Italy’s textile sector says the Transatlantic trade deal is potential boon – but the devil is in the details. By Brenda Dionisi in Milan
Senior figures in the Italian textile sector are optimistic that their industry will benefit should the European Union (EU) and the USA strike a deal during negotiations for a planned Transatlantic Trade & Investment Partnership (TTIP).
Eliminating or reducing tariffs on textiles at the US border would offer significant gains to Italy’s textile producers, said Filippo Laviani, a Europe and international trade regulation specialist with Italy’s largest fashion trade association Sistema Moda Italia: “Customs tariffs [in the US] are still high, like for example, the circa 20% tariff applied to wool men's suits imports and the 32% duty applied to T-shirts made of synthetic fibres,” he told WTiN.com.
Citing figures from Euratex, the European Apparel and Textile Confederation, Laviani said that “we can expect the [Italian textile] industry to grow, due solely to the elimination of customs tariffs, by at least 7%.” But he argued there would be other benefits: “This calculation, however, does not take into account, of course, the exchange rate nor does it consider the positive effects resulting from the elimination of NTBs [non-tariff barriers].”
Indeed, there seems to be a consensus across the industry that real benefits of the TTIP would also come from removing costly NTBs, aligning standards and procedures in the EU and the US, such as labelling and chemical classifications.
Paola Corbani, market analyst with the Bergamo-based Radici Group, a world leader in the production of polyamide, polyester, acrylic and polypropylene woven and nonwoven yarns, stressed current differences between the EU and US regarding the textile sector over the definition of rules of origin: “The US is pushing for a ‘triple transformation’ rule where at least three phases of textile production are carried out in the same country while the EU supports ‘double transformation’, or rather, the rule that two phases of textile production are carried out in the same country,” Corbani explained, adding that the triple transformation requirement would better protect American producers and damage many EU producers who, for example, do not manage the entire supply chain in-house but carry out certain production phases (such as fibre spinning or dying) in other EU countries or in Asia.
Another key issue will be finding regulatory convergence on environmental, health and safety standards, said Corbani: “One of the most debated issues of the TTIP is harmonising the divergent regulatory frameworks regarding chemicals and consumer health and safety in the EU and the US.” He explained that the EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) system is notably tougher than regulations administered by the US’ Food & Drug Administration and the Environmental Protection Agency. “It remains to be seen whether the US agencies approve the EU’s more rigorous REACH assessments and certifications,” said Corbani.
According to Laviani, other issues to be resolved include greater access for foreign companies to public procurement tenders in the US and the “elimination of specific NTBs that hinder trade on both sides of the Atlantic, such as very lengthy customs controls,” while Corbani notes that unfavorable currency exchange rates and the higher energy costs in Europe could hinder TTIP economic returns for EU chemical and textile producers.
“The TTIP is complex and the textile and clothing industries in the US are much stronger than those in the EU, which means that there are various aspects and technicalities to consider. Although the deal could provide many opportunities for Italian textile producers, especially at the higher end of the market, the devil will be in the details and we will have to wait and see how negotiations go,” Corbani concluded.