• November 21, 2002
  • Report

Textile and apparel producers face great uncertainty after January 1, 2005, when quotas that have long governed world trade in the industry are set to expire under an agreement signed 10 years ago.

Some analysts predict catastrophic losses for developing countries, especially in light of China’s accession to the WTO. Others see a potent mix of factors that complicate predictions: quota elimination, China’s accession, proliferating regional and bilateral trade agreements, and various legal maneuvers to counter massive surges of cheap imports. Nathan Associates has examined all these factors for developing countries as a whole and for a number of specific countries. Two years ago Nathan concluded that, while scenarios are grim, threatened countries and companies could still prepare aggressively for pending changes. How? By improving or even shoring up production capabilities or by diversifying into other labor-intensive sectors to curb otherwise certain—and sometimes massive—economic and social disruption. Developing countries’ preparations as well as their ability to adjust will be tested over the next year and Nathan will be monitoring their success.

In Changes in Global Trade Rules for Textiles and Apparel: Implications for Developing Countries we explore the challenges of recent changes in global trade rules for textiles and apparel. We first discuss the importance of the textile and apparel sector to developing countries’ manufacturing export share and employment. We then examine the effect of the growth and removal of quotas under the ATC and China’s accession to the WTO and its access to developed country markets–an event that will reshape the global textile industry. We then consider the changing nature of preferential trade agreements and the greater use of trade remedies to curb market disruption caused by unfair trade. To conclude, we identify several areas where USAID missions can offer assistance to countries that have significant textile and apparel exports.

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