Europe prepares for the challenge16 June 2003
How have the past twelve months been for the European leather sector? There is no simple answer to that question. The international context has deteriorated further since the disgraceful September 11 attacks with a consequent slowdown in economic activity on a global scale. The leather sector has not been spared by this trend and Europe has witnessed the erosion of business activity in a number of market niches. However, leather production has been upheld at a particularly good level in the current circumstances. On the regulatory and promotional front, the European leather sector has made tremendous progress. Since my election a great number of initiatives have been taken for shaping the European leather sector's development. Cotance is involved in consolidating the key success factors of Europe's tanning industry within EU trade and environmental regulations, with focal points in the WTO trade round (see Doha Development Agenda story on next page) and the new EU policy regarding chemicals. In addition, Cotance is working to improve the supply chain for raw materials with its participation in the development of BREF for Slaughter-houses. This will yield benefits in availability and quality of hides and skins in Europe. I can inform Leather International readers of the launch of a project together with the textile industry (PERFECT-LINK) that aims to strengthen organisations representing the leather industry in central and eastern Europe such as EU accession candidate countries. Together with the paper and textile industries, we have also submitted a project in the 6th EU framework programme for R&D for the setting up of a network of excellence with regards to water scarcity. Cotance is involved in the promotion of the image of the European leather sector: the development of Tanweek, the launch of an image campaign led by our Italian colleagues at Unic/Lineapelle and national initiatives such as the one by my Spanish association CEC-Fecur with 'Curtidores Españoles/Spanish Tanners'. Finally, I believe that Cotance demonstrates a clear leadership in proposing new deals for international leather trade relations. Also in the development of instruments that foster trade facilitation in the sector. I just mention the International Contract and its standardisation, areas where the ICT and ICHSLTA have not been particularly pro-active, to use a euphemism. How can the European leather sector remain competitive in the future? European tanners have always been at the forefront of the industry and it is our ambition to continue to be world leaders. This is not an easy job in today's competitive environment. Yet, our tanners in Europe have very solid competitive advantages: high quality raw materials, innovative chemical suppliers and machinery manufacturers, technological excellence, creativity, fashion and design as well as the largest leather market in the developed world. It is through constant improvement that European tanners aim to keep this significant edge over their competitors. One should not forget that the leather sector in general, and European tanners in particular, aim for one single goal: customer satisfaction through the supply of leather that fulfills their expectations. Tanners with vision have already identified the requirements of consumers in the future and drawn conclusions on the development of leather markets. Is Cotance actively involved in promoting better quality raw materials and improved animal welfare? Cotance is pursuing two new lines of action in this field further to the excellent work developed at national level by members such as CEC-Fecur, BLC, VDL, FFTM, Swedish Tanners and a number of other member associations. Cotance is involved in the expert group that is developing best available practice at abattoirs (BAT). Cotance's contribution to BREF contains a compilation of measures aimed at meeting the challenge of sustainability in the hides and skins value chain. We aim to set up a framework in the procurement of hides and skins in Europe that promotes improvements in animal welfare, occupational and public health and safety, recovery of waste and by-products and pollution prevention. Other benefits include improved customer satisfaction and image. Hides and skins typically represent 50% of leather production costs. In certain niches it even reaches 60-70%. This means that about €6 billion of the tanning industry's turnover in Europe reverts upstream to its raw material suppliers. European hide and skin suppliers are thus key stakeholders in the European leather sector and Europe's slaughterhouses constitute a fundamental link in the supply chain. Improvements in Europe's hides and skins value chain also require the adoption by slaughterhouses of integrated, preventive strategies applied to process, products and services in the pursuit of economic, social, health, safety and environmental benefits. They can greatly contribute to the achievement of sustainable development in this important sector by the adoption of BAT in the management of hides and skins supply in Europe. Improved hide and skin production in Europe is also profitable business for the following reasons: * Cleaner hides and skins are financially better rewarded due to better quality and the lower pollution prevention costs for the tanner * Cleaner hides and skins improve productivity of the fifth quarter and also the professionalism of relevant staff in slaughterhouses * Cleaner produced hides and skins improve the image of the raw material business, worker morale and public acceptance Cotance is also actively supporting hide and skin improvements outside the European Community through the promotion of better working conditions and improved earnings in the hides and skins supply chain in developing countries. The initiatives supported so far by Cotance can be seen as a model for the eradication of poverty at local level in developing countries and can thus be seen as a particularly valuable contribution by Europe's leather sector to Agenda 21 (UN Rio Summit 1992). There are still further initiatives in the Cotance pipeline. Explain how you see the next two years for the European leather making industry? It's going to be a difficult period for Europe's leather making industry. We are currently living in a turbulent period where many changes are occurring. It is question of sound industrial adjustment. European tanners will be taking critical business decisions in the next two years with regard to the European enlargement, the new EU Chemicals policy and the results of the WTO trade round etc. Cotance has an extensive experience in this field and I am completely confident that Europe's tanning industry will be well advised in this process. I reckon that those European tanners who are not involved in Cotance (Ireland, Denmark, Austria) will find much more difficulty in managing change and I warmly invite them to (re)join the group. How is Cotance assisting tanners to comply with strict environmental legislation? The hides and skins value chain has traditionally been considered as an environmentally intensive sector and still is in many countries. Europe, however, has made tremendous progress towards improved eco-efficiency, green productivity and pollution prevention in the tanning industry. It is a leader in cleaner technologies for the leather industry and has some of the world's most innovative and renowned tanneries increasing the sector's annual turnover to some €10 billion. Compliance with strict environmental legislation has no adverse effects on the generation of wealth. On the contrary, it is a fundamental pillar on which Europe's tanning industry bases its leadership together with its policy on corporate social responsibility. Last year, Cotance signed-up the European tanning industry to support the UNEP declaration on cleaner production. This implies the recognition that achieving sustainable development is a collective responsibility and that action to protect the global environment must include the adoption of sustainable production and consumption practices. I must also mention the excellent work that our secretariat in Brussels is developing in raising funds for the EU's R&D projects targeting eco-efficiency. Here, I must say that Cotance counts also on the pro-active help of GERIC and strategic alliances with suppliers and customers (such as the chemical industry and downstream leather users). As examples I should mention the Restorm project, Tannet, Silic-Salt etc. Do you think that it is fair that European tanners should 'suffer' higher environmental costs than leather makers in other parts of the world? If you ask me whether it is fair, I must answer you: NO! It is certainly not fair that European tanners are economically penalised because of their pro-active stance in the field of environmental protection. Corporate environmental and social responsibility in the tanning industry requires significant investments at company and sector level. A higher environmental cost in Europe's tanneries is thus a fact. Europe's tanneries spend some 5% of their turnover in environmental protection and these costs are clearly a benchmark for others across the world. The gap between them and European tanners' environmental spending reveals how far ahead we are compared to others and also what poor environmental performance there is out there in the tanning industry in some countries. And that difference is just the tip of the iceberg, because you have to add to this the whole issue of effluent treatment and waste management. EU tanners understand that it is a priority to put our green credentials forward to customers and the general public. It pays off in the medium and long run. However, it is not only the Europeans. There are also some laudable examples in the USA and other parts of the world. True, these examples are scattered and it is sometimes difficult to ascertain to what extent other tanners have adopted sustainable production and consumption. But fairness with regard to tanners is not really the point. The question is whether it is fair that there are people out there that have to suffer the environmental pollution caused by the tanning industry knowing that water is a scarce resource and that contaminated land will not allow crop harvesting. It is not fair towards a civilised society if natural resources are irresponsibly deteriorated. Are you worried by the impact on tanners of the proposed EU chemicals directive? As I said earlier, it is a difficult period. The new EU policy on chemicals is certainly preoccupying with regard to the impact on the leather sector. The Reach system that will become the cornerstone of the new policy will not only have adverse effects, it will lead to a stronger cooperation between Europe's tanners and its chemical suppliers. Cotance is actively working towards better cooperation and so far it has yielded significant improvements in the regulation shaping process, such as the exclusion of polymers or intermediates, but there is still room for improvements. Moreover, Cotance has set up with partner industries such as textiles and clothing, printing and furniture etc, a platform for voicing the concerns of the entire manufacturing industry. This complements the strategy Cotance is developing with the chemical industry. Please add any additional information that you think would be interesting to the readers of Leather International magazine? I take advantage of this opportunity by addressing the fundamental issue of international trade in the leather sector (from hides and skins to finished leather) and the Cotance proposal for a new deal in the WTO process that is ongoing. I must say that I am not surprised by the lack of response by ICT members to which we sent this important offer. I hope, however, that visionary tanners in countries that are our trade partners will push their associations and their governments into agreeing with our proposals. Cotance position for the WTO trade round - Doha Development Agenda 1. Cotance agrees to the removal by the EU of all import duties and to the avoidance of export restrictions, including export duties, applied on the products covered by HS Chapter 41 provided that at least the following countries take the same commitment: Brazil, Argentina, Uruguay, Paraguay, USA, India, Pakistan and China. 2. Cotance recommends a sector agreement for HS Chapter 41 products to be negotiated between the EU, the USA, Mercosur, India, Pakistan and China as core trade partners and open to as many other trade partners as possible where the principles of point 1 could be consolidated. 3. The phasing out of conventional import duties and the elimination of export restrictions, including export duties, should be at the same pace so as to reach full liberalisation at the same time. Developing countries might follow different timetables for the implementation of their commitments on the import tariff side but not with regard to export restrictions, including export duties. Full liberalisation of core trade partners should be enforced in a timeframe that does not exceed three years between those having eliminated all protection and those others benefiting from a longer timetable. 4. Special and differentiated treatment should apply to all least developed countries joining the initiative, notably ACP countries. They may be entitled to longer timetables to eliminate their import tariffs and export restrictions, including export duties, on products covered by HS Chapter 41, where justified due to their low participation in the sector's international trade. It is recommended, however, that the maximum delay until full liberalisation does not exceed a phasing in period of ten years so as to stimulate active industrialisation policies. 5. Japan should implement a trade regime for HS Chapter 41 in full cooperation with its developed trade partners (EU, USA) thus eliminating its TQ system for leather. 6. Cotance commits to work towards this goal by promoting this sector agreement among the other trade partners for its implementation in the Doha Development Agenda.