Textiles and Clothing, The Doha Development Agenda and Market Access

Will Martin World Bank6 May 2003

Topics

Implications of the quota phase-outBarriers to developing country exportsProposals for expanding market access under the Doha Development AgendaPotential threats from contingent protection

Abolition of the ATC QuotasWill require all participants to compete strongly

more like contemporary markets for shoes, toys and electronics

Countries like India and China– currently constrained by ATC quotas– will shift heavily into clothing

But big increases in exports of clothing and textiles reduce exports of other goodsCreating opportunities for diversification

Quota abolition and China’s export volumes

%

Cotton -8.6 Textiles 41.9 Apparel 125.7 Leather and shoes -5.0 Metal products -11.9 Automobiles and parts -22.8 Electronics -10.6 Other Manufactures -14.1

Will there be market access for export expansion and diversification?

Depends on tariffs in industrial and developing country markets

Specific tariffs a particular concern– impose higher barriers on exports from poorer countries

Also depend on reductions to be undertaken under the Doha Development Agenda

Barriers to exports from low income countries to 4 key markets, 2000

Brazil EU India US % % % %

Textiles/Clothing 21 11 38 11 All products 14 5 28 5

Will the DDA proposals increase market access?

Some relatively specific proposals non-agricultural market access, for example, by

ChinaEUIndiaUSA

China Proposal

Base rates Industrial countries: applied rates in 2000Developing countries: ave bound & appliedNewly acceding: ave bound 2000 & applied

Modified Swiss Formula using country’s average tariff as the ceiling

Cuts higher tariffs more than lower

EU Proposal

Base ratesBound tariffsIncrease the scope of binding

Compression mechanismLarger cuts in higher tariffsLowest duties to be abolished

India Proposal

Base ratesBound ratesUnbound rates may be bound at highest binding

MechanismSimple percentage cut• Developing country tariff cuts 2/3 of industrial

country cuts

Then reduce all tariffs over 3 times the national average to 3 times the average

US Proposal

BaseLower of bound or applied rates

Mechanism to 2010Reduce all tariffs below 5% to zeroAll other tariffs to be cut using a Swiss formula with a ceiling of 8%

Bind all tariffs at zero by 2015

To get an indication of implications

Convert specific tariffs into ad valorem to make comparableSet the India formula to generate 50 percent cut in base tariffs in industrial countries.Set the EU formula to a 1/3 cut below the average and a 2/3 cut above

Implications for tariffs facing low income countries in Brazil

Textiles All products % % Rate 2000 21.5 14.6 China formula 16.6 12.3 EU formula 13.0 9.9 India formula 21.5 14.2 US formula 6.5 5.8

Implications for tariffs facing low income countries in the EU

Textiles All products % % Rate 2000 11.0 5.3 China formula 3.2 1.9 EU formula 5.6 2.5 India formula 5.2 2.6 US formula 4.2 1.9

Implications for tariffs facing low income countries in India

Textiles All products % % Rate 2000 38.2 28.1 China formula 34.3 24.5 EU formula 29.3 17.1 India formula 34.1 24.2 US formula 7.2 6.6

Implications for tariffs facing low income countries in the USA

Textiles % Rate 2000 11.3 China formula 2.9 EU formula 5.3 India formula 4.9 US formula 3.7

Creating Market Access

At least four interesting proposals on the table could significantly reduce market access barriers for low income countriesOutcomes depend heavily on very specific specifications of base rates and depth of cutNeed careful analysis

Contingent protection

Use of antidumping measures could sharply reduce the benefits of liberalizationSerious defects relative to tariffs

nontransparentunpredictableresists restructuring

Of particularly serious concern to developing countries

Average definitive AD duties against

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Industrial Developing Transition

Average definitive AD duties, 2002

Industrial EconomiesDeveloping Economies

Transition Economies

By Industrial Economies

By Developing Economies0

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Against

ConclusionsDeveloping countries need to become more competitive in textiles and clothing after 2004,

and to ensure policies allow diversification into other products

Several proposed formula approaches could generate substantial additional market accessContingent protection, and particularly antidumping, poses serious threats to developing country exports