Greece bids for textile industry aid

Date: 21/12/1995

By Fiona McHugh

GREECE is mounting a last-ditch attempt to win more financial support for its flagging textile industry from the EU.

Faced with a flood of cheap rival products from Central and Eastern Europe on to the EU market, the Greek industry has suffered enormously in recent years, with its exports cut by 30&percent; and thousands of jobs lost.

Following the European Parliament's approval of the customs union with Turkey, the situation looks certain to deteriorate further as tariffs on textiles from Turkey are dropped.

Greece made its counterparts agree to help revitalise its textile industry, which currently employs 71,000 people, in return for its approval of the Turkey agreement, and is now demanding that this promise be fulfilled.

According to EU sources, Greece will be asking the Council of Ministers and MEPs to send more money its way by creating a new budget line to boost its textiles exports.

The European Commission was scheduled to adopt a communication on the state of play in the Greek industry this week, telling Athens that the EU could not afford to increase funding and offering instead to redirect funds already granted under the structural funds budget line.

But the Commission was asked at the last minute to postpone consideration of the communication to allow Greece more time to lobby for a new budget line.

Portugal and Greece, whose textiles compete directly with those from Central and Eastern European countries, have been hit hardest by the warming of trade relations between the two blocs.

Until 1989, textile exports from Central and Eastern European countries were extremely limited under a long-standing quota system. But those quotas are now being phased out and should be abolished entirely by the time association countries join the EU.

Portugal and Greece are also likely to feel the effects of the Turkish customs union more than EU partners such as Germany, where high-quality textiles are made.

Both have sought extra money to help upgrade machinery and pay for training. Portugal has had more success so far than its Mediterranean partner, after refusing to ratify the GATT agreement to liberalise world trade unless it got help for its textile industry.

In response to an agreement reached then, Parliament and the Council created a special budget line using money which flowed into EU coffers from the membership of Sweden, Denmark and Finland.

Greece hopes it too will be at the receiving end of such generosity, but that is far from certain.

“We cannot do much unfortunately as we simply do not have that extra cash at our disposal,” said one Commission official.

Turkey's market share of textile exports to the EU rose from 1&percent; in 1974 to 2&percent; last year, putting it fifth in line after Switzerland, India, the US and China.

Its share in clothing exports to the EU rose from 1&percent; in 1974 to 6&percent; last year.