A group of developing countries proposed Friday that the World Trade Organization study the global impact of phasing out a textiles and clothing quota system, saying many countries will lose out with this trade liberalization, reports Dow Jones.
The quota system, which has governed international trade in textiles since the 1960s, is to be phased out next year, allowing producers to export as much as they can sell. "Some studies have suggested that the elimination of quotas and the further liberalization of the sector may be beneficial to developing countries as a whole," said Servan Singh, the Mauritius ambassador to the WTO, who is co-sponsoring the proposal at a meeting of the WTO's goods council in Geneva. "But they also clearly indicate that there will be more losers, along with the winners in the process," Singh said.
The elimination of the quota system is part of the Uruguay Round treaty on trade liberalization. Producers believe it will allow them to export much more than they are selling now. China and India are expected to dominate world trade after the changes, as the United States and other industrial countries will have to remove their limits on imports of textiles and clothing, according to a WTO report published in August. The most likely exporters to lose market share are those located further away from North America and Western Europe and which currently have either quota or tariff-free access to US and EU markets, for example sub-Saharan African countries, the WTO report said. Mauritius is sponsoring the proposal, along with Bangladesh, Dominican Republic, Fiji, Madagascar, Sri Lanka and Uganda. There was no indication of whether the WTO would adopt the proposal and commission a study. But richer countries say that developing countries are failing to open up their domestic textiles markets, and aren't removing their quotas fast enough.
Reuters adds Mauritius' envoy told the WTO that African countries and others currently enjoying preferential access to the textile and clothing markets of the United States, the European Union and Japan would lose some 70 percent of their share.
Business Line (India) further notes the US and the EU are not backing the move to stall the abolition of apparels' export quota regime slated for January 1, 2005. The new Indian Commerce Secretary, S.N. Menon, told Business Line that both the US and the EU have made it clear they are sticking to the WTO obligation and dismantling of multi-fiber agreement (MFA). He, however, said an extension of quota regime for China for two more years (as it joined the WTO later) is a possibility.
Agence France Presse finally reports China on Friday called on the World Bank and IMF to help small textile and clothing exporting countries that are threatened by the end of import quotas at the end of the year. China's ambassador to the WTO Sun Zhenyu said the 40-year-old reliance on quotas had disrupted the production and trade of textiles in developing countries which have a comparative advantage in the sector. The IMF and the World Bank had shown they were ready to help poor countries "make adjustments so as to support trade liberalization efforts in the WTO" he added. "We call on those two institutions to significantly enhance their assistance programs in order to better respond to the needs of the members," China's ambassador said.
Development Agenda. The final ruling should be issued by the end of the summer.
