The European textile sector has a complex value chain, with global operations taking place across several industries. The sector contributes nearly 1 per cent of the EU GDP, when including the full value chain.
The European Commission has identified textiles as a priority sector in need of actions to ensure circularity and decarbonisation and has therefore introduced initiatives and regulation that affect the sector’s operations. Fostering a nuanced understanding of the global textile value chain is essential for productive public discourse and effective policy design. Against this backdrop, Copenhagen Economics was asked to provide an external perspective on the functioning of the European textile sector’s global value chains.
The European textile sector’s value chain has become increasingly international, as the value and volume of European textile imports and exports has risen substantially since 2000. European imports of textiles have almost doubled in volume from 2000 to 2022, the majority of which come from Asia. Similarly, European exports of textiles have increased by more than a third in the same period.
Most of the sector’s value creation is within Europe. Of the sector’s EUR 189 billion in value added in 2023, 86 per cent was produced in Europe. Outside of Europe, the European textile sector contributed EUR 15 billion to value added in Asia and EUR 13 billion in the rest of the world. Labour-abundant regions, such as many Asian countries, focus on labour-intensive tasks such as producing raw materials and manufacturing textiles. Whilst regions with a highly skilled workforce, like Europe, specialize in the more complex and high-value parts of the value chain.
The sector must overcome several obstacles to become more sustainable. Around 10 per cent of textiles are currently recycled in the EU, and current EU sorting and recycling capacities are too low to handle future EU targets, requiring innovations and investments.
The rapid shift in legislation brings implementation challenges and uncertain-ty to the sector, as well as increased costs:
• The extent of new legislation adopted during a short period adds a lot of initial investment costs and continuous compliance costs, also for suppliers outside of the EU.
• Contrary to EU regulations, the implementation of EU directives in EU member states risks resulting in different systems across the EU, complicating the transition.
Going forward, the European textile sector has opportunities in innovative parts of the value chain such as design, marketing, R&D, and professional services. The sector can also play an important role in pioneering sustainable practices and solutions to reduce emissions and promote sustainability outside of Europe. Europe also has opportunities in the production of advanced equipment for sustainable textile manufacturing and recycling.
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