clear and has been proved to be good for the Single Market.
Unfortunately, a day later on 2 July 2014, the Commission abandoned the hope of clarity and efficiency with the publication of another communication, entitled “Towards a circular economy: a zero waste programme for Europe”. This affects all products, including building products, and generally speaking has the same basic aims as the “resource efficiency” communication. However the tools chosen, such as “Ecodesign”, “Product Environmental Footprint” etc. are not entirely the same.
The result is enormous confusion, illustrating how various approaches within the European institutions can overlap and contradict each other. Europe can stop this by unambiguously recognising the specificity of building products and making sure the evaluation of environmental performance is based on European standards. Building products must stay outside the scope of non-specific initiatives for environmental performance.
jan.dietvorst@fedustria.be
TEXTURE, Museum of flax and River Lys © Mathieu Van de Sompel
Opened recently in Kortrijk
Belgium, and Flanders in particular, has been famous for its textiles for centuries. Linen takes pride of place. For example, “Belgian Linen” is a top quality product that enjoys international fame and is in demand all over the world. The TEXTURE museum that opened recently, housed in an authentic flax depot in Kortrijk, tells the story of the linen and flax industry. It is a story of craftsmanship and daring innovation. www.texturekortrijk.be Fedustria, Non-profit organisation Rue Montoyer 24, b1 B-1000 Brussels T + 02 528 58 11 www.fedustria.be Note
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Transatlantic Trade and Investment Partnership
Yes to a free trade agreement with the United States
Since July 2013, the European Union and the United States have been holding bilateral trade negotiations. The American market is the most important sales market outside the EU for the European textile industry, and an important trading partner for the European woodworking and furniture sector as well: around 5 % of non-EU exports are sent to America. Fedustria supports the free trade negotiations with the US. Unlike those with Vietnam (see the article on page 2), a genuine win-win situation is possible here, since the two economies are comparable. More specifically, Fedustria and Euratex are both pleading for an immediate mutual abolition of all tariff barriers, without exceptions, when the agreement comes into effect. Import duties in the US still constitute a significant obstacle to the European textile industry, with peak tariffs reaching as much as 38 % (the maximum in the EU is 12 %). What is more, European companies experience significantly more obstacles when they try to compete for American public tenders (Buy America provisions, Buy American Act and Berry Amendment). Better access to the American public procurement market is therefore crucial.
elizabeth.dewandeler@fedustria.be Publisher : J.F. Quix Allée Hof-ter-Vleest 5 b1 B-1070 Brussels
Copyright Fedustria : Fedustria members may use the information included in this newsletter as they wish; any third parties are requested always to mention the source of the information.
CEI-Bois: the European Confederation of woodworking industries, www.cei-bois.org; EOS: the European Organisation of the Sawmill Industry, www.eos-oes.eu; EPF: the European Panel Federation, www.europanels.org; Euratex: the European apparel and textile confederation, www.euratex.eu; Eurocoton: European cotton and allied textiles federation.