The Irish crafts sector must "raise its game" if it is to withstand the challenge of cheaper foreign competition, the chairman of the Crafts Council of Ireland said at the launch of the organisation's new three-year plan.

"In common with other industries, crafts face the challenge of competition and renewal," said Mr Martin Walsh.

Giving "added value" would help distinguish Irish craftware from international rivals, he said. Change was essential as 4,000 people made a living from the industry.

His sentiments were echoed by the Tánaiste, Ms Harney, who said the sector had to strive to innovate if it was to maintain a competitive edge.

"The industry's competitive position depends on design and quality. Better provision of education and accreditation will be key to achieving this, together with the strengthening of collaboration and partnerships with other agencies and institutions with the creative industries sector," said Ms Harney.

Key recommendations of the 2004-2006 plan include: greater exposure to high-quality, innovative and creative craft; encouraging awareness of contemporary and traditional craft from throughout Ireland; and holding greater number of craft fairs in the Republic and overseas.

The importance of crafts to rural Ireland should not be underestimated, Mr Walsh said. They also played a crucial role in raising Ireland's overseas image.

"The craft industry, with nearly 4,000 employees, is an important activity in Ireland, particularly outside major urban areas. The export of Irish products enhances our image abroad and the availability of quality craft products adds to the tourist experience in Ireland," Mr Walsh said.

Although the sector did not enjoy as high a profile as other industries, crafts was a major industry, he said.

"Its full economic significance is often less recognised than other areas of Irish manufacture but, in common with other industries, it faces the challenge of competition and renewal," he added.

Crafts contribute €84 million to the economy annually and sustain 1,400 companies, according to Mr Walsh. Exports were €20 million in 2002, of which the bulk went to the US and Canada.

The Crafts Council is funded by the State and the European Union, and overseen by Enterprise Ireland.