Download Challenges for Arab Countries

Challenges to the Arab World
International Developments in the Textile and
Systemic Challenges
Clothing Industries:
• Quota
free World
Challenges
for Arab Countries
•
•
•
•
Preference Erosion
Constrained Policy Space
Speakers:
A ChangingDr.
Business
Environment
Luis Abugattas
Global Slowdown
Dr. Ahmed Moustafa
Policy-induced Changes
United Nations Development Programme
Regional Bureau for Arab States
Arab Trade and Development Programme
ATDP
The Arab Textile Industries Forum
(ATDP)
1
Challenges to the Arab World
Systemic Challenges:
•
•
•
•
•
Quota free World
Preference Erosion
Constrained Policy Space
A Changing Business Environment
Global Slowdown
Policy-induced Changes
ATDP
The Arab Textile Industries Forum
2
A Quota Free World
The end of the Multi-Fibre Agreement (MFA) in
1995: WTO Agreement on Textiles and Clothing
(ATC)
All products integrated into GATT according to
schedule, 10 year transition process
Most quotas remained in place till the end of the
ATC, further quotas against products of the most
successful exporting countries (China)
ATDP
The Arab Textile Industries Forum
3
A Quota Free World
Quotas introduced heavy distortions to Textile
Trade: on January 1, 2009, all quotas have been
abolished
Consequences:
• Sharp decline in prices
• Adverse affects on many exporting countries,
including in the Arab World
• Concentration of production in less countries
• China gain extended market shares
ATDP
The Arab Textile Industries Forum
4
A Quota Free World
Table: EU imports from China in %
1999
2003
2005
2007
Growth
19992007
27.18
174%
38.32
83%
Textiles
China
9.94
16.8
23.4
Clothing
China
ATDP
20.93
25.49
35.32
The Arab Textile Industries Forum
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A Quota Free World
Table: US imports from China in %
1995
2000
2005
2007
35.44
42.59
22.04
30.77
Textiles
China
13.78
14.03
Clothing
China
ATDP
10.5
7.86
The Arab Textile Industries Forum
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Preference Erosion
No reduction in tariff protection: in the US up to
32% and up to 12% in the EU.
Non-reciprocal preferential schemes and evergrowing number of bilateral Free Trade
Agreements diminish the value of preferences.
WTO negotiations will decrease MFN in the US
and the EU
ATDP
The Arab Textile Industries Forum
7
Constrained Policy Space
Up to 70% of Textile Exporting Firms benefit from
Export Processing Zones (EPZs) or similar
institutions
Agreement on Subsidies and Countervailing
Measures (ASCM) prohibits export subsidies,
abolishment at the latest 2015
The need to revise current policies and consider
open and hidden Export Subsidies
ATDP
The Arab Textile Industries Forum
8
A Changing Business Environment
Trends:
• Concentration of the clothing retailing industry in
the EU and the USA
• Long term arrangements between producers
and buyers
• More sophisticated information technologies and
logistics: a key competitive aspect
• Private Codes of Conduct
ATDP
The Arab Textile Industries Forum
9
Global Slowdown
World Economy heads towards recession
Uncertainty about future demand
Table: Percentage Change of US Imports of textile and
clothing
2008 vs. 2007
2007 vs. 2006
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Total Textiles & Clothing
-5
-6
-4
-7
3
1
2
1
Total Apparels
-5
-3
-2
-1
9
5
2
-1
Total Non-apparels
-5
-8
-6
-11
-1
-1
2
2
ATDP
The Arab Textile Industries Forum
10
Global Slowdown
Figure: Actual and projected GDP growth rates for the US
ATDP
The Arab Textile Industries Forum
11
Policy-induced changes
 Trade Liberalization in Arab countries ends
decades of market protection and, therefore,
requires adequate flanking policies
 Imports surged in recent years due to trade
liberalization
 WTO negotiation deepens trade liberalization
ATDP
The Arab Textile Industries Forum
12
Arab textile exports to the EU
Table: Shares of leading Arab textile exporters in
extra-EU imports of textiles
ATDP
The Arab Textile Industries Forum
13
Arab clothing exports to the EU
Table: Shares of leading Arab clothing exporters in
extra-EU imports of clothing
ATDP
The Arab Textile Industries Forum
14
Arab textile and clothing exports to
the US
Table: Arab exports to the US in %
1995
2000
2005
2007
1.24
1.32
3.03
2.98
Textiles
US
1.39
1.42
Clothing
US
ATDP
2.24
2.45
The Arab Textile Industries Forum
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Concluding remarks
Dismantling of quote system, preference erosion,
global slowdown and new dynamics of
international trade pose great threats to textile
and clothing industry in Arab countries
New trading environment offers also interesting
possibilities for further development
Devised strategies and implemented policies are
necessary to confront the systemic changes
Appropriate flanking measures are inevitable
ATDP
The Arab Textile Industries Forum
16
Thank you for your attention!
ATDP
The Arab Textile Industries Forum
17