Post on 30-Dec-2015
ATDP The Arab Textile Industries Forum 1
Challenges to the Arab World
Systemic Challenges• Quota free World• Preference Erosion• Constrained Policy Space• A Changing Business Environment• Global Slowdown
Policy-induced Changes
International Developments in the Textile and Clothing Industries:
Challenges for Arab Countries
Speakers:
Dr. Luis Abugattas
Dr. Ahmed Moustafa
United Nations Development Programme
Regional Bureau for Arab States
Arab Trade and Development Programme (ATDP)
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Challenges to the Arab World
Systemic Challenges:
• Quota free World• Preference Erosion• Constrained Policy Space• A Changing Business Environment• Global Slowdown
Policy-induced Changes
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A Quota Free World
The end of the Multi-Fibre Agreement (MFA) in 1995: WTO Agreement on Textiles and Clothing (ATC)
All products integrated into GATT according to schedule, 10 year transition process
Most quotas remained in place till the end of the ATC, further quotas against products of the most successful exporting countries (China)
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A Quota Free World
Quotas introduced heavy distortions to Textile Trade: on January 1, 2009, all quotas have been abolished
Consequences:• Sharp decline in prices• Adverse affects on many exporting countries,
including in the Arab World• Concentration of production in less countries• China gain extended market shares
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A Quota Free World
Table: EU imports from China in %
1999 2003 2005 2007Growth
1999-2007
Textiles
China 9.94 16.8 23.4 27.18 174%
Clothing
China 20.93 25.49 35.32 38.32 83%
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A Quota Free World
Table: US imports from China in %
1995 2000 2005 2007
Textiles
China 13.78 14.03 35.44 42.59
Clothing
China 10.5 7.86 22.04 30.77
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Preference Erosion
No reduction in tariff protection: in the US up to 32% and up to 12% in the EU.
Non-reciprocal preferential schemes and ever-growing number of bilateral Free Trade Agreements diminish the value of preferences.
WTO negotiations will decrease MFN in the US and the EU
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Constrained Policy Space
Up to 70% of Textile Exporting Firms benefit from Export Processing Zones (EPZs) or similar institutions
Agreement on Subsidies and Countervailing Measures (ASCM) prohibits export subsidies, abolishment at the latest 2015
The need to revise current policies and consider open and hidden Export Subsidies
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A Changing Business Environment
Trends:• Concentration of the clothing retailing industry in
the EU and the USA• Long term arrangements between producers and
buyers• More sophisticated information technologies and
logistics: a key competitive aspect• Private Codes of Conduct
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Global Slowdown
World Economy heads towards recession
Uncertainty about future demand
Table: Percentage Change of US Imports of textile and clothing
2008 vs. 2007 2007 vs. 2006
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Total Textiles & Clothing
-5 -6 -4 -7 3 1 2 1
Total Apparels -5 -3 -2 -1 9 5 2 -1
Total Non-apparels -5 -8 -6 -11 -1 -1 2 2
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Global Slowdown
Figure: Actual and projected GDP growth rates for the US
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Policy-induced changes
Trade Liberalization in Arab countries ends decades of market protection and, therefore, requires adequate flanking policies
Imports surged in recent years due to trade liberalization
WTO negotiation deepens trade liberalization
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Arab textile exports to the EU
Table: Shares of leading Arab textile exporters in extra-EU imports of textiles
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Arab clothing exports to the EU
Table: Shares of leading Arab clothing exporters in extra-EU imports of clothing
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Arab textile and clothing exports to the US
Table: Arab exports to the US in %
1995 2000 2005 2007
Textiles
US 1.39 1.42 1.24 1.32
Clothing
US 2.24 2.45 3.03 2.98
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Concluding remarks
Dismantling of quote system, preference erosion, global slowdown and new dynamics of international trade pose great threats to textile and clothing industry in Arab countries
New trading environment offers also interesting possibilities for further development
Devised strategies and implemented policies are necessary to confront the systemic changes
Appropriate flanking measures are inevitable
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Thank you for your attention!