ATDPThe Arab Textile Industries Forum 1 Challenges to the Arab World Systemic Challenges Quota free...

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)


Challenges to the Arab World

Systemic Challenges:

• Quota free World• Preference Erosion• Constrained Policy Space• A Changing Business Environment• Global Slowdown

Policy-induced Changes


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)


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


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%


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


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


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


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


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


Global Slowdown

Figure: Actual and projected GDP growth rates for the US


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


Arab textile exports to the EU

Table: Shares of leading Arab textile exporters in extra-EU imports of textiles


Arab clothing exports to the EU

Table: Shares of leading Arab clothing exporters in extra-EU imports of clothing


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


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


Thank you for your attention!

ATDPThe Arab Textile Industries Forum 1 Challenges to the Arab World Systemic Challenges Quota free...

Documents

Transcript of ATDPThe Arab Textile Industries Forum 1 Challenges to the Arab World Systemic Challenges Quota free...