Winners and Lossers of the WTO agreement on Textiles and Clothing
ABSTRACT From the 1st of January 2005, the World Trade Organisation (WTO) Agreement on Textiles and Clothing (ATC) sends a clear message that such trade will be free of quotas. While nobody can give a precise picture of the global textiles and clothing market after 2004, there are some indicators of the potential winners and losers of the quota phase-out. The combined effect of the removal of MFA quotas plus the lowering of textiles and clothing globally should result in a considerable market opening and fierce competition for this sector. ... The biggest winners will be efficient producers whose current exports to industrial country markets are tightly constrain like China, Indonesia, South Asia and Thailand. ... However, the great losers will be the Least Developed Countries like Bangladesh, Cambodia, Laos, Myanmar and Nepal, where their welfare depends largely on textiles and clothing exports. The Uruguay Round’s Agreement on Textiles and Clothing (ATC) mandates the end of the quotas established under the Multi-Fibre Agreement (MFA) and also the reciprocal termination of the restrictions imposed by developing countries on their imports of textiles and clothing. By 2005, restrictions that do not meet General Agreement on Tariffs and Trade (GATT) standards are to be phased out. ... Several studies using data from complex Computable General Equilibrium (CGE) models predict that the agreement will generate a sustained increase in the size of economy (Sharma 1997; MacDonald et al, 2001), and forecasts by the GATT (1993) and the Organisation for the Economic Cooperation and Development (1993), also project steady economic growth (GATT 1993;cited by Sharma 1997, OECD 1993;cited by Sharma1997). While some (Lankes, 2002) support that liberalisation on textiles and clothing, could generate large benefits for developing countries in terms of income, exports and employment, others (Kapstein 1999), point out that the costs and benefits of dismantling the MFA, will not be felt equally across the developing world, and again new patterns of winners and losers will occur.