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Reports on Meetings
1. In response to requests from less-advantaged countries (LACs), and in the current series of assistance projects, on 7 June 1999 AITIC held a workshop on textiles and clothing, in particular on the implications of the World Trade Organisation (WTO) Agreement on Textiles and Clothing (ATC) for the LACs. It was held with the sponsorship of the WTO and with technical cooperation from the WTO, the International Textiles and Clothing Bureau (ITCB) and the International Trade Centre (ITC).
2. The formal sessions covered:
3. In addition, Mr. S. Harbinson, Permanent Representative of the SAR of Hong Kong, China and Chairman of the ITCB, gave an overview in an address at lunch.
4. As an indication of its importance, 9 percent of world trade is in textiles and clothing, providing some 142 million jobs (formal and informal) worldwide. However, textiles and clothing trade is heavily concentrated in the industrial countries. Textiles and clothing imports of the EU, US, Japan, Canada and Switzerland account for 70 percent of the world total. By contrast, imports by developing countries (including China, Mexico, Korea, Hong Kong, among others) amount to only 14% of the world total.
5. The importance of textiles and clothing in the early stages of industrialisation as an engine of growth is clear, e.g. Japan in the early 1900's, Hong Kong, Korea and Chinese Taipei from 1950 to 1980 and the ASEAN countries and China from the 1980s on. Against this background there is a long history of restraint in textiles and clothing trade: the bilateral voluntary agreements of the 1950's; the formal arrangements in respect of cotton textiles from 1961 to 1973; the Multifibre Arrangement from 1974 to 1994; and the key provisions of the ATC. (See paragraph 6 below and the AITIC Briefing Paper at Annex B; further detail on the textiles and clothing trade is in an Explanatory Note and a CD-Rom available from the Textiles Division of the WTO.)
6. The WTO and ITCB identified the key elements of the ATC, and therefore of its implementation as:
7. An aspect of the product coverage of the Agreement is that tariff headings not actually under restraint in a particular importing country were available for "integration" into normal WTO rules, which has implications for the rate of real integration to date (see paragraph 9 below).
8. On the integration of these products, it is for the importing countries maintaining quotas to select the specific tariff heading and the percentage of volume to be applied to each heading subject to there being some selection from each of the tariff groupings: yarns, fabrics, made-ups and clothing. It is significant that in the higher added value groupings, particularly clothing, the selection to date can be described as notional. For example, for the US the percentage by volume of 1990 imports integrated to date by tariff grouping is:
The situation is comparable for the EU and Canada.
9. Another indicator of the real effect (or rather the non-effect) of the integration process in the two major markets, the US and the EU, is the number of quotas (individual product limits) actually eliminated in stages 1 and 2:
10. The effect has been that, although a total of 33 percent of trade by volume has been integrated by stage 2, the actual amount integrated has been much lower. Less than 7 percent by volume and value per annum of restrained trade in the US, and less than 5 percent by volume and value per annum of restrained trade in the EU, has been freed of quotas. This is essentially a result of the nature of the product coverage, which allowed importers, quite legally, to "free" tariff items not actually under restraint.
11. In practice the increase in quota annual growth rates has been of minimal importance because of the small size of many agreed MFA growth rates (often less than 1percent). An indication of this is that in the EU the average pre-ATC growth rate was 3.44 percent per annum and after stages 1 and 2 it is 4.49 percent. For the US the figures are 4.61 percent and 6.36 percent.
12. Of interest has been the reduced incidence of "calls" under the special transitional safeguards mechanism, thanks in part to the vetting by the Textiles Monitoring Body. For example, in 1995 there were 24 applications for selective safeguards, whereas in 1998 there were only five.
IV. What remains to be done: the prospects and outlook for the future of trade in textiles and clothing
13. It was noted that the third stage of the ATC implementation begins on 1 January 2002, which will require the integration of a further 18 percent of the product coverage and the increase in quota annual growth rates by 27 percent per annum. The final stage begins on 1 January 2005, which requires the integration of all remaining products, the total elimination of quotas and the termination of the ATC.
14. Thus trade in textiles and clothing will be returned to normal WTO rules. This should allow the free interplay of market forces with open competition through such as price, quality, dependability and marketing. However, there were issues that are of concern to the LACs which will need to be addressed before and beyond the termination of the ATC, specifically:
15. It was considered that though the ATC is not for re-negotiation. The general issue of market access (which would include the textile and clothing sector and issues such as tariff peaks, antidumping measures and rules of origin) should be on the agenda for the WTO Third Ministerial Meeting in November 1999, and included in any new round of multilateral trade negotiations.
16. The International Trade Centre presented the topic, emphasising the role it played in the monitoring of the environmental aspects of international trade. Specifically the ITC was planning to collate and distribute information on eco-labelling in several sectors (further details and documentation is available from the ITC). The main points made on eco-labelling as related to textiles and clothing included: