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Mario Cantaluppi speech
Europe Silk Forum
Gand meeting, 12th May 2005

In recent months, the international trading of textiles has been very much in the spotlight.
However, for those in the trade the issue has been under discussion for over twenty years.
The silk section of AIUFFASS, which was founded in 1987 under the chairmanship of Michele Canepa, has always strived to improve the general conditions of the trading of silk yarns and silk fabrics between the eu and the rest of the world, obtaining important results in the process.
Nowadays there is much talk about the problems in the textiles sector, but often those who speak are not really qualified to do so.
The European Textiles Industry is complex and comprises many different aspects.
In order to be congruous, policies must be pragmatic and take into consideration the specific situations they refer to.
A serious policy for silk, therefore, must necessarily take care of those factors that make our industry completely different from the wool, the cotton and the chemical fibres industries.

The first specific point to consider is that mainpart of this wonderful fibre is produced in China and neighbouring India.
This generates a strong interdependency between Europe and Asia with regard to silk.
China dominates the world silk scenario.
90% of international trade flows of raw silk and semi-finished silk yarns involve chinese products. The same figure applies for the clothes-making sector.
The numbers are not quite so high for fabrics, ties and scarves, although China remains a key player.

This said, Europe occupies an equally strategic position in the international scenario, as it is our textile industry that puts the fibre on the map in the fashion world.
The role of European weaving is therefore extremely important, because silk is destined for consumption as a luxury good.
Without backing from the fashion sector, the demand for silk disappears.
We are therefore dependent on the Chinese people for the supplies of raw materials, piece goods and for some garments, but they need us to ensure that silk remains an attractive proposition.

In the silk sector, cooperation between producing countries and the eu has always been essential and, when successful, has brought about long-term mutual advantages.
In the meanwhile, when this cooperation has been lacking, it has caused problems and it has been damaging to the development of the market.

In the past, with silk excluded from the multi-fibre agreement, we have had to work with our oriental partners to establish a set of rules that would allow us to look to the future and to develop our business.
We placed great attention on the opening of markets and from our small silk sector, we managed to anticipate all the issues that are now the legacy of the European textile industry.
We respect the requests our colleagues are making in order to safeguard their interests.
We too fifteen years ago asked for and obtained quotas on certain customs categories, such as the one for silk fabrics and the one for blouses, dresses, scarves and ties.
We therefore believe that our silk world can take a further step forward by offering and asking for the total opening of the Chinese, Indian and Russian markets.
In view of its inclusion in the WTO, china agreed to discuss with us the issues we have raised.
Unfortunately India’s attitude was less cooperative as they continue to put their own local interests before the sincere acceptance of international trade rules.
The customs duties scheme currently in force is a clear indicator of the commitment to the creation of a more open international market for silk products.
The two tables that will be shown illustrate the development of the trade for silk fabrics between Italy and the two Asian giants – China and India - in 2002, 2003 and 2004.
However, it is first necessary to consider the serious domestic problems behind the choices of the individual nations; it is evident that the market which has generally gone the way of liberalization is the one which nowadays offers the greatest opportunities to our European businesses.
Undoubtedly, today silk suffers from the lack of an adequate institutional structure, in which Europeans, Chinese and Indians can work together to tackle the problems and share the strategies that can support consumption and business.
And this is the main issue to be dealt with for a coherent policy on silk.
The parties involved have a great deal to share and develop – together – but they currently lack a forum where qualified discussion can take place.
EURATEX has achieved great results with its work, as have the governments of our countries, especially Italy and France.
They have defended the opinions of those who fear the decline of the manufacturing industry, but we must face reality and develop a new balance between producers.
The question must be tackled in bilateral discussions between the EU and China, and the EU and India.
Many attempts have already been made to do so, but with no concrete results.
However, i believe that we must insist and go on.
The Chinese and the Indian authorities must work together with those of the European commission.
We have already had the opportunity to explore with the Chinese the three key topics that remain the guidelines of our negotiation requests.

The first is the issue of the access to the raw material.
Substantial progress has been made in comparison with our situation just a few years ago, when we suffered the scandal of double prices for raw materials.
However, certain issues remain unresolved.
First of all the fact that the export licence system is still operative, especially for raw silk and spun silk yarns.
However, the system of state control over exports remains in place and this is incompatible with the explicit agreements which were achieved between china and the European Union, as china entered the WTO.
Another problem regards C.I.Q. certification.
We all know that exporters of raw silk and twisted yarns are compelled, by law, to have this certification.
In the meanwhile, C.I.Q. is not reliable at all.
The abolition of compulsory certification will make us free to check goods and to reward efficient control centres, to the detriment of those that are less trustworthy.
However, the question of access to the raw material goes beyond these specific aspects of the supply process.
In a process such as silk-farming, quality always depends on a series of factors that are highly variable and not always governable.
For this reason it is essential to keep negotiations open so that quality can improve.
Equally it can worsen and if it is true that we need silk, what we need even more is reliable silk.

Another important issue concerns market access, or the opening of markets.
As I mentioned earlier, china dominates the silk market in the world.
European production, marginal in terms of in quantity, is more valuable and is employed in the manufacture of high-quality goods.
Price competition between European and Chinese producers is out of the question, our productions are complementary.
For Chinese consumers Italian and French products have an appeal that maybe even we have forgotten.
Leading surveys estimate that by 2010, there will be some 250 million Chinese who will be able to buy our products.
The same applies for both India and Russia.
We can add that nowadays our sales in China and Russia are developing at a very good growth rate.
Returning to the analysis of the customs duty structure currently in force in China, India, Russia and the European Union,
We can see that the area with the lowest duties is Europe.
As i said, China has made good progress: until just 5 years ago their duties for fabrics were set at 30%, now they are not largely different from ours.
Russia has adequate rates for textile products, but duties on clothing are still high.
Despite some apparent improvement, india still has the highest duties of all and this table only includes official rates.
In addition to duties, additional heavy taxes can take levies as high as 60%! Not to mention the fact that in India other non-tax related aspects further weigh on operations.
In the interest of all our industry’s businesses, we must make concerted efforts towards reducing the duties that penalise our products.
And here we have the statistics describing the quantities and the values of the trade for silk fabrics between China-Hong Kong and Italy, on one side, and India and Italy, on the other side.
It is so clear that we can all only benefit from an improvement in market access conditions, by reducing duties and the other obstacles to exportation.
The same kind of situation should be achieved not only with China, but also with India and with other countries. This is our real interest.
In this perspective we can consider the possibility of exploiting protective actions, that would provide a clear indication of the EU’s commitment of achieving total mutuality.

The third issue relates to the fight against counterfeit goods and the misuse of “made in Italy” or “made in France” labelling.
China has now introduced new regulations in the fight against illegality.
The Chinese authorities are no longer willing to ignore practices that we object to here in Europe.
Cooperation with the Chinese authorities may be useful and bear concrete results in the fight against “made in...” abuse as it is already doing in the fight against counterfeiting.

All these issues were tackled during the “E.U. China textile trade dialogue”, a meeting that has taken place on two occasions, the first in Brussels in September and the second in Beijing in November. The matter was discussed especially in November and it was decided that an “ad hoc” committee would be set up with the support of the European Union and the people’s Republic of China.
We hoped to be able to get under way in this period, however the growing tension between Brussels and Beijing has frozen all dialogue.
We need dialogue and cooperation, they are useful to both us and our international silk trade partners.
A new objective has been identified that will provide our specific sector with important results, results that in the future may be useful to the entire European textile industry.
Thank you.