​Alberto Paccanelli (Euratex): "The EU-US Free Trade Area stuck on the rules of origin"

By

Matthieu Guinebault

Published
Nov 10, 2014

Europe and the United States are currently negotiating a possible free-trade transatlantic agreement. Euratex, the European Apparel and Textile Confederation, is involved in the difficult discussions. In Budapest for the Flax and Hemp European Trade Union Federation, one of the founding organisations of Euratex, its President discusses the stumbling blocks, his vision of American textile, and the necessary implementation of a Euro-Mediterranean channel.

FashionMag.com: What do you take from the negotiations revolving around this agreement?

Alberto Paccanelli: It is a subject of utmost importance for Euratex. The negotiations are taking longer than expected. (It's) complicated. But with both political agendas being heavy, both sides want to come to an agreement, which is good. We want a more developed market where the EU and the US work together. An important step for the global economy. The Americans want a separate branch for textiles, contrary to the Europeans. But great work is being done with our American textile counterparts. 

FM: What is the main difficulty being encountered?

AP: The EU-US Free Trade Area are stuck on the rules of origin. Because the Americans want to base themselves on a local triple transformation of production, notably to protect their increasing spinning activity, while the Europeans wish to remain with a double transformation, since it relies on more global sourcing. This is a major question. If the European rule prevails, this agreement would be a success offering great potential. If not, it may not be very beneficial for the European textile industry.

FM: When do you see the agreement coming to a conclusion?

AP: It will depend on the agenda. We hope to finish at the end of 2015. I think it's doable. It will depend on the strength of the new European Commission and its willingness to draw it to an end. It also depends on Obama's team, which hopes to have something to present come election time. I don't know what impact the Republican's recent parliamentary win will have.

FM: What is your view of the American textile industry?

AP: The United States is once again becoming a very competitive country from a manufacturer's point of view. Due to their gas production and their energy independence, the energy there costs one third of what Italy pays, for example. Labour costs also play a role, with the possibility of paying ten dollars an hour (about 6.3 pounds) when it is double in Europe. I think this will attract a lot of manufacturing investors in the coming years. So we have to be even more prudent in these free-trade negotiations.

FM: The USA has welcomed several textile relocations. Is such a scenario possible in Europe?

AP: It is possible if we have intelligent politicians. Our manufacturing costs are not as competitive as they should be. You can see a very bureaucratic approach in Europe, with taxes on energy like on labour. This limits relocating. But, if we could regulate this problem, then we could bring production up.

FM: Could strengthening the Europe-Turkey connections help this process?

AP: From a strategic pint of view, I see Turkey integrating Europe. This would be important to build what I call a pan-European approach, which would also integrate North Africa. In Europe, we can offer many services. But we are lacking an integrated value chain for the zone, which would allow us to compete with India and China. The process was launched two years ago. It is time for a consultation with the different countries in the Union on the topic.