Move to tackle barriers facing EU leather trade

Date: 01/08/1996

By Elizabeth Wise

LEATHER and footwear industry analysts will be working throughout August to complete studies on the two sectors for the European Commission by the early autumn.

The independent studies should pinpoint where EU producers have problems procuring raw materials and selling their finished goods, enabling the Commission to draft a strategy for dealing with trading partners.

Each study - part of a Commission plan to find and redress barriers to Union products on markets around the world - will target 15 countries. In each case, the analysts have been asked to determine the legal nature of the barrier to give Commission officials a lead on how to respond.

Both the leather and footwear industries are seeking new markets for their products, which are increasingly being undercut by cheaper, mostly Asian or Latin American imports.

The European market is relatively open to those imports, with only one tariff quota (against Chinese footwear) and a few anti-dumping rules as protection for EU industry.

Since adding protective measures would be illegal under world trading rules, the Commission must instead help industry find new markets.

Because European-made leather goods are typically of higher quality and price than others, the industry is looking hard at Japan as a market. But stiff quotas and tariffs of up to 60&percent; still stand in the way.

It is not much easier to sell to countries without such tariffs, such as South Korea, where other producers undercut European manufacturers.

“We are losing in closed markets, and we are losing in open markets to countries that produce with artificial advantages,” says Gustavo Gonzalez-Quijano of the European Confederation of National Associations of Tanners and Dressers.

Those advantages are not only in cheap labour, but also cheaper raw materials.

Cattle-rich countries such as Argentina have either barred European tanners from buying their hides and skins or raised hide prices for European buyers. As hide purchase prices account for half the price of a finished product, a two-tiered pricing system puts European tanners at a disadvantage and some 50,000 jobs at risk.

“It is a serious problem, because how long can we keep focusing on European quality, fashion and technology before European consumers decide price is more important?” asks Gonzalez-Quijano.

Since 1989, steady job losses and falling sales have characterised Europe's leather industry, which in 1995 employed 48,000 people and had a turnover of 7.2 billion ecu.