EU and global nonwovens issues: the view from Brussels.

The past months have been rich in changes for the EU and its institutions. This started with the addition of 10 new Members States to the EU on May 1, the biggest enlargement of the EU so far. These changes continued with elections to the European Parliament, including the new Members States representatives in June and the start of the new term of the enlarged European Commission on November 23, 2004.

The Case For Open Trade For Nonwovens

January 1, 2005 will mark a historic change in the EU's international trade environment. On that day, the EU will have suppressed all its quotas on imports of textiles from WTO countries in order to conform to its obligations as a result of the agreements signed on textiles and clothing at the end of the Uruguay Round in 1994.

To prepare for the challenges faced by the textiles industry and in particular the elimination of import quotas on January 1, 2005, the European Commission adopted a "Communication on the future of the textiles and clothing sector in the enlarged European Union" standard on October 29, 2003. This Communication stressed that: "European producers are world leaders in markets for technical/industrial textiles and nonwovens (for example industrial filters, geotextiles, hygiene products or products for the automotive industry or the medical sector)."

In order to follow up on the suggestions contained in the Communication, the Commission set up a High-Level Group comprising all stakeholders of the textiles and clothing industry in early 2004. This group's mandate was to formulate recommendations on initiatives to improve conditions for the competitiveness of the European textile and clothing industry. The group produced its report--"The Challenge of 2005--European Textiles and Clothing in a Quota-Free Environment" on June 30, 2004. The nonwovens industry was represented notably by EDANA chairman Rolf Altdorf. Mr. Altdorf has clearly expressed the opinion that nonwovens have a different nature from general textiles, the guideline being that international trade rules should acknowledge this fact.

To support this vision, EDANA adopted a position paper on trade issues in June 2004, which advocates fair and free trade and improved market access for nonwovens. This position, which was supported by EDANA's partner association in the U.S. (INDA) and in Japan (ANNA), was largely spread among EU officials and in the trade press. It urges the EU to take action in the following areas:

* To ensure that the unique production process of nonwovens, directly from raw materials (fibers/polymer chips) to fabric, which is fundamentally different from that of textiles, is reflected in international trade rules, notably rules of origin

* The early elimination of tariffs for nonwovens on a reciprocal basis, especially in industrialized countries with abnormally high duties

* The removal of obstacles in accessing raw materials in terms of capacity, quality and pricing and consequently the removal of inadequate anti-dumping duties

* The inability of the European nonwovens industry to benefit from world market prices on fibers puts its medium-to long-term competitiveness at risk.

* More realistic requirements for processing and working operations carried in third world countries to enable nonwoven products to qualify for EU and third world countries preferential duty treatment. Similarly, non-preferential rules of origin should reflect the specificity of nonwovens.

* Removal of non-tariff barriers

Building on the work carried out by the High Level Group for textiles and clothing, the European Commission proposes several actions to enhance the competitiveness of the European textiles industry prior to the disappearance of the remaining WTO textiles quotas on January 1, 2005.

The most interesting of these actions relates to the opening of markets. In this area, the Commission proposes to improve European industry access to third world countries and eliminate non-tariff barriers within the ongoing WTO negotiations under the Doha Development Agenda. A task force bringing together the commission and industry will be set up to identify and prioritize obstacles to be tackled by third world countries.

In this regard, EDANA's call on tariffs seems to have been heard. EDANA and some of its members are indeed currently being interviewed to know what are the main tariff and non-tariff problems in third world countries. Nonwovens and technical textiles are considered an area of priority for the investigation by the consultant commissioned by the European Commission Directorate General for Trade. The report that will follow this survey will be the basis of discussion with industry and action by the EU toward third countries. Countries like Argentina, Brazil, China, India and Mexico, just to name a few, keep abnormally high duties on imports of nonwovens. The level of these duties goes up to 25% in some cases.

Global Nonwovens Advisory Board

Tariffs have been identified as a priority area for the Global Nonwovens Advisory Board (a joint initiative of ANFA, EDANA and INDA), a high level platform representing the interest of the entire value chain within the nonwovens and engineered fabrics industry. It is aimed at actively addressing issues on a global basis. The first summit of the Global Nonwovens Advisory Board will take place during INDEX 05, April 12-15, in Geneva, Switzerland.

The Case For A Fresh Start In EU/US Trade Relations

The newly appointed EU Commissioner for Trade, Peter Mandelson, has decided to make transatlantic trade and investment one of his top priorities. At a Transatlantic Policy Network-Congressional Autumn Conference held in Brussels, December 2, 2004 he said, "It is time for us to make a fresh start." He believes that both the EU and the U.S. should make it a priority to put their weight behind the current multilateral negotiations and bring to a successful conclusion the Doha Development Agenda.

According to Mr. Mandelson, the existing trade disputes between the two partners are relatively small compared to the extent of trade and investment affected. They show the mutual readiness to use the agreed international dispute settlement procedures of the WTO. All these are good signs of the maturity of the transatlantic economy and the international system of governance. Mr. Mandelson considers that tariffs are not the problem between the U.S. and the EU. Therefore the focus should be on removing the regulatory and structural barriers that still impede businesses and inhibit innovation, growth and prosperity on both sides (e.g. standards, intellectual property rights, accounting rules).

Foreign Sales Corporations (FSC)--Possible End of EU Sanctions

The European Commission has announced that the EU is going to suspend sanctions on a range of U.S. experts after the U.S. President signed a bill repealing the illegal FSC/ETI expert subsidies. With the signature of the U.S. president, the bill becomes U.S. law. After the WTO ruled that the FSC provides illegal subsidies to U.S. exporters in May 2003, the EU started retaliating against the U.S. in March 2004 with punitive import duties on a range of products, starting at a level of 5% with monthly increases of 1% to reach a ceiling of 17% in March 2005.

This is the latest act in an effort from the U.S. to comply with several WTO rulings, which had found the legislation in question to provide illegal subsidies to U.S. exporters to the tune of $4 billion per year. The Commission has, however, announced that it would go to the WTO dispute settlement system with regard to the WTO compliance of the new legislation.

EU Legislation Update--Food Contact Materials

How are food contact nonwovens regulated under EU law? They are covered by Framework Regulation on materials and articles intended for food contact, a new version of which (EC) 1935/2004 has recently been adopted by EU ministers and entered into force on December 3, 2004.

The Framework Regulation states that food contact materials shall be safe. They shall not transfer their components into the food in quantities that could endanger human health, change the composition of the food in an unacceptable way or deteriorate the taste and odor of foodstuffs.

The Regulation also includes the following provisions: If an article is intended for food contact it shall be labeled for food contact or bear the symbol with a glass and fork. In cases where the intention for food contact is obvious by the nature of the article (e.g. knife, fork, wine glass), this labeling is not mandatory. Also, labeling, advertising and presentation of food contact materials shall not mislead the consumer. From October 26, 2007 food contact materials and articles shall be traceable throughout the production chain. The provisions of this regulation apply to all food contact materials placed onto the EU market, hence to products imported from outside the EU.

The regulation establishes 17 groups of materials and articles that may be covered by specific measures, among which are paper and board, plastics and textiles. As the raw materials for nonwovens can be either synthetic fibers, man-made fibers or natural fibers, the existing Plastics Directive 2002/72/EC is the most applicable for demonstrating safety of food contact materials. Regulations on paper could also be used as a reference for food contact nonwovens. However, at an EU level, there is no directive on paper se far (1).

On a national level, several countries de have specific regulations for paper- and cellulose-based materials for which compliance should be checked. Specifically, Belgium, France, Italy and the Netherlands have binding regulations, while in Germany the BfR (2) has issued non-binding recommendations, which are considered as the reference by many authorities and by the industry. The interest for nonwovens is that a number of recommendations for neighboring materials (such as paper and absorber pads) provide relevant requirements for nonwovens and super-absorbents.

Facing this complex legislative framework, EDANA and the European nonwovens producers are discussing voluntary guidelines for the suitability of nonwovens for food contact.

As we can see, EDANA is pursuing a more open international market for nonwovens trade and at the same time is putting considerable efforts into helping the industry assess the safe profile of nonwoven products in their multiple and versatile uses.

(1) The Council of Europe (not the same as the EU) has issued a non binding Resolution AP (2002) (1) On Paper And Board Materials And Articles Intended To Come Into Contact With Foodstuffs that could serve as the basis for a future EU Directive.

(2) Federal Institute for Risk Assessment

More information about EDANA's activities can be found at www.edana.org.