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The End of Enchainment : Will the Removal of Textile and Clothing Quotas Bring Us Enchantment? World Bank Seminar 25-

Dr. Dean Spinanger Kiel Institute for World Economics dspinanger@ifw.uni-kiel.de The End of Enchainment : Will the Removal of Textile and Clothing Quotas Bring Us Enchantment? World Bank Seminar 25-26/04/05 I. Introduction and Overview There are some WTO issues not cl arified

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The End of Enchainment : Will the Removal of Textile and Clothing Quotas Bring Us Enchantment? World Bank Seminar 25-

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  1. Dr. Dean Spinanger Kiel Institute for World Economics dspinanger@ifw.uni-kiel.de The End of Enchainment:Will the Removal of Textile and ClothingQuotas Bring Us Enchantment?World Bank Seminar25-26/04/05

  2. I. Introduction and Overview There are some WTO issues not clarified .....why not??? Many countries are growing...... at a rate far above many other countries. But in what areas??? ......and how strong???

  3. I. Introduction and Overview But others threw themselves onto the mercy of free trade. Unfortunately „free trade“ seems to be interpreted differently around the world. Often „free trade“ is associated with unfair competition. That, of course, is BS.....

  4. Introduction and Overview Free trade means letting in all goods into a country that are sold at a price which reflects production costs. It does not mean notletting all those goods into a country that are very competitive. Take a look at what some economies accomplished.

  5. TOTAL EXPORTS BY COUNTRIES/REGIONS (bn $)

  6. TOTAL IMPORTS BY COUNTRIES/REGIONS (bn $)

  7. I. Introduction and Overview But now with almost all countries in the WTO, With quotas having been removed on T&Cproducts.., With other industries being more open..... What might be happening as a result of all this????

  8. II: WHAT MIGHT HAPPEN? What does the future hold for all those countries after China‘s WTO accession? I am not a charlatan...but an economist. There are basic economic principles which tell us what might be.. And these basic economic principles are packed into a cutting edge model.

  9. II: WHAT MIGHT HAPPEN? The model is called GTAP5....... General Trade Analysis Project version 5. It‘s robust, very realistic, and adaptable to specific needs.

  10. The GTAP5 Model General equilibrium: multi-sector, with linkages through intermediate inputs and factor markets. Calibrated : the model is “bench-marked” to baseline scenario in 1997. Data: GTAP social accounting matrix data. Policy data: include GTAP tariffs, final WTO accession tariffs for P. R. China & Chinese Taipei, service sector protection, newly calculated quota rents and imputed competitive advantage for China.

  11. The Sectoral Breakdown (23)

  12. The Regional Breakdown (25)

  13. Percent Impact of ATC Phaseout and China’s Accession on Total Exports

  14. III: WHAT IS GOING ON? But what does all this mean for T&C industries and for importers? What options are open....and what other countries might serve as a base for production and/or sourcing? Those who know best are in Hong Kong.

  15. III. WHAT IS GOING ON? There‘s a saying: You have to know where you came from in order to know where you might be headed. In other words: What are the trends from the past telling us about where we are and might be heading?

  16. WHERE HAVE WE COME FROM & WHITHER?

  17. World Exports in Bill. US$: 1965 - 2003

  18. The ATC: Where Are We Now? Liberalization was a FARCE Final tranche 2004: only sensitive products Faking liberalization + finagling protection Of course, guidelines were not precise Motto was: Mañana is better than now

  19. ATC Liberalization 1995 - 2005

  20. A trap set by past politicians (backloading) 100% Quota protection

  21. III. WHAT IS GOING ON?

  22. III. WHAT IS GOING ON?

  23. III. WHAT IS GOING ON? In the time period 90–03 Mexico was beaten by Bangladesh in increasing its share in global clothing market among the top 25 exporters. But Vietnam came from nowhere to #15,while Mexico climbed just 30 places based on its preferential access to North American markets.

  24. Ranking of Factors Influencing Investment Decisions: 2000 Rank Coefficient of variation (%)

  25. Ranking of Factors Influencing Investment Decisions: 2003 Rank Coefficient of variation (%)

  26. Average Ranking of Factors Influencing Investment Decisions from 01/2000 and 02/3003 Rank 10 9 1 3 5 8 4 2 6 10 8 7 7 11 9 14 12 6 13 15 5 17 16 4 18 3 0 20 40 60 Coefficient of variation (%)

  27. III. WHAT IS GOING ON? These are THE 7 KEY FACTORS to get in shape: 1. Politics and stability; 3. Quality of transport infrastructure; 5. Policies affecting trade and investment; 4. Quality of telecom infrastructure; 6. Labor costs; 8 Policies re. labor, health & environment; 10.Lack of capital/profit transaction restrictions.

  28. Telecomm Infrastructure s

  29. Service Infrastructure bh

  30. Difficult to Understand Regulations - NTBs s

  31. III. WHAT IS GOING ON? The message is clear: Without coming up to the cut in these areas, T&C exporters will lose out in the battle for market shares now that quotas are eliminated. And of course with China being a full-fledged member of the WTO since Doha, competition is all the greater. WHAT‘S GOING ON OUT THERE???

  32. Sweden's Clothing Imports from Selected Regions in Percent of Total Non-OECD Imports plus Portugal, Spain and Greece (1980-2001) Source: Own calculations based on Swedish import data. Moving 3-year-average.

  33. Sweden's Clothing Imports from Selected Regions in Percent of Total Non-OECD Imports plus Portugal, Spain and Greece (1980-2001) Source: Own calculations based on Swedish import data. Moving 3-year-average.

  34. Clothing Imports of Sweden from China, 4 South Asian Countries and EURO-RIM in % of NON-OECD Clothing Imports, 1990-2001

  35. Clothing (SITC 84) Imports of Major EU Countries and USA from Selected South Asian Countries in % of Non-OECD Imports, 1990–2003 Sweden United Kingdom Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  36. Clothing (SITC 84) Imports of Major EU Countries and USA from Selected South Asian Countries in % of Non-OECD Imports, 1990–2003 Germany France Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  37. Clothing (SITC 84) Imports of Major EU Countries and USA from Selected South Asian Countries in % of Non-OECD Imports, 1990–2003 Italy Netherlands Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  38. Clothing (SITC 84) Imports of Major EU Countries and USA from Selected South Asian Countries in % of Non-OECD Imports, 1990–2003 United States Canada Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  39. Clothing (SITC 84) Imports of Major EU Countries and USA from Selected South Asian Countries in % of Non-OECD Imports, 1990–2003 Japan Australia + NewZealand * * 2003 only Australia Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  40. US Textile (SITC 65) and Clothing (SITC 84) Imports from Africa and Latin America SITC 65 Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  41. US Textile (SITC 65) and Clothing (SITC 84) Imports from Africa and Latin America SITC 84 Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  42. Canadian Textile (SITC 65) and Clothing (SITC 84) Imports from Africa and Latin America SITC 65 Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  43. Canadian Textile(SITC 65) and Clothing (SITC 84) Imports from Africa and Latin America SITC 84 Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  44. EU* Textile (SITC 65) and Clothing (SITC 84) Imports from Africa and Latin America SITC 65 * 2003 without Greece, Finland and Sweden Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  45. EU* Textile(SITC 65) and Clothing (SITC 84) Imports from Africa and Latin America SITC 84 * 2003 without Greece, Finland and Sweden Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  46. Japanese Textile (SITC 65) and Clothing (SITC 84) Imports from Africa and Latin America SITC 65 SITC 84 Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  47. Australian and New Zealand Textile (SITC 65) and Clothing (SITC 84) Imports from Africa and Latin America SITC 65 SITC 84 Source: OECD, ITCS (http://www.sourceoecd.org), own calculations.

  48. AND WHERE ARE THE DANGERS?? The dangers are clear: When countries are too, too successful they get hit with NTBs. This could mean, for instance, antidumping measures (ADMs) or other non-tariff measures (NTMs). Remember the impct of the dumping measures portrayed earlier.

  49. DANGERS ARE LURKING EVERYWHERE

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