Secondhand stores fear law will shut doors

Marianna, an elegantly dressed middle-aged woman who runs a second-hand clothing store on ulica Elektoralna, opened her shop in the early 1990s. She said her busiest day is Friday, when she sells everything for a 50% discount. But after June 30, her shop, like most of Poland's 16,000 businesses that sell imported secondhand clothes, may be forced to shut their doors after a new law regulating clothing waste material takes effect. Under the new regulations, 330 importers that buy used clothing for resale to Poland's secondhand shops or for further industrial processing will be severely limited in what they can bring into the country, effectively raising their costs and denting their sales. "The new regulations will make prices at secondhand stores rise threefold," said Ewa Metelska-Świat of the Chamber of Recycled Textile Materials. On July 1, importers will only be allowed to buy textile waste materials with a special license issued by the Environmental Protection Office or secondhand clothing that has already been sorted and cleaned before entering Poland. The government is hoping the measures will redirect sales to local textile producers, who said their turnover has suffered due to competition from secondhand clothing stores.

"We estimated that 70% of 55,000 tonnes of clothing imported in 2001 came to Poland mixed with textile waste, which is what made them cheap because sorting clothes abroad is expensive," Metelska-Świat said. "Once prices rise in stores, which sell only cheap, secondhand clothing sorted in Poland, they will go bankrupt because we don't have a strong middle class that would be interested in a secondhand store with more expensive clothing sorted abroad." Metelska-Świat said 30% of imported clothing is in turn exported to the former Soviet republics, which has proven to be an absorbent market. "A portion of imported clothing is also used to produce a special kind of paper, industrial cleaning materials and many other products," Metelska-Świat said. "Without our imports, many Polish plants would be left without raw materials for production." Owners of secondhand stores - lumpeksy in Polish - are defending their interests by collecting 100,000 signatures and submitting an amendment to the law in Parliament. "We want to amend the law in such a way that it would allow us to import clothing under the current regulations," Metelska-Świat said. "We are also in talks with the Economy Ministry but it all takes time, which is something we don't have. After Poland enters the European Union the new regulations would become invalid anyway but by that time our stores will have gone bankrupt and our market niche will go to EU companies dealing in secondhand clothing."

Manufacturing opposition In the meantime, though, lumpeksy have powerful opponents. Domestic clothing producers say that 70,000 people lost their jobs in the textile industry last year due to competition from secondhand stores. "They lose their jobs and become customers of lumpeksy only because we cannot sell what we produce," said Bogumił Świderski, a member of the Polish Chamber of the Textile Industry. "Polish companies can also produce quality garments but we cannot do it for zł. 8 because we need to pay taxes and ZUS (Social Insurance Administration)." Świderski said the state could earn another zł. 800 million ($195 million) in tax revenue and VAT from the textile industry if its sales were not eroded by competition from secondhand stores. "I know that there are secondhand stores in the EU but they are not such a threat to production like here because EU countries are rich and there is (little) demand for secondhand clothing," he said.

Paying taxes But according to Andrzej Sadowski, director of the Warsaw-based think-tank Adam Smith Center, the development of lumpeksy only proves the entrepreneurial spirit of Poles and the government should not spoil the market. "They were established because there was and is demand for such stores and the government didn't pay a penny to support them," he said. "On the contrary, lumpeksy have been paying taxes." Secondhand stores paid zł. 91 million ($22 million) in duties and VAT last year. "Unfortunately, instead of improving competition skills, many sectors of the economy prefer to ask the government for protection," Sadowski said. "Polish clothing producers want special protection instead of looking for other markets and competing abroad. Once we enter the EU, state protection will disappear and all those companies will collapse. 'Freedom is the best and the cheapest art in running the economy,' said Ferdynand Zweig, a Polish prewar economist."

Polish textile firms are hoping that the new regulations will stop the import of secondhand clothing and increase demand for their products. "If the market becomes more absorbent we will have customers to produce for and the industry will start employing again," Świderski said. "The new regulations will also lead to improving the standard of imported secondhand clothing." But according to Metelska-Świat, a ban on the import of secondhand clothing will not result in a boom in demand for new Polish garments. "I don't even think we are (the textile industry's) competitors," she said. "A customer who buys trousers for zł. 8, if deprived of that possibility won't go to a store to buy a new suit for zł. 800. If they're looking for real competition, I would say it's from cheap, new clothing imported from Asia and Turkey, not us."