VZCZCXRO7657
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHFR #4176/01 2780951
ZNR UUUUU ZZH
R 050951Z OCT 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 0659
RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNMEM/EU MEMBER STATES

UNCLAS SECTION 01 OF 02 PARIS 004176 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE ALSO FOR EEB/TPP/ABT Gary Clements 
COMMERCE FOR ITA/OTEXA Maria d'Andrea 
STATE PASS USTR Carol Miller 
 
E.O. 12958: N/A 
TAGS: ETRD ECON FR
SUBJECT: French Textile and Apparel Industry 
 
 
NOT FOR INTERNET DISTRIBUTION 
 
Ref.: State 114799 
 
Summary 
------- 
¶1.  (U) Per reftel request, the Federation of the French Textile and 
Apparel Industry (UIT - Union des Industries Textiles) provided us 
with an update on developments in 2006 and initial estimates for 
sector performance in 2007.  In 2006, the French textile sector 
experienced growth in household consumption, exports and overall 
turnover, and significantly increased research and development 
through the use of France's recently-created "competitiveness 
clusters."  However employment suffered an important decline and the 
rise in energy costs, raw materials and dyes negatively impacted the 
margins of French companies. End summary. 
 
Production/Consumption 
---------------------- 
¶2.  (U)  In 2006, French textile production experienced a 5 percent 
setback in volume terms, compared to the previous year.  The 
turnover of French textile/apparel firms, on the other hand, grew by 
one percent during the same period, reaching 18.2 billion USD (14.5 
billion euros).  Household consumption increased by 3 percent in 
volume and 1 percent in value to 35.9 billion USD (29.3 billion 
euros). 
 
Trade 
----- 
¶3.  (U)  Between 2005 and 2006, the French textile trade balance 
deteriorated by 5 percent, leading to  a deficit of 5.25 billion USD 
(4.2 billion euros), despite a 2 percent boost in French exports (to 
8.4 billion euros, or USD 10.5 billion).  This is the first increase 
in textile exports since 2000.  France exports mostly to the EU 
(Belgium, Italy, Spain, Germany and the UK).  However, Tunisia, 
Morocco and the United States also feature among its top ten 
customers.  France exported USD 302.5 million (241 million euros) in 
textiles to the United States, its 10th largest customer. 
 
¶4.  (U)  Imports followed the same upward trend, increasing by 3 
percent to 15.8 billion USD (12.6 billion euros).  Imports from EU 
countries (especially from Italy and Belgium) declined, while those 
from third countries (China, India, Bangladesh and Tunisia) grew by 
7 percent. 
 
Prices and Employment 
--------------------- 
¶5.  (U)  In 2006 consumer prices in the textile/apparel sector 
increased by 0.2 percent. During the same year, employment declined 
by 7 percent to 86,070 employees, due in part to increasing 
productivity and restructuring. 
 
Outlook for 2007: More innovation and clusters 
--------------------------------------------- - 
¶6.  (U)  The UIT is upbeat for 2007 as consumption continued to grow 
during the first quarter of the year.  Technical textiles are 
experiencing sustained growth, driven in part by French 
"competitiveness clusters," as are exports to emerging countries 
such as Russia, Thailand, South Korea and Saudi Arabia.  As part of 
its industrial policy to promote innovation, the GOF has established 
67 clusters known as "competitiveness poles" throughout France to 
create greater synergies between private and public funding, 
especially in support of SMEs.  Three clusters have been developed 
in the textile sector in northern and southeastern France.  They 
bring together 100 companies working on some 93 projects, together 
with the French Institute of Textile and Clothing, and some 20 
universities and research centers.  The UIT has partnered with the 
French Agency for Innovation (OSEO) and the GOF, which respectively 
earmarked 8 million euros (10.04 million USD) and one million euros 
(1.25 million USD) for the textile clusters in 2006. 
 
¶7.  (U)  France also expects to reap the benefits of its 
participation in the European technological platform of 
Textile/Clothing (controlled by EURATEX in Brussels) to accelerate 
industry adaptation to evolving market conditions.  The UIT shares a 
representative office in Shanghai with counterparts from Germany, 
Austria and Switzerland.  The associations may expand this 
cooperation to Moscow soon. 
 
¶8.  (U)   Severe competition from China and the appreciation of the 
euro against the dollar, the yen and Asian currencies linked to the 
dollar, are among factors that constrain sectoral growth.  Last 
July, French Prime Minister Francois Fillon spoke in favor of 
extension of the of the EU's China textile quotas due to expire at 
the end of 2007.  Regardless of whether quotas (or some sort of 
successor arrangements) are maintained, the UIT is banking on new 
technologies and technical textiles used in planes, trains, cars, 
 
PARIS 00004176  002 OF 002 
 
 
buildings and similar applications to widen its customer base, 
particularly in emerging countries and North America. 
 
 
Stapleton