The pandemic has had detrimental effects on many industries all over the world. Today we’re focusing on Europe, which has prioritized technical textiles over clothing in the textiles industry, despite the fact that the latter has been hit harder by the pandemic than other sectors of the industry. Naturally, this has a direct impact on MSMEs due to their financial fragility and vulnerability, forced closures and mass layoffs, many of which will be forced to cease operations completely.

In order to understand the situation in which Europe finds itself, we must first understand how the market is currently operating. Since the emergence of globalization and outsourcing, the shift in production to other countries for lower operational costs and the abundance of raw materials has had a severe impact on the domestic market, leaving it heavily dependent and largely reliant on foreign countries, particularly in Asia. 

Nevertheless, the European market has changed and is predominantly composed of SMEs who are no longer consistent with the economies of scale required by globalization, digitalization and sustainability. Moreover, maintaining a level playing field with other markets is challenging since it makes no sense for Europe to implement regulations and restrictions requiring the import of resources and products from countries that do not comply with them. This creates unfair competition. Finally, there is a scarcity and shortage of human capital, which makes it difficult to attract and retain new talent.

Alberto Paccanelli, the president of Euratex, highlighted strategies to address these concerns and reduce reliance on Asian countries in an interview. One way is to integrate with Mediterranean and North African countries, he said: “If we consider the Mediterranean countries, Eastern Europe and Turkey as part of a large value chain, we can absorb market share from Asian countries. [..] We can implement interaction between European and North African companies that could be very competitive in price.”

The PAN-EURO-MEDITERRANEAN agreement is one of those initiatives, which aims to establish common rules of origin and accumulation among the partner countries and the EU to facilitate trade and integrate the supply chains within the area. Ultimately, the PEM convention will replace the network of 60 bilateral protocols on rules of origin in force in the pan-Euro-Med zone. This single legal instrument, rather than a complex network of protocols, could be amended more easily, paving the way for the long-awaited adaptation of the pan-Euro-Med rules of origin to current market conditions, reviving the industry in Europe and expanding to closer regions in the Mediterranean and North Africa, creating jobs and a more controlled supply chain.

As a result, instead of considering relocation, the implementation of regulations and new methods of supporting domestic markets could be more effective in protecting the traditional sectors. The CRE@CTIVE project aims to develop the sectors by adopting a simpler and more innovative governance model to build a cross-border value chain. This will strengthen traditional sectors and build a tight-knit supply chain, thereby helping European and the Mediterranean traditional textile, leather, and footwear industries.