The director general of the European Apparel and Textile Confederation (EURATEX) has called on the EU to keep pushing for a free-trade deal between the EU and the Mercosur trade bloc – notably because it is dominated by Brazil, which today remains a tough market for the European textile industry.
Speaking to WTiN.com, Francesco Marchi lamented that “despite the growth of consumption, Brazil is closed for us”.
Negotiations between the EU and Mercosur, which also includes Argentina, Paraguay, Uruguay and Venezuela, began at the turn of the millennium. According to the European Commission, sealing a trade deal between the two blocs would create the world's second largest-trading area, with 700 million consumers and an estimated GDP of up to € 9 trillion.
While both sides try to iron out their differences, high tariffs of up to 35% currently prohibit European textiles from freely entering the promising Mercosur market. According to Mr Marchi – who oversees the interests of all European textile and clothing industries – Brazilians spend more on clothing than their European counterparts, with their consumers ‘eager to consume’. However trade with Brazil is decreasing in terms of both imports and exports.
For Mr Marchi, the only solution is to get rid of technical barriers. “We know the Brazilians in part are trying to get a lot of investments to develop their industry but their procedures are not conducive for attracting investment,” he told WTiN.com.
Trade red tape is a major problem, he said. And any attempt to ease such burdens through a Mercosur deal is currently impeded by Argentina, whose Peronist government is firmly wedded to insisting on import licences, according to Mr Marchi. “We are under full control of customs,” he said, “which slows down the process.”
Dealing with Mercosur’s ‘strange regional conglomerate’ is challenging, he said. “There are two big players – Brazil and Argentina. Brazil is open to a free-trade agreement with the EU but Argentina is more conservative,” he says. “Argentina is making our lives difficult,” he continues.
Despite these difficulties and further obstacles due to official protection of Brazil and Argentina’s agriculture and agri-food industries, Mr Marchi does suggest there is “some sunshine amidst the clouds” caused by the World Trade Organization (WTO) trade-facilitation agreement that was agreed in Bali last December. This will at least force Brazil and Argentina to outline their intentions on reducing trade red tape by July 2014.
According to Mr Marchi, now the Brazilians are keen for EU-Mercosur negotiations to proceed in earnest, something that he hopes will change the mood of the talks and make sure they deliver a deal – although he warns is could take five years. “We have longstanding relations with the Brazilian textile industry,” he insists. “We can sell them high-quality and high-content products”.
Mr Marchi hopes negotiations will continue under the guidance of ‘realpolitik’, with an outcome. “It won’t be easy,” he admits but insists that EURATEX remains open to secure a deal that is “balanced - based on reciprocity and symmetry.
“Despite competition, we are ready to go zero-duty on day one,” he concludes.