Memorandum by UK Sporting Goods Industry
Association (UK)
The UK Sporting Goods Industry welcomes the
House of Lords review and we hope it will lead to significant
steps towards articulating a new EU trade policy favoring ambitious
bilateral trade agreements, a more rigorous pursuit of EU economic
interests in overseas markets, and greater recognition of the
complexities of global supply chains.
1. PROSPECTS
OF MULTI-LATERAL
DEVELOPMENTS
In a global trade environment in which we are
working as an industry—multi-lateral trade agreements are
the preferred solution, as it controls dramatically the complexity
of managing international trade. But in the current international
political climate it is unlikely such agreements have the possibility
for significant, and many third country governments defend their
interests via bi-lateral agreements, there is no alternative to
EU than to follow such an approach. Otherwise the international
competitiveness of EU-located industries could suffer comparably.
Bi-lateral agreements are seen as a second best alternative, as
each agreement is potentially different from others, which makes
it difficult to follow and make use of it for our industry's advantage.
Further to that each has it own schedule and dynamic—so
it will create constant need for adaptation and follow-up.
We continue to support moves to conclude negotiations
on the Doha Round that stalled in July 2006. Multilateral trade
opening undoubtedly provides the greatest scope for reducing both
tariff and non-tariff barriers and provides the most inclusive
approach to supporting global growth. The WTO also provides the
best environment for developing countries to secure their negotiating
objectives and obtain meaningful access to the world economy.
We remain a committed and supportive partner of the Commission
and other governments in seeking an early re-start to negotiations
on the Doha Round. However, it is not clear that, even if talks
can be re-started, the WTO alone can effectively meet our level
of ambition in key areas such as intellectual property or certification
and labeling requirements. Alongside efforts to re-start the Doha
negotiations, we strongly support the decision by the Commission
to launch FTA negotiations with major trading partners in Asia,
notably India, ASEAN and Korea. These countries have massive potential
markets and urgent action is needed to tackle the regulatory issues
and NTBs that hold EU market share at minimal levels. European
exports of clothing and textiles to India represent only 0.6%
of the EU's worldwide exports in this sector, and have even declined
in recent years. In the longer term, FTAs with Russia and Ukraine
will provide key opportunities to tackle a number of vital issues
including an ambitious level of market access, IPR protection,
and reform of export restrictions on raw materials such as hides
and skins.
We believe that FTAs with the EU's target countries
will be meaningless if they cannot secure significant new market
access and meaningful action to eliminate NTBs. Accordingly, we
strongly support the EU's intention to negotiate comprehensive,
WTO-plus agreements. These should cover:
— Substantial tariff reductions for
sports footwear, textiles and apparel with the goal of zero for
zero tariffs.
— A high level of ambition on protection
of intellectual property rights.
— Reform of cumbersome certification
and labelling requirements.
— A rapid end to export restrictions,
particularly for raw materials.
— Enhanced trade facilitation and simplification
of customs procedures.
— Simple rules of origin consistent
with the Commission's objectives in the reform of the EU rules
of origin.
We welcome the European Commission's statement
in November 2006 that a trade strategy that supports leading European
players on the global market can offer no place to protectionism.
Short-sighted protection of weak EU industries by closing our
markets simply undermines our calls for others to play by the
rules, pushes up prices for the consumer, and may support one
set of jobs in the EU at the expense of other European jobs.
While FTAs proposed by the Commission are vital
for new market access, China is clearly the defining relationship
for the EU in trade terms. The size of the market, the power of
the country through its manufacturing capacity and continued competitive
cost base, and its importance as a member of the WTO make it a
formidable negotiating partner. A free trade agreement is not
on the menu in the immediate term, but we wish to underline the
importance of maintaining a comprehensive and rigorous dialogue
with China on trade policy issues. We also believe the Commission
should work towards agreement on Market Economy Status for China
in 2008.
A more determined push for increased market
access should form a second arm of the new approach to China.
We are concerned at the lack of transparency in dealings with
the Chinese authorities, the existence of cumbersome certification
requirements and import authorisations, and delays in customs
clearance. In a country that presents huge opportunities both
for manufacturing and for sales, where EU exports more than doubled
from 2000-2005, and where European sporting goods companies are
in the process of opening retail outlets on almost a daily basis,
speedy resolution of these issues is critical.
2. EU TRADE POLICY'S
ROLE FOR
STIMULATING GROWTH
AND JOB
CREATION
As we are living in saturated markets we depend
on an open trade environment to secure current jobs or create
new jobs with different value-creation levels, compared to pure
assembly and production jobs.
Restrictive trade policies will only foster
non-competitiveness of industries, while limiting chances for
export of advanced products and services. In contrary an open
trade policy with securing of IP on a global basis secure high
tech and high value jobs in Europe.
The UK & EU Sporting goods industry with
its fast pace of technological change and focus on continuous
innovativion (new sports creating new demands, requirements for
advanced products and fashion orientation etc) needs a trade policy
focused on further liberalization to contribute to European value
creation or growth and job-security for our employees.
Trade objectives that support global supply chains
The European sporting goods industry is a leading
exponent of the strengths of the European economy and of the evolution
in EU trade priorities. With over 40 billion Euros in annual sales,
our brands are among the most recognised in the world. Our exports
support European growth and jobs and we provide millions of jobs
in developing countries. Our industry has supply chains that encompass
innovation and high quality design in Europe, labour-intensive
sourcing and manufacturing operations in a wide range of developing
countries, rapid dispatch of finished products to market via global
logistics chains, and sale of goods to consumers across Europe,
other industrialised countries, and in a growing number of emerging
markets, both directly and indirectly through selective distribution.
The European sporting goods industry needs a
trade strategy that keeps pace with these developments. Policies
should ensure that European and global consumers can have access
to the goods they want at affordable prices by tackling both tariff
and non-tariff barriers (NTBs) and putting a stop to unjustified
trade-distorting measures such as anti-dumping actions. Equally,
unique designs must be protected by stringent and well-enforced
intellectual property laws and trade policies must continue to
support industry's considerable efforts to promote sustainable
development and fair labour standards.
Today the EU is now operating in a much more
complex global trading environment. Preserving and creating jobs
is no longer a straightforward proposition in the context of global
supply chains. Today, a trade strategy needs to maintain and promote
manufacturing jobs in a competitive European textile and garment
industry, while at the same time supporting the expansion of jobs
in design, brand building and retail in European firms whose manufacturing
is carried out elsewhere. The consumer's voice is an increasingly
powerful factor in such debates. These issues have become prominent
and highly controversial with the imposition of safeguard measures
against imports of clothing from China and the recent anti-dumping
actions against leather footwear imports from China and Vietnam.
Most importantly, the time has come to recognise
that European competitiveness and jobs are dependent upon high
quality, high value-added sectors. The European sporting goods
industry is a key example of this, encompassing branding, fashion
design, and the development of innovative technologies for textiles
and clothing, equipment and shoes. This not only secures quality
jobs in Europe, but also boosts investment in research and development,
supports global logistics companies, many of which are European,
and contributes to EU export earnings with the expansion of sales
in emerging markets.
3. RELATIONSHIP
BETWEEN EUROPEAN
TRADE POLICY
AND POLICIES
ON ENVIRONMENT
We support the introduction of an EU based tariff
reduction involving the import of sustainable designed and produced
products, regardless whether products are fashion or sports related.
This would give brands an incentive to increasingly switch to
sustainable production.
Our arguments:
— The EU should support EU based companies
in deepening the partnerships between them and their suppliers
through the collaboration, joint development and sharing of protocols,
standards and solutions aimed at tackling environmental and social
issues. In turn, EU based companies could commit themselves to
retaining long term partnerships.
— Environmentally and socially sustainable
products are in general more knowledge intensive and therefore
require more complex production techniques. Instead, of moving
away from existing suppliers in developed nations, EU based companies
should be encouraged to raising the overall knowledge level of
their partnership with these suppliers. This approach would contribute
to a bottom-up transfer of knowledge and thus positively impacting
local economic development.
— The EU should stimulate the introduction
of a Cradle to Cradle approach covering the whole sportswear value
chain; EU based companies should take the lead in involving all
actors along the value chain.
Set clear EU wide principles on the environment
and society for all EU based actors active in the sportswear industry,
including consumers, retailers, etc. Currently, the main emphasis
seems to be on the role of sports brands, whilst the responsibilities
of major retailers, agents and manufacturers seem to receive insufficient
attention.
Our motives:
Facilitate roundtable, agenda setting discussions
between stakeholders from both North and South. The aim of these
discussions should be to:
— Support the development of a
fair, just and effective regulations regime. At this moment there
is increasing tension between Hard and Soft Law, as well as growing
questions involving the validity, legitimacy and application of
most soft law codes. In addition, there seems to be an abundance
of different voluntary codes of conduct produced and applied on
both an individual as well as industrial level. Often the relationship
between these codes is unclear, as well as, their reach across
different actors within the supply chain. For example, retailers
are increasingly developing their own standards and codes, yet
it is increasingly unclear how they relate to the codes applied
by the brands.
— Create a culture of partnership
and constructive problem solving between civil society, government
and the private actors. At this moment, the relationship is for
a large part, still overtly reactionary, negative and one based
on defence and mistrust. This culture proves increasingly unproductive
for all involved, emphasizing publicity success over profound
improvements.
The EU could support its companies in becoming
drivers for positive change in the development, environment and
climate change debate, through a number of practical solutions.
Our suggestions:
Provide independent and objective information
to the public at large and all relevant stakeholders, on current
issues as well as key positive developments in the industry. At
this moment, there seems to be an abundance of mostly biased information
produced by brands, retailers and NGOs that negatively impacts
the public debate and thereby hampers constructive efforts aimed
at achieving positive change.
Assist companies improving the effectiveness
and validity of current auditing and monitoring processes:
— Train local auditors and monitors.
— Work with and train local environmental
and labour law experts that can act as local representatives for
EU based companies.
— Create a working relationship
with local NGOs, providing them the opportunity to engage in profound
and constructive partnerships to solve longstanding social and
environmental issues.
4. HAVE DEVELOPING
COUNTRIES BENEFITED
FROM MULTILATERAL
TRADE AGREEMENTS
A typical example for success of multilateral
trade-agreements for developing countries is GSP, especially in
the past, when customs duties were considerably higher. With the
GSP instrument it is possible to create foundations for competitiveness
in a global context.
In successful developing countries, the aid
given via import advantages by the EU using such tools like GSP
created infra-structures for business, especially needed in supply
and delivery—logistics (harbours, roads) but also in modern
communication-technologies.
5. TRADE DEFENCE
INSTRUMENTS
TDI's are still necessary to prevent unfair
trade behavior. The current proposal of DG Trade is a positive
step towards a more modern application reflecting EU interests
on a broader scale. The limitations of existing TDI instruments
need to be overcome as many of the most recent Anti Dumping (AD)
investigations clearly demonstrate—eg the leather footwear
case.
We welcome the European Commission's decision
to initiate a review of trade defence instruments. The EU needs
effective defences against unfair trade practices, but too often
in today's globalised economy they have served to protect one
set of interests in Europe at the expense of other, equally European,
interests. Recent cases have shown the divisive nature of such
policies and the damage that can be inflicted on competitive industries
and ultimately the consumer.
Consumers, retailers and businesses who source
overseas now routinely demand the right to greater choice and
lower prices. Trade defence instruments therefore need to acknowledge
that European importers and retailers depend on third country
markets and their comparative advantages as a crucial part of
the supply chain. Where production and distribution networks are
globalised, antidumping measures effectively apply a discriminatory
tax on European companies that seek to lower their input costs
through the open world trading system.
We welcomed the European Commission plans to
reform TDIs to ensure that new rules take into account the diversity
of European interests. In particular, we believe that the criteria
for initiating antidumping investigations should be more rigorous,
particularly in arriving at a broad-based assessment of economic
harm. In cases such as footwear, where manufacturing of most athletic
shoes moved to Asia over 15 years ago, the influence of manufacturers
in Europe should correspond closely to their true market share.
6. INTELLECTUAL PROPERTY
RIGHTS
Continued co-operation on intellectual property
rights should be a top priority. Our sector continues to be challenged
by increasing numbers of counterfeit product and ongoing trademark
infringements. While the Chinese legislative framework is strong
and implementation is being reinforced through a number of measures
including the recent Action Plan on Intellectual Property Rights
Protection, it is clear that local enforcement must be a priority
if the fight is to succeed. We therefore welcome the Commission's
commitment to continue to drive forward EU co-operation on IPR
enforcement with a number of priority countries including China,
as well as Russia, ASEAN, Turkey and others.
8. IS THERE
STILL A
ROLE FOR
THE WTO IN
THE 21ST
CENTURY?
Our commitment and belief in the multi-lateral
trading system and the WTO is the best organisation to ensure
we have a rules-based trading system for all global trading nations.
28 February 2008
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