PRLog (Press Release) –
Feb 14, 2007 – With the abolition of quotas only a few months away, questions are being raised about the impact of quota elimination on the future of the textile and clothing industry. How will smaller economies be affected? Will global markets expand? Who will be the winners and losers? Will importing countries adopt other protectionist measures to replace quotas? And what strategies are needed to maintain growth? After the quota phase-out was introduced in 1995 under the Agreement on Textiles and Clothing (ATC), industrial countries looked for new ways of protecting their textile industries, and helping them to maximise their share of global production and trade, for as long as possible. One way has been to use rules of origin to reward certain “preferential suppliers” with special duty rates, or zero duties, and quota-free access—provided that the garments they export are made from EU- and US-produced yarns and fabrics. In offering special tariff rates, importing countries forego significant duty revenues and therefore effectively subsidise their textile industries. In the USA this subsidy is estimated at US$2.5 bn or more a year. This policy has, however, made preferential exporting countries reliant on the EU and the USA for their markets—as well as for supplies of materials which are not cost effective. It has also suppressed the development of these preferential countries’ own textile industries. Such countries will further lose some of their competitive advantage if and when tariffs are reduced in the Doha Round. The USA and the EU will therefore need to relax their rules of origin to enable preferential countries to compete, and to avoid a rush to alternative forms of protection after quotas have been eliminated
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