Textile ‘big bang’ worries poor countries

The WTO has agreed to hold fur­ther con­sul­ta­tions on the phase-out, this Decem­ber, of long-stand­ing quo­ta bar­ri­ers to tex­tile and gar­ment imports. Less com­pet­i­tive devel­op­ing coun­try exporters fear they will lose busi­ness to Chi­na, India, Egypt and Pak­istan once their quo­ta-guar­an­teed shares of the­Unit­ed States and Euro­pean mar­kets are elim­i­nat­ed. The quo­tas cre­ate mar­ket entry rights for a spec­i­fied vol­ume of tex­tiles and gar­ment imports from par­tic­u­lar coun­tries. Although they have lim­it­ed the growth of sales from Bangladesh, Turkey, Lesotho, Mex­i­co and oth­ers. But they have guar­an­teed access for these coun­tries that could not be tak­en from them by the more com­pet­i­tive pro­duc­ers in Chi­na, India, Egypt and Pak­istan. In oth­er words, pro­tec­tion means pro­tect­ed prof­its. The WTO con­sul­ta­tions were agreed late last week after months of pri­vate meet­ings between the WTO Direc­tor Gen­er­al and rep­re­sen­ta­tives of some of the poor­est devel­op­ing coun­tries. The gov­ern­ments of import­ing coun­tries, pres­sured by “big retailers”:http://www.ictsd.org/weekly/04–09-01/story2.htm who want access to com­pet­i­tive sup­ply, are deter­mined to go ahead with the mar­ket open­ing, which cul­mi­nates a 10-year planed phase-out of the quo­tas. Some of the com­pet­i­tive pro­duc­ers, includ­ing Chi­na, are also reluc­tant to hold any spe­cial meet­ings in WTO, because they are con­cerned that it might imply that the final steps might be recon­sid­ered or post­poned. bq.  But trade offi­cials and indus­try lead­ers said an unex­pect­ed out­pour­ing of con­cern from sev­er­al dozen coun­tries, includ­ing Turkey, Mex­i­co, Bangladesh, Mau­ri­tius and Lesotho, per­suad­ed the WTO to con­sid­er the call for glob­al action.(“Telegraph of Calcutta”:http://www.telegraphindia.com/1041003/asp/business/story_3834807.asp) The WTO has recent­ly released a detailed report “The Glob­al Tex­tile and Cloth­ing Indus­try post the Agree­ment on Tex­tiles and Clothing”:http://www.wto.org/english/res_e/booksp_e/discussion_papers5_e.pdf that con­sid­ers the poten­tial impacts of the end of the quo­tas. The sit­u­a­tion in the indus­try is com­plex with many dif­fer­ent fac­tors affect­ing com­pet­i­tive­ness, includ­ing labor costs that seem to favour economies such as Chi­na and India, but also prox­im­i­ty to mar­kets that may secure the com­pet­i­tive posi­tion of Cen­tral Amer­i­can and East Euro­pean economies. It’s the poor­est coun­tries of Sub-Saha­ran Africa and Cen­tral Asia that may be the most vul­ner­a­ble to com­pet­i­tive pres­sures. But this does not mean it’s appro­pri­ate to respond to their dilem­ma by attempt­ing to shore up their posi­tion by pro­tec­tion or trade pref­er­ences that do noth­ing to improve under­ly­ing com­pet­i­tive­ness. As Chi­na clocks up spec­tac­u­lar suc­cess­es in North Amer­i­can mar­kets, it’s own price com­pet­i­tive­ness is under pres­sure. Accord­ing to “Chi­na Daily”:http://www.chinadaily.com.cn/english/doc/2004–08/23/content_367923.htm, Chi­nese offi­cials and some man­u­fac­tur­ers are call­ing for floor prices to stop ‘mali­cious com­pe­ti­tion’ from their own indus­try can­ni­bal­iz­ing the growth in the Unit­ed States mar­ket or pro­vok­ing U.S. safe­guard action.

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