Inquiry into European Trade Policy

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 3rd 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.

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