Belgium, (Brussels Morning Newspaper) The body representing the textiles industry in the EU says it is “highly concerned” about the potential loss of competitiveness, caused by the “EU’s inaction of the energy crisis.”
The comments come after the European Council summit last week and its conclusions on the measures to tackle the energy crisis.
The European Apparel and Textile Confederation says it is “extremely concerned about the fast loss of competitiveness of Europe” and demands urgent action to “save the industry.”
It says the reason for a “sharp” decline in competitiveness is twofold.
First, the energy cost in Europe is more than 6 times higher than in the US, China, and neighbouring countries.
“This factor alone has almost erased the business case for producing in the EU.”
At present, many textiles and clothing companies are producing at net loss or have shut down production, says the confederation.
“The industrial conditions have worsened in such a way that there is no business case to invest in Europe or buy products produced or processed in the EU. It is only the sense of responsibility of our entrepreneurs towards the European society that is keeping the plants and production running,” it says.
Secondly, “while the EU is passive and extremely slow in articulating a credible and effective response” to the energy crisis, its main international competitors and trade partners (China, India and the US respectively) have developed comprehensive state-aid frameworks for their domestic industry despite not being affected by the crisis at all.
The latest example, it states, is the €369-billion scheme of the Inflation Reduction Act rolled out by the Biden administration.
Recent trade data indicate a loss of global competitiveness: imports to the EU have grown tremendously in 2022 (+35% year-to-date). It is also evident that the surge in imports goes in parallel with the surge of natural gas price. It is expected that energy prices will remain high and volatile, opening the door for imports to gain substantial market shares in the EU, according to the confederation.
The confederation said, “If the status quo is maintained, not only the EU will not be able to recover its competitive position on the global business stage, but it will also fail its plans to reach zero-net emissions and achieve circularity. It is evident that these ambitions – that our industry is passionately supporting – need massive capital investments.”
EURATEX now calls on the EU political leaders in the Commission, in the European Council and in the national capitals to:
- “Raise the ambition” and adopt a comprehensive approach at EU level: energy, state-aid and trade policy must be brought together in a single strategy with concrete emergency solutions and with a clear SME dimension;
- “Let all hesitations aside and adopt a meaningful” price cap on natural gas wholesales. It should also be ensured that electricity prices are brought to a sustainable price level;
- “Change the European posture” on state-aid, even temporarily. An ambitious plan of investments and state-aid in green technologies to support the industrial transition should be rolled out.
A spokesman added, “Such a plan, however, should not be conceived as a retaliation against our most necessary and like-minded trade partners.
“Access to finance and markets must be safeguarded for all those actors who are capable and willing to invest in Europe, on the basis of reciprocity.
“In these challenging times for geopolitical stability, ensuring strong trade ties with our traditional allies and partners is of utmost importance. The roll-out of an investment and state aid plan should not interfere, but rather support, the dialogue with the US (and other partners) and the deepening of our trade and investment partnership.”
