doing business - ukrexport.gov.ua1].pdf · doing business in switzerland and the eu ... or swiss...

DOINGBUSINESS

in Swi tzer land and the EU

– Requ i rements for Access

Doing Business in Switzerland and the EU – Requirements for Access

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1 MARKET ACCESS

1.1 QUALITY AND STANDARDS IN SWITZERLAND AND THE EU 3

1.2 PACKAGING, SIZE MARKING AND LABELLING 5

1.3 TRADE RELATED ENVIRONMENTAL 18

AND SOCIAL ISSUES

1.4 PRESENT TRADE REGULATIONS 23

1.5 IMPLICATIONS AFTER THE ELIMINATION OF THE 28

TEXTILES QUOTA

1 M A R K E T A C C E S S

1.1 QUALITY AND STANDARDSIN SWITZERLAND AND THE EU

The application of the EuropeanNorms (EN) in the 25 EU and the 3EFTA countries (including Switzer-land) is the basis of a liberal intra-European trade and is valid in all28 countries (more details:www.cenorm.be).

However, there are no general EUor Swiss standards for garments.The rule is that importers in EUcountries as well as in Switzerlandgenerally fulfil the minimum qualityrequirements regarding materialand making. The technical com-mittee of the European ClothingAssociation (ECLA) has publishedan example of recommendationsfor manufacturers of knitted andwoven clothing. Within theserecommendations ECLA, whereSwitzerland as well as the EU 15countries hold a membership(please compare www.iafnet.org/html/iafwebsites.htm) makesa difference between:

- Recommendations concerning the characteristics of product which could be detected by an experienced person with-without aid of instruments in-general use. A fault is located if the irregularity is evident in the fabrics as it was delivered or in the final product

- Recommendations concerning the characteristics of fabrics, which could be only recovered with the help of appropriate equipment. Description of each characteristic includes definition, testing method, minimum quality standards and (if necessary) possible allowable tolerances compared with measurements of the sample.

Testing methods for clothing areusually based on the ISO stan-dards for Switzerland (www.iso.ch) or they can also suit the requi-rements of European norms (EN)or national standards of the EUmember states (such as DIN, SIS,BS). ISO is made up of its mem-bers. A member body of ISO is thenational body ‘most representati-ve of standardization in its coun-try’. Only one such body for eachcountry is accepted for member-ship of ISO. Member bodies areentitled to participate and exerci-se full voting rights on any techni-cal committee and policy commit-tee of ISO. The member body ofISO in Switzerland is SwissAssociation for Standardization(SNV) (more details can be takenfrom www.snv.ch). ISO norms arealso applied in Switzerland.

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The major standards for qualityand grading standards in the EUand Switzerland are the following:

- for care labelling - ISO 3758

- for dimensional stability - DIN 53894 (steaming), DIN 54311 (fusing), ISO 3759/5077/6330 (washing/tumbling), ISO 3175 (dry cleaning)

- for physical properties - ISO 5081 (tensile strength strip), ISO5082 (tensile strength grab), ISO 9290 (tear strength), BS 3320 (seam slippage), EN 22313 (abrasion resistance), ISO 9876 (crease tendency/ recovery), BS 5811 (pilling ten-dency), SIS 650047 (fibre penetration), EN 24920 (spray test) etc.

- for colourfastness to washing, light, water and other external influences - ISO 105

Although the EU attempts to acti-vate free trade based on the har-monization of product require-ments, each EU member stateand Switzerland has its own natio-nal market for apparel with itsrespective requirements concer-ning quality, type of clothing,colour, fabric, size etc.

Swiss norms are progressivelydisappearing due to the appea-rance of international norms.Following requirements inherentto globalisation, Swiss industry has

changed over to internationalstandards over the last twentyyears. In order to counteract pos-sible discrimination against theSwiss clothing industry becauseof the country’s non-membershipin the EU, Switzerland has accep-ted various EU-norms and refe-rences within the framework ofnational legislation.

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1.2 PACKAGING, SIZE MAR-KING AND LABELLING

Packaging

Care must be given to the packa-ging of products if one intends toexport to EU countries andSwitzerland. Packaging must betravel-steady, it must protect theproduct against environmentalinfluences, theft, rough handlingetc.

As well as these basic demands,some importers may have speci-fic demands concerning packa-ging, such as printing informationabout the order on the boxes(order number, quantity, productnumber, product description etc.).Some materials like PVC are lesspopular or even forbidden in somecountries because of environ-mental issues, and exportersshould discuss this matter withpotential clients and include thecost of the special price in theirwholesale price, if required.The EU has issued a Directive onpackaging and packaging waste(94/62/EC) that is applicable, to alarge extent, to Switzerland aswell. Among other measures, theDirective sets maximum levels ofconcentrations of heavy metals inpackaging and describes require-ments specific to manufacturingand composition of packaging.The Directive needs to be trans-posed to the national legislation ofthe member states.

Since the last market surveydated 2002, it has becomeincreasingly difficult and expensiveto dispose of waste in Europe. Inprinciple, the importer is heldresponsible for disposal of thepackaging waste for all goodsfrom outside the EU. It is thereforecrucial, when planning exports tothe EU, to take the packaging ofyour products (both sales packa-ging and transport packaging) intoconsideration. To fulfil the require-ments of the target market, clearcommunication with the importerabout packaging is highly recom-mended. Most of the previous systems,such as the German packagingwaste programme the ‘GreenDot’ - where trade and industry inGermany and other EU countrieswere obliged to take back packa-ging materials - have lost impor-tance over the last 2-3 years,mainly because of misuse of thegreen dot which appeared almoston every imported packaging wit-hout an obligation to take backthe packaging.

New legislation about wood pak-kaging has recently been introdu-ced. More detailed informationabout packaging techniques andthe use of packaging materialscan be found on the website ofITC (http://www.intracen.org).

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Size marking

The following body measure-ments are used: body length,chest size and hip size. Thesethree basic measurements deter-mine the fitting of the garments.The following sizes are similar inGermany, the Netherlands andAustria.

Size table for women's outerwear (body sizes) in cm:

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Character sizes XS S M M L L XL XL XXL

Figure sizes 34 36 38 40 42 44 46 48 50

Chest width 80 84 88 92 96 100 104 110 116

Waist size 61 64 68 72 76 81 86 91 97

Hip girth 86 90 94 98 102 106 110 114 118

Size table for men's outerwear (body sizes) except trousers/jeans

(see next table) in cm:

Character sizes XS S S M M L L XL XL XXL

Figure sizes 42 44 46 48 50 52 54 56 58 60

Chest width 84 88 92 96 100 104 108 112 116 120

Size table for men's trousers in cm:

Figure sizes 40 41 42 43 44 45 46 47 48 49

Waistband width 68 68 72 72 76 76 80 80 84 84

Side length 100 108 102 110 104 111 104 112 106 112

Figure sizes 50 51 52 53 54 55 56 57 58 59

Waistband width 88 88 92 92 97 97 102 108 114 120

Side length 106 113 108 114 108 114 111 111 111 111

All attempts to harmonise the sizesystem at European level have sofar failed. The system is that insome EU countries, except theUK, the same figure sizes areused, but sizes are not equal. Forinstance: Women’s figure size 36in Germany and The Netherlandsis equivalent to 40 in France and42 in Italy. As mentioned above,the UK uses a different system:Women’s figure size 36 inGermany and The Netherlands isequivalent to 8 in the UK, 38 to 10etc. Apart from this discrepancy, thedifferent brands and retailers inEurope use the same figures forthe sizes, but a lady’s size 38might differ to quite some extentfrom brand to brand.

Jeans sizes

Jeans are sold internationally ininch sizes. They are read as fol-lows: the first number refers to thegirth of the waist and the secondto the inside leg seam (inseam).Both are expressed in inches.

Germany has a specific systemfor the men’s sizes, which aresubdivided into three groups:

a. Standard sizes: 44 46 48 50 5254 56 58 60 62

b. Large sizes (shorter than stan-dard sizes and wider at the hip):24 25 26

c. Slim sizes (longer than standardsizes and narrower): 84 86 88 9094 98 102 106

Size Marking for Babies’ and

Children’s Wear

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Example: Conversion table for women’s sizes in inch and conventional sizes

Inches 26 27 28 29 30 31 32 33 34 35 36

Sizes in Germanyand Switzerland

34 - 36 38 - 40 42 - 44 - 46

Years Groups

0 - 22 - 6

6 - 1212 - 1414 - 16

BabiesToddlersMiddle group/schoolPreteensteenagers

Infants’ Wear (body sizes)

For the purposes of sizing all chil-dren are best grouped into infants(younger than seven years), boys

and girls. The Swedish ‘Centilong’system based on height values isused in some European countries.There is one standard for all thesesizes.

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Height 50 56 62 68 74 80 86 92 98 104

Chest 40 42 44 46 48 50 52 54 55 56

Waist 40 42 44 46 48 49 50 51 52 53

Hips 41 43 45 47 49 51 53 55 57 59

Arm length 18 20 22 24 26 28 30 32.3 34.6 36.9

Inside leg length 16 19 22 25 28 31 34 37 40.6 44.2

Height 110 116 122 128 134 140 146 152 158 164 170 176 182 188 194

Chest 58.0 59.0 60.0 62.0 64.0 67.0 70.0 73.0 77.0 81.0 85.0 88.0 91.0 94.0 97.0

Waist 54.0 55.0 56.0 57.0 59.0 61.0 63.0 65.0 68.0 71.0 74.0 77.0 80.0 83.0 86.0

Hips 59.0 61.0 63.0 65.0 68.0 71.0 74.0 77.0 81.0 85.0 89.0 92.0 95.0 98.0 101.0

Arm length 39.1 41.4 43.7 46.0 48.3 50.6 52.5 55.3 57.5 60.0 62.5 65.0 67.0 69.0 71.0

Inside leg

length

47.5 51.0 54.5 58.0 61.5 65.0 68.0 71.0 74.0 77.0 80.0 83.0 86.0 89.0 92.0

Neck

circumference

28.0 28.5 29.5 30.5 31.5 32.5 33.5 34.5 35.5 36.5 37.5 38.0 38.5 39.0 39.5

Height 110 116 122 128 134 140 146 152 158 164 170 176 182 188

Chest 58.0 59.0 60.0 62.0 64.0 67.0 71.0 75.0 79.0 83.0 86.0 89.0 92.0 95.0

Waist 54.0 55.0 56.0 57.0 59.0 61.0 63.0 65.0 67.0 69.0 71.0 73.0 75.0 77.0

Hips 61.0 63.0 65.0 67.0 70.0 73.0 77.0 81.0 85.0 89.0 93.0 96.0 99.0 102.0

Arm length 39.1 41.4 43.7 46.0 48.3 50.6 52.8 55.0 57.3 59.5 61.5 63.5 65.5 67.5

Inside leg

length

47.5 51.0 55.0 59.0 63.0 67.0 70.0 72.5 75.0 77.5 80.0 82.5 85.0 87.5

Neck

circumference

28.0 28.5 29.0 29.5 30.0 30.7 31.5 32.2 33.3 33.7 34.5 35.5 36.5 37.5

Body Sizes Infants in cm:

Boys' wear (body sizes) in cm:

Girls' wear (body sizes) in cm:

Shirts and Blouses

In EU and Switzerland, sizes formen’s shirts are based on neckcircumference in cm or inchesand vary respectively from 37-48cm and from 15-19 in, and can beextended with other measure-ments, of which arm length is themost important. The sizes XS-XXLare also used for leisure or sportshirts, also in combination with theusual shirt size. For women’s andchildren’s wear, the standardouterwear sizes are used.

Labelling

The International Association forTextile Care Labelling (GINETEXFrance - Groupement Internatio-nal d’Etiquetage pour l’Entretiendes Textiles, www.ginetex.org),which represents the textile pro-ducing and retailing industries in 16European countries (most of theEU countries as well asSwitzerland and Tunisia as non-EUcountries included), has devisedan internationally applicable carelabelling system for textiles basedon symbols of pictograms. Onlythose care labels issued by theGINETEX may be used by theretailers/manufacturers in theGINETEX member countries.

The care identification symbolsare protected under trademarklaw. The marks are owned by theaforementioned GINETEX Group.The care identification is alsocovered by international stan-dards (ISO 3758 / EN 23 758).

In Switzerland, the row of symbolsmay not be reproduced, issued orused without a special agreementwith SARTEX (Swiss Asso-ciation for Textile Marking –www.sartex.ch). The contractingcompanies undertake to makecorrect use of these symbols at alltimes within the meaning of therelevant guidelines.

These guidelines apply to all texti-les and textile products sold inSwitzerland and require a declara-tion as to the kind and content ofthe raw materials used. Pursuantto the agreement with the user,legal action will be taken in theevent of any breach of this under-taking. The textile labelling regula-tions set by the individual memberstates of the European Union (EUStandards) comply with the Swissguidelines and requirements. Theright to use these trademarks hasbeen given to the national mem-ber bodies of GINETEX. SARTEX isindependent in regard to its struc-ture and operating methods, butshould adhere in all respects tothe use of internationally agreedsymbols (above) as well as totechnical regulations and decisi-ons taken at the GINETEX level.Commercial companies (whole-salers, importers etc.) are requi-red to include the undertaking toensure correct care identificationand appropriate labelling in com-pliance with the Swiss guidelinesin their orders for deliveries.

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There are two kinds of require-ments in the EU and Switzerland:

Mandatory requirements containrequirements like size, fibre con-tent and care-labelling/washinginstructions. With regard to fibrecontent: the indication 100% orpure can be used within a marginof 2 percent of the weight of thefinal product. Other fibres with aweight of less than 10 percent ofthe weight of the final productscan be mentioned; in that case, allother fibres must be mentioned.An international care-labelling pro-gram is in use in many countries,also outside the EU. The programuses five basic symbols, whichrelate to the properties of colour-fastness, dimensional stability,effect of retained chlorine (ble-ach), maximum safe ironing tem-peratures and certain other pro-perties.

Voluntary requirements, such asorigin marking, brand or productname and other consumer infor-mation.

The care label

- should be durably fixed to the textile article,

- should be legible during the whole lifetime of the article. In particular it should withstand the washing and dry cleaning process it recommends,

- should be clearly positioned where it is easily noted and without interference from a seam,

- should not show through the article and spoil its appearance.

Other forms of information maybe combined on the same labelbut clearly separated from eachother. Garments consisting ofeasily separable parts should belabelled on each of the parts.There should only be one singlecare label on an article even if thedifferent components have tocarry further information (forexample fibre content).

The object of labelling is to informthe consumer and the commerci-al textile care industries whenbuying, using or cleaning the arti-cles. Therefore labels should beeasily detectable. The label shouldbe affixed permanently and posi-tioned always at the same placesdepending on the type of the arti-cle. Because of differences inmaterials, production, demands offashion etc. these requests canonly partially be fulfilled and by wayof exception an alternative placeof positioning is given. To achievea maximum of conformity, recom-mended positions are laid down.

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The International Textile Care Labelling Symbols (according to ISO 3758)

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SYMBOLS MAXIMUM WASHINGTEMPERATURE

CARE PROCESS

95° Cmechanical action normalrinsing normalspinning normal

95° Cmechanical action reduced (1)rinsing at gradually decrea-sing temperaturespinning reduced





30° Cmechanical action muchreduced (1)rinsing normalspinning reduced

40° Chand wash only

-do not wash


40° Cmechanical action muchreducedrinsing normalspinning normal

95C

95C

50C

60C

40C

40C

50C

40C

30C

(1) corresponding to a load inferior to a normal load and a maximum liquor ratio* symbols only used in some countries

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SYMBOLS CARE PROCESS

Chlorine-based bleaching allowed only in a cold and dilute solution

Do not use chlorine-based bleach

CI


Iron at a maximum soleplate temperature of 200° C

Iron at a maximum soleplate temperature of 150° C

Iron at a maximum soleplate temperature of 110° C (steam iron may be risky)

Do not iron

IRONING

Dots placed within the symbols (1, 2 or 3 dots) indicate the maxi-mum temperature in degreesCelsius for ironing textile articles.

DRY CLEANING

Letters (A, P and F) in the circlerefer to the solvents which may beused by drycleaners.Underlining the circle indicatesthat a specific process should be

TUMBLE DRYING

The tumble drying symbol (a circle in a square) must be completed by one ortwo dots for two different temperature levels.

used (mild process with strict limi-tations on the addition of waterand/or mechanical action and/ortemperature during cleaningand/or drying). In this case, self-service cleaning is not allowed.

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Dry-cleaning in all solvents normally used for dry-cleaning with normal cleaning procedures

Dry-cleaning in all solvents normally used for dry-cleaning except trichloroethylene with normal cleaningprocedures. Self-service cleaning is possible

The bar placed under the circle indicates strict limitati-ons on the addition of water and/or mechanical actionand/or temperature during cleaning and/or drying.Self-service cleaning is not allowed

Only petroleum solvents may be used with normalcleaning procedures

The bar placed under the circle indicates strict limitati-ons on the addition of water and/or mechanical actionand/or temperature during cleaning and/or drying.Self-service cleaning is not allowed

Do not dry-clean - no stain removal with solvents

A

P

F

F

P


No restrictions concerning the temperature of tum-ble drying after a washing process

Tumble drying possible at lower temperature setting(60° C maximum) after a washing process

Do not tumble dry

In April 2005 the Textile Carelabelling System according to ISO3758, valid worldwide, wasupdated. The new care symbolsare listed below and concernwashing, bleaching and professio-nal care. The other symbolsremain valid as before.

Washing

For additional washing processesthe following symbols have beenintroduced:

Bleaching

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30°C for normal treatment

30°C for very soft treatment

The empty triangle means that all bleaching processes areallowed

The triangle with the two lines means that only oxygen basedbleach and no chlorine based bleach is allowed

The crossed black triangle means that bleaching is not possi-ble (normal washing powder allowed)

New symbol: wet cleaning possible

The crossed empty circle means ‘No chemical treatmentpossible’

The crossed full circle means ‘No water treatment possible’

Professional Textile Care (Cleaning on chemical and water basis)

30C

30C

W

Source: www.textileaffairs.com, 2006

Below is some useful generalinformation how to use the carelabels and what to write on them:

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Care Labelling – General Recommendations for Exporters

WashingAll garments worn close to the skin should preferably be washableat 60º C., normal mechanical agitation. All other garments should bewashable at 40º C., normal mechanical agitation. The bar under thewashtub should only be used in the case of delicate fabrics. The barindicates that the mechanical agitation should be reduced. The bro-ken bar should only be used in the case of machine washable wool andmachine washable silk. The broken bar indicates that the mechani-cal agitation should be much reduced. The hand-wash symbolshould only be used for articles which cannot be washed in the was-hing machine.

Bleaching Normally the symbol is crossed out.

Ironing three dots for cotton and linen; two dots for acetate, metal-lised fibres, polyamide, polyester, tri-acetate, viscose, wool, angoraand silk; one dot for acrylic, modacrylic, elastane. The symbol shouldbe crossed out for chlorofibres and polypropylene.

Dry cleaning Only use the symbol P. The bar under the symbol only to be used fordelicate fabrics, especially those made from angora.

Tumble drying Two dots for all cotton and linen articles, one dot for all other com-positions. Care should be taken that articles are finished properly toprevent excessive shrinkage. This should be tested.

Note: the ‘weakest’ fibre determines the selection of thesymbols in blended materials.

Source: CBI, 2005

Ecolabels

In the late nineties and at thebeginning of the millennium, vario-us competing ecolabels werepopular all over Europe. In thebeginning, they were mainly usedfor under- and babywear. Manylabels have now disappeared andthe approach to the whole ‘ecolo-gical’ issue about textiles and clot-hing is broader and considers thewhole supply-chain from the pro-duction process up to the deliveryinto the shop. Social and environ-mental aspects play an importantrole (cf. chapter on ‘Trade RelatedEnvironmental and Social Issues’).

Currently, the German/Swiss Öko-tex Standard 100 is widely accep-ted in the EU countries andSwitzerland as well.

Öko-Tex 100

A recent statistical evaluation ofthe certificates issued throughoutthe world highlighted the impor-tance of the Oeko-Tex Standard100 as the world’s leading testlabel of its type at this time. Today,this label is the most widely used,and among European consumersbest-known, ecolabel in relation totextiles and clothing. It was deve-loped in 1993 by the ‘InternationalAssociation for Research andTesting in the field of TextileEcology’ and changed in 1997.Companies in the EU, Switzerlandand throughout the world haveapplied for more than 6000 certifi-cates (2004 data). The headquar-

ter of Oeko-Tex International islocated in Zürich/Switzerland(www.oeko-tex.com).

Obtaining the Öko-Tex label invol-ves testing for harmful substancesaccording to the criteria which arelaid down for each product class.Harmful substances may havesome effect on people andhuman health. Importers fromoutside the EU have becomeaware of the significance of thislabel. The number of the impor-ters who ask for Öko-Tex is gro-wing continuously.

The standard specifies four articleclasses:

- Articles for babies- Articles in direct contact with

skin- Articles without direct skin

contact- Decoration material

The standard consists of the follo-wing fundamental guidelines:

- Requirements apply to the end product only

- Exclusion of certain dyes which can cause cancer or allergic reactions

- No flame retardant or biocide treatment allowed

- Limitation of harmful substan-ces in the end product (pestici-des, formaldehyde, heavy metals)

- Differentiated limitations accor-ding to textile types and target groups

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The Oeko-Tex 100 Standard com-prehensively addresses theHuman Ecology component oftextile products. It evaluates andscreens for any harmful substan-ces present within processed tex-tiles intended to come into con-tact with consumers.The advantage for clothing expor-ters of applying for Öko-TexStandard 100 is that this system isbuilt up in a modular way andenables reliable and comprehen-sive assessment within a realistictime frame. This is advantageouswhen considering the nature ofthe clothing and textile industrywith its fashion-conscious, dyna-mic pace.

The Oeko-Tex scheme is availableto manufacturers world-wide.Although it is far more cost effecti-ve to test at each stage of theproduction process, it is still possi-ble to certify the finished productitself at any time. Another advan-tage of the system is, that if a pro-duct is checked and certified at aparticular stage of the productionprocess chain, it can then be usedin the next stage without having tobe re-tested.

The designation is restricted toone year, after which the productwill need to undergo new testing.The Öko-Tex Standard 100 as wellas the Ökotex 100 plus label haveachieved a worldwide acceptan-ce with an increased number ofregistered companies also in Asiaand South America.

Oeko-Tex Standard 100 plus

The first edition of the Öko-TexStandard 1000 was issued in1995. It outlined the requirementsfor environmentally friendly pro-duction. Manufacturing sites fulfil-ling a strict set of criteria, addres-sing areas such as banned chemi-cals and harmful manufacturingprocesses were licensed to carrythe label ‘UmweltfreundlicheBetriebsstätte’ (lit. Environmen-tally Friendly Manufacturing Site)which they could use as proof ofan environmental managementsystem. First organizations weresubsequently audited in a pilotproject.

The ‘Oeko-Tex Standard 100 plus’label was awarded for the firsttime in 1999. This related to a finis-hed product which fulfilled therequirements of the Oeko-TexStandard 100 and was also produ-ced only on sites carrying theOeko-Tex Standard 1000 licence.Generally speaking, it can berecommended that clothingexporters from developing andemerging countries should con-centrate on this ÖkoTex 100 label.The Öko-Tex label can be used todistinguish a textile product fromcompetitors.

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1.3 TRADE RELATED ENVI-RONMENTAL AND SOCIALISSUES

Apart from legal requirements,nowadays producers are beingconfronted more and more withadditional requirements. EU andSwiss buyers want more informa-tion from producers, for exampleabout the social conditions at theirproduction sites or environmen-tally sound production. TheGerman Karstadt/Quelle Group,for instance (one of the largestEuropean clothing retailers) statedin June 2005, that before signingany contract their buyers areobliged to check the fulfilment ofthe social standards at the pro-duction site. Karstdt in this respectworks with the BSCI programme(more details under www.bsci-eu.org). Although the require-ments in this field are not a part ofofficial legislation and have nolegal basis, it is recommended totake them into account in order tobe competitive.

If a manufacturer wants to indica-te to external parties that he ismanufacturing in an environmen-tally sound way, he can complywith standards which have beendeveloped for this purpose. Themajor standards and current mar-ket requirements are described inthis chapter.

Environmental Requirements

Environmental aspects play animportant role for outerwearmanufacturers interested inexporting to the European marketgiven that environmental aspectsare a major issue in the EU andSwitzerland. Besides governmen-tal actions (legislative, regulations),a strong consumer movement isnot to be underestimated, especi-ally in the Northern and Westernparts of the EU (Scandinavia,Germany, Netherlands, UnitedKingdom) and in Switzerland.These aspects are not just a trend- these are lasting issues, which,together with other determinantssuch as price and quality, have astrongest impact on the positio-ning of a supplier in the Europeanmarket.

The capacity of a company to usethe environmental approachtowards its products such as eco-labels (for products, see alsoEcolabels), environmental ma-nagement standards (for thewhole organisation) and producti-on processes are ‘green’ marke-ting tools, which have been crea-ted by governments and privateparties.

Being a part of the business chain,companies in developing coun-tries may also become responsi-ble for negative side effects oftheir business and their impact onsociety, the environment and theiremployees.

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Environmental Management System

An ‘Environmental ManagementSystem’ (EMS) is important forenvironmental protection and pol-lution prevention in the productionphases. It is a management toolwhich enables an overview of theenvironmental impact of the com-pany and the possible way it couldbe diminished. At the momentthere are two general voluntarystandards with which manufactu-rers can comply: ISO 14001 andEMAS, both of them based on thepopular ISO 9000 series of qualitymanagement standards.

The EU’s Ecological Managementand Audit Scheme (EMAS) hasbeen operating since 1995. Itapplies to companies with pro-duction facilities within the EU andtherefore is not relevant for expor-ters from developing countries.However, ISO 14001 is favouredby exporters to the EU andSwitzerland as well.

The ISO 14001 Environmentalmanagement system was publis-hed in November 1996. It has asimilar impact to the ISO 9000Quality Management Systemsseries. The objective of ISO 14001standard is to provide companieswith the necessary elements of anenvironmental managementsystem, which can be integratedinto business policies to achieveenvironmental and economicgoals, such as compliance withlegislation and demands set bythe company as well as continu-

ous improvement of the environ-mental performance of the com-pany. ISO 14001 specifies onlygeneral requirements for an envi-ronmental management system,but it contains no environmentalperformance criteria.

Product related requirements

The main characteristics of theproduction process are the vastquantities of water required andthe variety of chemicals used inthe processing stages, whichcause much waste. Typical envi-ronmental problems associatedwith the production of textiles arewater pollution because of disch-arge of untreated effluent. Liquidwastes arising from washing con-tain a substantial organic and sus-pended pollution load, such asfibres and grease. Effluents aregenerally hot, alkaline, strongsmelling and coloured by chemi-cals used in dyeing processes.Some of the chemicals dischar-ged are toxic and can lower thedissolved oxygen of receivingwaters, threaten aquatic life anddamage general water qualitydownstream.

There are many ways to reducethe amount of water used andemitted. Concerning dyes andpigments, there are many alterna-tives available which are less pol-luting. Other technologies make itpossible to use less dye and redu-ce or eliminate spillage of dyes.

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Quality related requirements

A quality related requirement arethe so called Quality managementstandards which refer to themanagement of a company. Thisis in contrast to most of the otherstandards, labels and markingsdescribed, all of which relate toproduct or production processes.Quality management standardsare not compulsory for marketentry into the EU; however, theycan definitely contribute to thecompany’s image in the market.The most important qualitymanagement system is ISO 9000,inspired by the concept of TotalQuality Management. TQM is aphilosophy based on customersatisfaction and continuous per-formance improvement. ISO esta-blished a policy committee,DEVCO, specifically to addressthe needs of developing coun-tries. See http://www.iso.org

Azo dyes and other harmful substances

Azo dyes are among the leadingcolouring agents in the textileindustry, especially in developingcountries. Approximately 70% ofall dyes used in the textile industryare azo dyes. There are about 2 000 different azo dyes, of whichapproximately 200-300 may fallunder a ban. Dyes in the categoryof direct, azoic/naphtol, disperse,acid or basic dyes may split offcarcinogenic amines.

Many azo dyes above the con-centration of 30 ppm are prohibi-ted in the EU and also inSwitzerland. The ban on azo dyesis applicable to all products thatare in contact with skin for longperiods of time. The manufacturermust also take into considerationthe fact that the products, oncethey have entered the EU, can be‘re-exported’ or transferred easilyto Switzerland and otherEuropean countries. Therefore, itis highly recommendable to followthe Azo regulations.

The best way to avoid problemswith banned azo dyes is to useonly dyes which are absolutelysafe. Use dyestuff supplied byreputable manufacturers, whogive the Colour Index numbers,the generic names and materialdata sheets. Ask for azo-safe cer-tificates. Choose reputable certi-fied laboratories.

Other substances used in the tex-tile and clothing industry that arebanned (or allowed to a limitedextent) in some EU countries andSwitzerland are: pentachlorophe-nol (PCP), cadmium, formalde-hyde and nickel. Polychlorobi-pheniles (PCB) and terphenyles(PCT) have a total prohibition, asdo asbestos and certain flameretardants.

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Flame retardants

Flame retardants are used in texti-les to reduce their flammability. Tri-(2,3,-dibromopropyl)-phosphate(TRIS) and tris-(aziridinyl)-phosphi-neoxide (TEPA) are both carcino-genic and mutagenic, whichmeans that these substancesmay alter genetic material.Polybromobiphenyles (PBB) arehighly persistent, carcinogenicand reprotoxic. Moreover theyalso have effects on the immunesystem and the nerve system.

In the light of the European direc-tive on ‘the restriction on the mar-keting and use of certain dange-rous substances and preparati-ons’ (76/769/EEC), the EU hasprohibited the use of these flameretardants: TEPA, TRIS and PBBare prohibited in textile articlesintended for skin contact. Theyare also prohibited in Switzerland.

Social Requirements

Encouraged by consumer organi-zations, the consciousness ofethical trading aspects has achie-ved growing emphasis in manyEU countries and in Switzerland.This has led to the developmentof codes of conduct by manyimporters. There is a growing con-cern among buyers of clothingabout the use of child labour in thefactories of new suppliers.Exporters who can guarantee thattheir products are made withoutchild labour have a competitiveadvantage over other products

and a better chance of establis-hing a long-term business relati-onship. Exporting companies indeveloping countries mostly arerequested to apply principles ofcorporate conduct compatiblewith the Code of Conduct of theirpartner company in the EU.

These social requirements aregaining importance on Europeanmarkets and are becoming a pre-condition for international trade.The so-called social codes areoften corporate codes.

In addition, the EU has added a‘social clause’ to the GeneralizedSystem of Preferences (GSP),which allows for special importtariff reductions for products thatare produced in a humane way.The garment industry and thetrade associations in some EUcountries are developing a modelcode of ethical conduct for theproduction of all items. A similarsystem for Switzerland is not plan-ned as yet.

Occasionally, consumers or citi-zens form pressure groups(sometimes even demonstratingon the streets) to force govern-ment to put an end to businesspractices they find unethical oranti-social. Such ‘consumeristmovements’ succeeded in settinggovernment rules; the SA 8000(Social Accountability) is an exam-ple of such. The fact that consu-mers don’t accept certain practi-ces demands that suppliers adoptnew processes or materials.

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Code of Conduct

A Code of Conduct was agreed inSeptember 1997 by Europeantextiles union (ETUF-TCL) andEURATEX (employers’ organizati-on). The agreement applies notonly to the European enterprises(mainly EU and Switzerland), butalso to their subcontractors orsubsidiaries in developing coun-tries. One objective of their deve-lopment is to demonstrate a com-pany’s social responsibility.

The core thought of the agree-ment is following: companies areresponsible for their social role.Business ethics and integrity aremajor determinants of the qualityof a company. Companies arealso responsible for establishingtheir own General BusinessPrinciples or Codes of Conduct.These reflect the company’s posi-tion towards business ethics,labour conditions, environment.They should point out the contri-bution of the company to theseissues. The company also has tointroduce mechanisms whichmeasure the true effectiveness ofthe Code of Conduct.

Social Accountability (SA 8000)

SA 8000 is an international stan-dard for social accountability andwas founded in 1997. Its purposeis to ensure ethical sourcing ofgoods and services. It is a volunta-ry standard, which sets basicstandards for child labour, forcedlabour, health and safety, freedom

of association and the right to col-lective bargaining, discrimination,disciplinary practices, wage levels,working hours and compensation.The requirements in the standardare based on recommendationsof the International LabourOrganization (ILO) and on agree-ments and conventions of theUnited Nations (Human Rights,Rights of the Child).

SA 8000 supports the demandsof consumers for worldwide soci-al standards and is internationallyrecognized. SA 8000 accreditati-on is valid for three years with sur-veillance and observation auditsevery six months. Those thatmeet the requirements have theright to display the SA 8000 certi-fication mark.

Socially acceptable productionhas gained importance inSwitzerland. Up to now, 20 audi-tors have been trained for the SA8000 by the Swiss companyAmana SA, Aarau. Link Fair TradeGuarantee represents the label ofAmana SA and operates as a sealof approval for socially fair labourconditions and social engage-ment in low wages countries. Theorganization is aimed at the pro-motion and implementation of SA8000. The advertising efforts ofthe organization aim to makeSwiss companies buy ‘FairFashion’.

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Clean Clothes Campaign

The European wide ‘CleanClothes Campaign’ based inAmsterdam, which is based onthe SA 8000 regulations, is alsopolitically very strong inSwitzerland. This organizationpublishes regular newslettersregarding ‘social behaviour’ whendealing with the supplier countriesof leading Swiss clothing retailersand manufacturers (please com-pare www.cleanclothes.ch andwww.evb.ch).

More information can also berequested from the Council onEconomic Priorities AccreditationAgency (www.cepaa.org), withheadquarters in New York/USA.

Sources of Information

For detailed information aboutenvironmental aspects relevant totrade at EU level, please refer tothe websites of SIPPO and CBI(www.sippo.ch and www.cbi.nl,especially the CBI Access Guide.

For Switzerland, whose ecologicaland environmental regulations aresimilar to those of the EU, morespecific information can be foundin the CBI/SIPPO Eco-TradeManual. Other sources of informa-tion are the WTO web site(http://www.wto.org), theEuropean Commission(http://europa.eu.int) and OETH(http://www.oeth.com).

1.4. PRESENT TRADE REGU-LATIONS AND OUTLOOK FOR2005

European Union

All EU countries apply commonCustoms tariffs to imports fromoutside the Union. If there is nospecial trade agreement in force,the general import tariff applies.Some kind of preferential tradeagreement in the field of tariffs,reductions of EU duty levels mayapply to many developing coun-tries, according to the commit-ments in the Uruguay Round, until2005.

Most of the developing countrieshave been granted special tradepreferences; these countries usu-ally benefit from zero dutiesthrough preferential treatmentunder the Renewed GeneralisedSystem of Preferences (RGSP) orunder the 4th Lomé Conventionfor the African, Carribean andPacific (ACP) countries.

RGSP (Renewed GeneralisedSystem of Preferences)

This agreement allows productsoriginating in the countries con-cerned to be imported at prefe-rential tariffs or, for the least deve-loped countries even duty-free. A‘Certificate of Origin Form A’ hasto be filled in by the exporter andissued by the competent authori-ties. Tariff contingents and ceilingsdo not exist any more.

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As from 1 January 2006, thegeneral arrangement and the‘EBA’ arrangement underRegulation No. 980/2005 willenter into force and will continueto apply together with the ‘GSPPlus’ arrangement. The two spe-cial incentive arrangements forthe protection of labour rights andof the environment underRegulation No 2501/2001 arerepealed from 1.1.2006.

Lomé Convention (for ACP coun-tries)

The partnership agreement bet-ween the 25 European Union (EU)member states and the African,Caribbean and Pacific (ACP)states marks five generations ofagreements between ACP-ECsovereign states. It is the world’slargest financial and political fra-mework for North-South coope-ration. Its main characteristics are:the partnership principle, the con-tractual nature of the relationship,and the combination of aid, tradeand political aspects, togetherwith its long-term perspective (5years for Lomé I, II, and III, and tenfor Lomé IV). Products originatingin the ACP countries can beimported without duties and quo-tas, when a ‘Movement CertificateEUR.1’ is filled in by the exporterand issued by the competent aut-horities, such as the localChamber of Commerce. Tariffcontingents and tariff ceilings nolonger exist.

Preferential duty regimes underFree Trade Agreements (FTAs)

The EU also has many free tradeagreements with partners in theregion (the central Europeancountries, the Mediterraneancountries) and beyond (Mexico,Chile). FTAs now increasinglyinvolve provisions affecting non-tariff measures and regulatoryissues such as provisions on tradefacilitation and rule-making inareas such as investment, intel-lectual property, government pro-curement, technical standardsand SPS issues.

The following Free TradeAgreements are available online:

- FTA under the Euro-Mediterranean Partnership

- FTA with Mexico

- FTA with Chile

- FTA with South Africa

Non-tariff barriers

Examples of non-tariff barriers areanti-dumping measures, sanitarysanctions, quota restrictions, envi-ronmental clauses and intellectualproperty rights. The most impor-tant form of non-tariff barriersregarding clothing is quota restric-tions. Since 1995, the Multi FibreArrangement (MFA) has beentaken over by the WTOAgreement on Textiles andClothing (ATC).

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The ATC calls for import restricti-ons on textile and clothing thathave already been lifted in fourdistinct phases spreading over aperiod of 10 years: 16% of importsby volume in 1995, 17% in 1998,18% in 2002 and the rest in 2005.

Many clothing items are alreadyquota-free, but WTO rules allowimporter countries to impose anti-dumping duties if there is evi-dence that markets are being dis-rupted by selling below costs.

Anti-dumping measures

Anti-dumping implies that, underWTO regulations, exporters areexpected to sell their products atfair market value, at a price abovecost and without imposing higherdomestic prices for the same pro-duct that would in effect subsidizetheir lower export prices. In theevent of predatory pricing by aparticular company or country, theimporting country is allowed toimpose a duty surcharge on theimported product, to bring thefinal price up to fair market value.

Anti-fraud investigations andactions

Besides anti-dumping measures,the EU is stepping up anti-fraudinvestigations and actions againstfraud designed to:

- circumvent trade policy mea-sures, such as anti-dumping measures;

- benefit illegally from preferentialtreatment such as that under RGSP;

- cheat consumers (claiming EUorigin for products produced elsewhere);

- combat counterfeiting and piracy (copying exclusive designs and models without permission of the owner).

Financial instruments in the EU

The awarding of tariff preferencesor the levying of ‘environmentaltaxes’ on products is one of themajor instruments of the EU (besi-des legislation) to promote envi-ronmentally sound products.Such preferential systems are thecommon subsidy and supportschemes, Green GSP, whichworks on the assumption thatextra preferences can be awar-ded on top of the preferences forproducers who show their com-mitment to the environment andwho search for cleaner producti-on techniques to reduce the envi-ronmental damage from their pro-duction processes and final pro-ducts. The EU principle ‘the pollu-ter pays’ becomes obvious asresponsibilities for pollution pre-vention and clean-up are increa-singly placed in the hand of thepolluter. European importersfaced with this will want to sharesuch extra costs with their develo-ping country partners.

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Switzerland

General Foreign Trade Conditions- World Trade Organization (WTO)and Free Trade Agreements

On July 1st, 1995 Switzerland joi-ned the WTO (formerly GATT) andsince then has applied the ‘mostfavoured clause’ regarding tradeto all WTO member countries. Thisalso applies to dealings with regi-ons and countries whereSwitzerland has signed bilateral ormultilateral agreements on trade.Furthermore, by joining the WTO,Switzerland had to change mostof the non-tariff trade barriers tocustoms duties.

Moreover, Switzerland is a mem-ber of the European Free TradeAssociation (EFTA). The dismant-ling of tariffs by the EFTA, in paral-lel to the European EconomicCommunity (EEC), has eliminatedto a large degree the customsduties between the EuropeanUnion (EU), the EFTA countriesand Switzerland, at least asregards industrial products (inclu-ding clothing).

Within the EFTA framework,Switzerland has also made freetrade agreements with Bulgaria,Croatia, the Czech Republic,Estonia, Hungary, Israel, Jordan,Latvia, Lithuania, Macedonia,Mexico, Morocco, PLO, Poland,Romania, Slovak Republic,Slovenia and Turkey. Further, ‘pan-European cumulation’ has been ineffect since July 1st 1997.

Switzerland has entered bilateraltrade agreements with numerousother countries to prevent doubletaxation and to protect and pro-mote mutual investment.

THE SWISS GENERALISEDSYSTEM OF PREFERENCES

General Principles

The preferential treatment givento exports of developing countriesis designed to help increase anddiversify their export. The SwissGeneralised System of Prefe-rences (GSP) was introduced onMarch 1st, 1972 in compliancewith Switzerland’s intention toimplement Resolution 21 (II) adop-ted by the United NationsConference on Trade AndDevelopment (UNCTAD) in 1968.

Beneficiaries of preferences

In principle, all developing coun-tries and economies in transitionare eligible for preferences underthe Swiss scheme, with theexception of countries or territo-ries that have reached a high levelof development. The exclusion isbased on objective criteria. GSP-benefits will not be granted tocountries which are members ofOECD or have a free trade agree-ment with Switzerland. Also exclu-ded are countries which theDevelopment Assistance Com-mittee (DAC) of the OECD hasclassified as a most advanceddeveloping country or territoryunder Part II of its list of develop-ment aid recipients.

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Scope of preferences

Switzerland grants preferentialreductions amounting to 50% ofthe normal rate on textiles andclothing. The least developedcountries benefit from exemptionfor clothing and textiles. Completeup-to-date information on customtariffs may be obtained from theFederal Customs AdministrationOZD.

Rules of Origin

The Swiss Scheme includes rulesof origin which the goods mustcomply with in order to qualify forGSP-treatment. To satisfy therules of origin, the goods have tobe either wholly produced in thebeneficiary country or they musthave undergone working or pro-cessing in a beneficiary country tospecific processing criteria laiddown in the regulations.

The prerequisites for the origin ofimport textiles and clothingapplied in the Swiss GeneralisedSystem of Preferences have beenharmonised with EU and Norway.The rules related to the origin ofmanufactured goods were adap-ted to conform with the Pan-European cumulation system ofOctober 1st, 1998. Therefore, tex-tiles and clothing containing rawmaterials from EU countries andNorway may also be granted pre-ference.

CUSTOM TARIFF

Customs duties based on weight

Swiss customs duties are basedon the ‘Harmonized System ofClassification’ which is appliedworldwide. Unlike most countriesthat have a taxation system basedon value (customs duties ad valo-rem), the Swiss system is stillbased on weight. It is the grossweight that counts, i.e. the weightof the goods together with that ofany packaging. Only in exceptio-nal cases do the value of thegoods or other criteria such as thenumber of items, serve as thebasis for taxation.

Switzerland imposes very modestcustoms duties, amounting onaverage to less than 2% of thevalue of the industrial goods(including clothing) concerned.

Customs clearance

The basic documentation requi-red includes the customs declara-tion, which must be accompaniedby the invoice with mention of theweight and an attestation from theexporter as to the origin of thegoods. A certificate of origin isnecessary if preferential customstreatment is wished or if the mer-chandise is to be re-exported.

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- The documents which must accompany goods travelling byrail are an international freight waybill and two international customs declarations.

- Goods travelling by post requi-re an international dispatch note and a customs declarati-on.

- The accompanying documentsshould mention whether or notthe consignment is to be clea-red through customs at the border or at a particular cus-toms office in the interior.

Value added tax (VAT)

At 7.6%, Switzerland has thelowest VAT-rate in Europe. VATthat has been pre-paid may berecovered in certain cases.

1.5 IMPLICATIONS AFTERTHE ELIMINATION OF THETEXTILES QUOTA

The main challenges facing theEuropean Union and Swiss textilesand clothing sector today are glo-balisation, modernisation and amurderous competition. Marketaccess and fair trade have a hig-her priority for the textiles andclothing sector than 5 years back.Opening new markets, negotiati-ons of bilateral agreements areaimed at ensuring that industryhas time to adjust to full liberalisa-tion.

EU and Swiss apparel importsshowed a constant increase inrecent years. In their outsourcingstrategies, EU and Swiss manu-facturers prefer Eastern Europeancountries even over some Asiancountries with even lower wagerates (such as Vietnam or China)due to their geographical proximi-ty and their higher quality stan-dards. Thus, EU and Swiss com-panies remain able to respondquickly to changing marketdemands.

On the other side, non-EU clot-hing suppliers increasingly facethe fact that the reduction of thenumber of suppliers on the retai-lers side continues. The Germanbased Institute for Managementand Consulting in Mannheimstated in June 2005 that recentlya 13.5% overall reduction of sup-pliers has been reached. Thereduction of the number of sup-pliers is a part of the market-driven optimisation of the supply-chain, where the chains reducemost (25% in 2004/2005).

The commercial relationships ofthe European Union andSwitzerland in textiles and clothingare mainly governed by the WTOAgreement on Textiles andClothing (ATC), which provides forthe progressive application of theentire range of GATT rules to thesector, including the gradual aboli-tion of all remaining quotas by the1st of January 2005 (not applica-ble for Switzerland as there are noquota restrictions).

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The EU has negotiated bilateraltextile agreements with a consi-derable number of third countries,which are not as yet members tothe WTO. Those countries aresubject to quantitative restrictionsand/or a surveillance regime.

At the beginning of 2006, thesituation of the EU clothing mar-kets, one year after the eliminationof all quotas in the clothing sectorafter many years, is summarisedby the European Commission offi-cially in the following way (StatusNovember 2005):

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- The disruptive impact of liberalisation of Chinese textile exports tothe EU in the first nine months of 2005 has been limited to a fairlynarrow range of product categories.

- In these categories there have been absolute rises in textile imports and steep falls in unit prices. Among the categories affec-ted are the ten categories covered by the June 10 EU/China Textiles Agreement.

- China’s share of exports to the EU in these textile categories libe-ralised on 1 January 2005 has increased dramatically at the expense of traditional EU suppliers, mainly in Asia but also in NorthAfrica and the ACP. There has, however, been only a modest risein textile imports to the EU, either in the 35 products liberalised on1 January 2005, or in total textile imports.

- A deceleration in the rate of growth of imports from China in the products covered by the 10 June Agreement has already been noticeable in September 2005.

Macro trends following liberalisation1 January 2005

In general, in the first half of 2005,China increased its exports to theEU by 45% in value and by 40% involume. For products liberalised in2005 there has been an increasein China’s market share by 145% involume and 95% in value. Thissuggests significant falls in unit pri-ces - see below. In these productsChina, the US and India are theonly significant providers to haveincreased their exports in 2005.India’s increase in exports by valueis 15%; the US’s, 10%.

This has been at the expense ofother suppliers to the EU. All othersuppliers have suffered export dis-placement in products liberalisedin 2005. Pakistan, Indonesia,Thailand, South Korea, thePhilippines, Taiwan, Hong Kongand Macao have all seen exportsfall (by between 10% in the case ofPakistan and 60% for Korea) invalue and volume. It is noteworthythat the most significant displace-ment by China has been exportspreviously originating from HongKong, Macao and Taiwan.

Textiles exports from ACP coun-tries for the first nine months of2005 fell by 20%. Mauritius hasseen exports to the EU fall byabout 20% in value and volume.Morocco has seen a fall in exportsof around 11% in value and volume.Bangladesh has largely sustainedits market share in volume but witha fall in value, suggesting price-cutting and rationalisation. Onepurpose of the June Agreement

was to alleviate pressure on thesemore vulnerable producers.

Market disruption in a small numberof sectors

Serious market disruption hasbeen limited to a small number ofproduct sectors which haveexperienced both double digitabsolute growth in exports, a risein Chinese exports, and steep fallsin unit prices sufficient to forcerestructuring.

All ten categories covered in theJune 10 Agreement have experi-enced very large overall rises inChinese imports - as high as over500% in some cases. Eight of theten sectors covered in the June 10Textiles Agreement have seendouble digit absolute growth inimports, alongside huge growth inexports from China. There hasbeen an absolute rise in imports ofT-shirts (24%), pullovers (17%),men’s trousers (23.6%), blouses(13%), bed linen (17%), dresses(8%), bras (12.5%), table and kit-chen linen (14.7%) and flax yarn(59%). All the ten safeguardedsectors have shown absolutegrowth. However, there has beena deceleration of the growth ofimports from China in the tensafeguarded products, whichhave all experienced lower ratesof growth in September as com-pared with the previous period.Such deceleration will becomemore apparent in the coming fewmonths due to the fact that inseven of the products covered bythe MoU, the ceilings for importshave been reached.

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There have been drops in unitvalue in Chinese exports in allexcept five of the 35 productsliberalised in 2005. These includedrops in unit price of between 18%and 60% for all Chinese exportscovered by the June 10 textilesagreement, with the exception ofonly one product, flax yarn, wherethe unit price drop was 5.5%.

Although EU producers have suf-fered from market disruption inthe categories affected as a resultof the fall in unit prices and greaterChinese competition in exportmarkets, there has been only aslight increase of textile importsinto the EU in the first nine monthsof 2005 (3.7% in value and 4.9% involume), and also a modestincrease in total imports in theproducts liberalised in 2005 (4.8%in value and 10.4% in volume).

Obviously, the first effect of the eli-mination was booming importsfrom China against much lowerprices in the first months of 2005and objections from South andEast European clothing producingcountries. In June 2005, the EUand China agreed a deal that willmanage the growth of Chinesetextile exports to the EU until2008. This agreement will cover10 of the 35 categories of Chineseimports liberalised on 1 January2005: pullovers, men’s trousers,blouses, T-shirts, dresses, bras,flax yarn, cotton fabrics, bed linen,table and kitchen linen.

It covers the categories of seriousconcern, including most of thecategories identified by theEuropean Textile AssociationEuratex and the two categoriesfor which the EU had already laun-ched formal WTO consultationswith the Chinese: T-shirts and flaxyarn. The agreement limits therate of imports while allowing fairand reasonable growth forChinese exports. By finding a wideand balanced agreement, the EUand China ensure a period ofadjustment for textile industries inthe EU and developing countries,provide greater predictability forimporters and retailers, and pre-serve the prize of market liberali-sation for China.

The agreement limits growth inimports in the 10 categories tobetween 8% and 12.5% per yearfor 2005, 2006 and 2007.Quantitative levels apply from 11June 2005, however, at the timeof the agreement, quotas for jer-seys, jumpers etc. were alreadyfilled. More information can befound on http://sigl.cec.eu.int orhttp://export-help.cec.eu.int/.

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However, the risk of EU importersnot receiving all goods from Chinaordered in 2006 and 2007 is com-paratively high, especially in thesensitive categories mentionedabove. Thus the EU buyers willmake sure that the Chinese sup-plier really has sufficient exportlicenses for the ordered goodsand finally will be able to deliver theagreed quantities. An import stopfor clothing from China to the EUin 2006 is also possible for singlecategories, especially as many2005 contracts have been trans-ferred into 2006. E.g. alreadytoday (October 2005), the 2006quota has been exceeded in thecategories of knitwear, trousersand dresses.

This situation with China is anopportunity for other supplyingcountries, mainly from Asia andalso the Mediterranean area.Some European buyers tend tolook for other Asian countrieswhich are attractive alternatives toChina, such as Vietnam, Pakistan,Indonesia, Sri Lanka and so on.However, the experts agree onone point, that the position ofChina as a supplying country forclothing will remain dominant andthe fight for supply shares to theEU among developing and emer-ging countries has started.According to a study of theGerman Technical University inDarmstadt, Laos, Vietnam,Cambodia and Bangladesh will bethe ‘loosing countries’.

Cologne,1st of February 2006

JP CONSULTING AssociatesBruecker Mauspfad 623D-51109 Köln / Cologne - GermanyTel.: +49 – 221 – 84 49 54Fax: +49 – 221 – 84 49 86

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