Fashion Roundtable Despatch February 2018
POLITICS • ECONOMICS • BUSINESS
Inside Parliament
Cars More Valuable Than Fashion?
For the 161st time in the last 12 months, the automotive sector was discussed in a parliamentary debate (Fashion has been mentioned once in the House of Lords, and once at DCMS Questions in that same time period). Since Brexit this figure is even higher and is a brutal reminder of quite how out-classed the creative industries are, in terms of political representation. The work of Fashion Roundtable has proven categorically that cars are not more valuable to the UK economy than fashion. The UK car industry contributed £15.8 billion to GDP in 2016. UK Fashion contributed £28.1bn in 2017. With our work, we are moving in the right direction, but we've got a fight on our hands to exert the political authority we deserve.
Women's Suffrage Centenary
This month we have been able to celebrate the 100th anniversary of women's suffrage, when married women over 30 were allowed the vote in the UK. It serves as a stark reminder of the distance both that we have come in terms of political equality, but also that we have still to go. We are proud at Fashion Roundtable to have a senior team of diverse women, all fighting to eliminate the barriers to fair representation both in politics and our industry.
Gender Pay Gap in Creative Industries
This subject area was raised in DCMS questions this month and is a subject area that we hope to build on more in the coming months. Whilst the public debate at the moment focuses on television and film, we hope to use the work in these sectors as a springboard to widening the scope. More on this to come.
Fashion Mentions
No mention of Fashion in the House of Commons or House of Lords - more work to be done.
Observations: Division and Debate by Eszter Kantor
A cautionary tale: US denim
What can you look forward to under WTO rule if there is no Brexit deal?
Learn from the experiences of the US garment industry, more specifically from manufactures of denim items. The more recognisable your product brand is, the more likely it will be targeted in a trade dispute.
The United States and the European Union does not have a free trade agreement in place, as after three years of negotiations work on the Transatlantic Trade and Investment Partnership (TTIP) was suspended under the new US administration. This means that WTO rules apply in most transactions.
Back to US manufacturers of women`s jeans. In 2000 the United States introduced the Byrd amendment also known as the Continued Dumping and Subsidy Offset Act of 2000. It was implemented in 2001. This amendment allowed the US government to distribute funds collected from duty hikes (mostly from anti-dumping duties and countervailing measures) to US companies that have filed anti-dumping complaints. This decision did not sit well with eleven WTO member states, who considered this a direct subsidy to US industry based on the penalisation of importers and thus they have launched legal action.
In 2002 the WTO ruled that the Byrd amendment is illegal and asked the US to repeal the legislation by the end of 2003. This did not happen and in 2004 eight countries (Brazil, Canada, Chile, the EU, India, Japan, Korea and Mexico) out of the original eleven complainants requested permission to launch counter measures. The WTO in 2004 allowed these eight countries to introduce retaliatory tariffs up to 72% of the amount redistributed to US companies (around 800 million USD by 2003).
The retaliation (introduced in 2005) from the EU`s side, at that time, amounted to an extra 15% tariff targeting key US imports such as paper products, textiles, machinery and sweet-corn.
The Byrd amendment was finally revoked in 2005 but the practice of distributing funds from tariff hikes to US companies is still continuing today under a so-called transitional-clause. Consequently, the retaliatory tariffs are also in place, their measure varies annually depending on the amount distributed to US companies.
Women`s denim products were added to the EU`s list in 2013, from then on, the manufacturers have gone through a steep learning curve in international trade disputes and a rollercoaster ride of tariffs. In 2013 the EU imposed a 38% tariff (slapping on an additional 26% on the basic one) on US women`s denim items, lowering it to 12.35% in 2014, raising it to 13.5% in 2015 and again lowering it 13% in 2016 and then again raising it to 17.3% in 2017.
Just last week the US administration has promised to introduce higher tariffs on imported steel products (25% on steel and 10% on aluminium) regardless of origin. If so, it is expected that other WTO member states will complain against the unreasonable increase which is not a response to dumping but simply meant to be protectionist against all importers. While it is likely that a WTO procedure will be launched, just to remind everyone that tariff hikes can also be introduced elsewhere, the EU shot back with a promise of tariffs on some of the most favourably viewed US products such as Harley-Davidsons, denim and bourbon. The market response to the US announcement was rather negative, stock market dropped and some EU companies are awaiting confirmation on the tariffs before they would sign off on further investments in the US.
As you can see things do not always go smoothly in WTO circles, not even amongst the best of friends or the biggest markets. In a world where markets are merging to create more leverage in international negotiations, staying outside of common markets can make your country vulnerable to tariff hikes and increase the risk of investment ultimately impacting on all citizens.
Eszter Kantor is Fashion Roundtable's Brussels based EU Politics Expert.
Populism in Italy: Is fashion's globalised agenda losing yet another home?
In previous incarnations of this briefing, the impact of Macron was discussed, as we established to what extent his approach to business incentives and migration might impact Britain's ability to remain competitive in the global fashion market. France represents one of four of the key international homes of fashion, London, New York and Milan being the remaining three. The political landscapes of the countries within which these cities sit offers us an important idea of how the industry as a whole will have to adapt, as we enter an era of shifting political cultures.
This month Italy has been contesting an election, and as with the Dutch elections last year and the German elections more recently, this is an important political environment on which the future of a globalised Europe relies. Both Germany and the Netherlands escaped populism in the form which we have seen in the US, and managed to prevent the election debate being dominated by the subject of European integration and closer economic, social and military cooperation across the continent. Italy has not been so lucky.
The results, announced in early March, show a strong movement towards the self-branded anti-establishment, Eurosceptic party: Five Star Movement. More shockingly, is the comfort with which Matteo Renzi, the now previous Prime Minister, was willing to take his party out of negotiations and into opposition, having attracted only 20% of the vote. To convert this into UK money, imagine UKIP attracting a third of the vote in a General Election and Theresa May refusing to even contemplate organising a coalition and potentially limiting the political impact of UKIP. Whilst critics of the Lib Dems are quick to point out their decision to 'get into bed with the Tories', what many don't discuss is the rationing impact they had on the austerity agenda. Here could be the same, but Renzi has in many ways taken a coward's way out.
More depressingly in some senses, is Berlusconi's resurgent political authority in the Chamber of Deputies (Italy's second chamber). As is the case with Trump, this is a man famous for his mistreatment of women and general lack of regard for important social constructs like consent, equality and fairness.
Milan is therefore on the verge of finding itself in a very similar position to London, trapped in a country that no longer represents the economy on which its success relies. Very quickly Paris is moving to a central and leading position, as more and more we see movement in the remaining three centres of fashion, towards a strict anti-globalisation and anti-migration agendas. Protectionism is the new black. No more than now then, is the international approach of Fashion Roundtable relevant.
If you are based in Italy or have subsideries in Italy and want a more detailed break-down of the election results. Please don't hesitate to contact our Political Director, via admin@fashionroundtable.co.uk.
Brexit View From Brussels: By Eszter Kantor
Brexit developments have shifted into a higher gear at the end of February. After ten months of negotiations, the European Commission has published its draft withdrawal agreement. It was clear from the beginning that despite the facts that it was the UK who had initiated proceedings for an exit and they were the ones in a more uncertain economic position, it was the European Commission who was holding the pen and leading the discussions.
Whoever is drafting the legal text has the lead on the content, and the leading role of the Commission was never questioned. The European Commission has exclusive responsibility over trade and investment agreements with non-EU countries. This includes negotiations on goods and services, public procurement, intellectual property (IP) and foreign direct investment. During the last 25 years the Commission has completed a number of free trade and investment agreements with non-EU countries and has several very experienced teams spread across various directorates. They had the luxury of selecting the best of the best, with whom they can complete negotiations in less than two years. The UK`s team on the other hand, was just being compiled and it will take years until their team will work effectively, gaining experiences not only on negotiating practices but also on how to work together with other government agencies.
The withdrawal agreement deals with four major items: citizens` rights, regulatory and judiciary coordination, UK financial obligations, Northern Ireland. The paper states that the rights and obligations of EU and UK citizens, who are currently living/working or will be arriving/working until the end of the transition period, are stipulated under EU law. Meaning they will have the same rights and obligations for their lifetime as those who had arrived during the UK`s EU membership. Recognition of professional qualifications and coordination of social security systems will also continue as today.
Continued circulation of goods and services including tariff free access as per the customs union would continue until the end of the transition period. However, the custom status of UK goods as union goods will not automatically apply. Their status as union goods will have to be proven by the person concerned by any of the means referred to in Article 199 of Commission Implementing Regulation (EU) 2015/2447 (e.g. invoice, transport document, excise declaration etc.).
During the transition period the UK will not be able to implement its own trade agreements with other countries but it can start negotiations. As trade agreement negotiations usually take 4-6 years to complete; it seems unlikely that this would impede the UK`s ability to continue its outreach to future partners.
Continued protection of IP, geographical indicators and trademarks will continue until the end of the transition period. The registration or grant of intellectual property rights will continue to be carried out free of charge by the relevant UK authorities. Access to public procurement is guaranteed until the end of the transition period. The Court of Justice of the European Union will continue to have jurisdiction for proceedings brought by or against the United Kingdom before the end of the transition period.
The document details the areas where the UK will need to make payments to compensate for its exit before the end of the current budgetary period, which runs until the end of 2020.
The transition period, as set out in the document, will start from April 1, 2019 and end on 31 December 2020. It is the ambition of the UK to have a bilateral trade agreement finalized by the end of the transition period.
In order to ensure borderless access between Northern Ireland (NI) and the Republic of Ireland (RoI), the EU has suggested to create a common customs area on the island and regulate the transport of goods accessing NI from the UK. This was seen as a viable option to ensure protection of the single market while the Good Friday Agreement remains intact.
There have been discussions specifically on Northern Ireland between the negotiating teams. The EU maintained that there are two viable and realistic options. Either put a border with customs posts between NI and the RoI or put a border around the island of Ireland.
This is a major point of contention. In contrast to the EU position, the UK has identified an alternative scenario which Mrs. May repeated in her speech on March 2nd. She stated that future UK-EU relations will be based on a trade agreement, meaning that customs and border check may apply. Her suggestion is yet to be detailed but in broad terms, she suggested to introduce a double customs system under which the UK would have the same external tariff, for goods arriving from non-EU countries to EU member states, as the EU and would have another tariff system for goods arriving to the UK as final destination. This would require importers to separate goods arriving in bulk and customs officials to distinguish and implement different procedures for goods depending on their final destination.
Customs control is not only a source of income and a measure of protecting a country`s internal market from competition, but it is also a way of ensuring that no sub-quality or illegal items cross the border. Even in today`s streamlined and reasonably effective customs control, the EU is facing daily battles against counterfeits and illegal items that range from textiles, toys and electronical devices to fake medicines and cigarettes. Criminal gangs dealing with smuggling are often linked with terrorism, trafficking of drugs, people and wildlife. Therefore, the importance of an effective customs control system can not be overemphasised.
In 2015, more than 40 million products suspected of violating an intellectual property right were detained at the EU's external borders, with a value of nearly €650 million.
1) There were over 95.000 procedures launched against smugglers of counterfeit items. Out of these clothing and accessories made up 16% , shoes 28% while personal accessories including bags, sunglasses etc. 29% of all investigations. Altogether these three categories made up 73% of all procedures.
2) Looking at it realistically the UK`s customs and border control agency will be facing pressure to be able to cope with the increasing flow of EU goods that would need to be checked. To think that on top of that they will have the manpower, the technology improvement and the back office necessary to filter products by final destination and apply appropriate procedures is a high ambition.
The status of Northern Ireland is important in itself and it is also strongly linked to the future EU-UK customs arrangement. There are still ten more months ahead of the negotiating team to finalize the text of the withdrawal agreement and if they finish ahead of time they can start negotiations on the text of the EU-UK free trade agreement.
In order to achieve a trade agreement that can stand the test of time, the UK will need to strengthen its trade negotation team and improve communication and work between various government functions. Currently, despite reports on the contrary, the UK is dealing with a friendly partner, which in the future may not always be the case. Yet, it seems government branches have a problem separating their areas of responsibility and contradictory statements appear from officials. In the new era after 2020, government branches will have an increasing responsibility and will become liable for trade decisions.
https://ec.europa.eu/taxation_customs/sites/taxation/files/2016_ipr_statistics.pdf
http://europa.eu/rapid/press-release_IP-16-3132_en.htm
Commonwealth Fashion Exchange At Buckingham Palace & HM The Queen Attends Her First Catwalk Show At London Fashion Week.
Buckingham Palace hosted a cocktail event to celebrate the Commonwealth Fashion Exchange, created by Commonwealth Secretary-General Patricia Scotland and Livia Firth, founder of eco-philanthropy Eco-Age, in conjunction with Woolmark, Swarovski, and Matches Fashion. Attended by the Duchess of Cambridge, the Countess of Wessex and Princess Beatrice, they met designers and Commonwealth fashion leaders, to support our global fashion talent.
Not to be outdone, the next day, Her Majesty The Queen attended her first ever catwalk show, to see Richard Quinn's show at 180 The Strand. Afterwards, the Queen presented the inaugural Queen Elizabeth II Award for British Design. An idea her adviser Angela Kelly, Sarah Mower MBE and the BFC had developed: "initiated in recognition of the role the fashion industry plays in society and diplomacy, [and] be awarded annually to an emerging British fashion designer who shows talent and originality, whilst demonstrating value to the community and/or sustainable policies".
With 4 members of the Royal Family in attendance at fashion related events across London over London Fashion Week and events at several embassies to support European, Commonwealth and global fashion talents, we at Fashion Roundtable believe this focus on our incredible fashion value and reputation, needs to be replicated in Parliament.
With that in mind, our first roundtable as secretariat for the All Party Parliamentary Group For Textiles and Fashion is scheduled for 20/03 on Fashion Trade with China. Please email: admin@fashionroundtable.co.uk for more information.
Beware the Dreaded Forecast - Op- Ed Mystery Guest Editor
Labour adopts political Customs Union
This month saw the long-awaited declaration, from those within the leadership of the Labour Party, that they would be categorically supporting a new customs union with the EU, following departure. This comes amid increasingly strong and vocal positioning from MPs, sector representatives like Fashion Roundtable and trade unions.
For most of the Brexit debate in the past 18 months, the offer to voters and the EU has been binary - IN or OUT. Despite a growing coalition of centrist voices in the UK political spectrum, represented by the APPG on EU Relations, Chuka Umunna and Anna Soubry, the binary has prevailed and did so through 2017's election. However, what this movement by a mainstream political party (after a fair amount of dithering), has done, is legitimise a compromise position. Guy Verhofstadt seems encouraged by the position, and has not hidden his desire for such a position, as the agreed future relationship.
What is key to consider as these discussions are on-going, and the negotiation takes place, is that the EU Parliament still has to support whatever deal is put to them. This is something no-one seems to be engaging with comprehensively, but represents the most significant barrier to the cake and eat it strategy. If you are Spain's representatives in the EU, and you are facing the perpetuation of an era of struggling economic performance and forced austerity, it is very hard to imagine you will openly support a political position that massively benefits the UK to the economic detriment of the remaining 27. This is something the EU will be aware of, as they risk the total collapse of the union, should other populist European countries smell the chance to leave the EU on preferential terms to those available within the Union.
Brexiteers will have to, at some point, accept that we are either leaving on WTO terms and risking potential economic collapse, or leaving with a weakened but clear-cut relationship. The Prime Minister is also running dangerously out of the time within which she can pretend we can expect anything better than what we currently have. Is the option of total reversal still on the table? That is yet to be seen. But what we do know is that when that meaningful vote comes to Parliament, MPs have got a serious choice on their hands and one which history will not let them forget. We shall see how many put country before career.
Dr Lisa Cameron At The Drawn Together Event Where 10 Creative and Cultural All Party Parliamentary Groups At The House of Parliament.
Dr Lisa Cameron MP Outlines Her Commitment To Promoting Fashion And Textiles Within Parliament.
The UK Textile and Fashion Industry is one of our largest, worth approximately £28bn annually and is now reported to be the UKs second – sector employers. The industry is crucial to our economy and Government must have a clear understanding of the policies needed to ensure jobs and livelihoods, sustainability and to maintain best practice. This industry is what culturally defines Great Britain, yet its influence on British culture has yet to make its mark in Parliament. Whilst I’m sure most Members of Parliament would enjoy a little fashion advice themselves, the mark I am referring to is political. This industry champions individuality, creativity and equality and ought to be advocating for such ideals in the corridors of Westminster.
The recently formed Textiles & Fashion APPG which I am chairing will seek to act as bridge between the sector and policymakers to begin this much needed dialogue. I am delighted to have the role of Chairing this group during this crucial period, one of its most successful, yet challenging eras. For policymakers, we must consider ethical design, diversity within the industry, support regional growth alongside international trade and of course, navigate the impact of Brexit.
It is also crucial, to ensure diversity that Parliament looks at who is making that happen in the textile and fashion world – in terms of inclusion for disabled people, ethnicity, fashion across the lifespan and healthy body image. Importantly, we also want to champion regional developments and will shortly be launching a challenge to MPs to meet with local textile and fashion companies and to nominate them for a ‘Best in the UK’ award.
The UK is a global leader in everything from fashion start-ups, to avant-garde designers to digital retailers. These fashion economic powerhouses need to assess the risk from future, less fluid trade deals. Whilst it is true that the strength of the textile and fashion sector has meant record increased sales since the Brexit vote, this is believed to be attributable in part to the weakness of the pound. Many crucial issues remain unanswered that may have significant bearing on the future of the industry including the arrangement for EU students within our fashion colleges, visa requirements for our graduates who seek employment in major EU design houses, the impact of restrictions on freedom of movement for work placements/internships not to mention its impact upon manufacturing costs, trade and movement of our goods.
In my capacity as Chair of the Textiles & Fashion APPG, I recently joined forces with nine other creative groups in Parliament to call on the Government to protect the rights of EU workers and to ensure our creative talent pipeline remains strong and supported after we leave the EU. The passion shown from the creative industries in attendance were inspiring and as we gather a momentum within the Textiles and Fashion industry the Government will require to listen.
There are exciting times ahead and the All Party Parliamentary Group is truly a cross party endeavour with wide representation from five political parties in the current parliament. Fundamentally, we will be working to promote the industry’s progression and ensure that its’ future contribution -of which we all are proud, remains sustainable, successful and world leading.
Dr Lisa Cameron is the SNP MP for East Kilbride, Strathaven and Lesmahagow. She now Chairs the Textiles and Fashion All-Party Parliamentary Group, for which Fashion Roundtable provides the secretariat.
Fashion Roundtable January Political Meetings
As well as our January Fashion Roundtable Brexit event, where civil servants from BEIS, DCMS and DIT were in attendance; Bev and Tamara from our team met with the Retail Head of BEIS this month and the Lib Dem's Peers' Adviser for Education.
Fashion Roundtable attended a number of events with the Creative Industries Federation with Dexeu, DCMS and leading stakeholders, as well as a further event with Margot James, Minister of State for DCMS.
Fashion Roundtable also met with the DIT North American Fashion Team at the DIT offices.
Fashion Roundtable as secretariat for the APPG for Textiles and Fashion, worked along side 9 other All Party Parliamentary Groups inside the House of Commons for the latest Drawn Together event at Portcullis House, Houses of Parliament, promoting the concerns of the entire creative sector and freedom of movement. See the link for minutes: https://www.fashionroundtable.co.uk/news/drawn-together-10-appgs-including-appg-for-textiles-and-fashion-freedom-of-movement-creatives-post-brexit