The structure of the global textile
market is fundamentally changing in response
to policy reforms stemming from the 1995
Uruguay Round (UR) of the World Trade Organization.
The UR instituted agreements to reduce tariffs
on textile and apparel products to levels
closer to those found elsewhere in manufacturing.
It also established the Agreement on Textiles
and Clothing (ATC), which stipulates that
all bilateral import quotas, sanctioned
under the 1974 Multi-Fiber Arrangement (MFA),
will be eliminated by 2005. Full implementation
of the UR reforms will bring textiles and
apparel into greater conformity with internationally
accepted rules of trade. Collectively, these
reforms should stimulate growth in textile
trade, which already outpaces trade in other
sectors of the world economy. For example,
trade in textiles and apparel in the last
decade nearly doubled to $334 billion. These
reforms also promise to significantly alter
the location of production and the direction
of fiber and textile trade.
The
Bilateral
Fiber and Textile Trade database, available
on the ERS website, enables analysts to
examine the evolving structure of trade
among partners and across commodities and
products in the global market. This database,
derived from UN
Comtrade data, contains information
about commodity and product trade flows
among exporting and importing countries/regions
between 1992 and 2002.
The global network of trade in
textiles and apparel has shifted significantly,
with many low-income countries benefiting
from higher sales within the past decade.
Unlike agricultural production, which depends
on the availability of natural resources,
the location of textile and, particularly,
apparel production is highly mobile and
extremely responsive to wage differentials.
Textile and apparel production requires
substantial labor, is not technologically
demanding, and provides employment opportunities
for the relatively unskilled laborers who
transfer out of subsistence agriculture.
It introduces workers to manufacturing and
provides them with training opportunities
in new and productivity-enhancing activities.
Competition from low-cost suppliers
in developing countries has put considerable
pressure on established exporters of textiles
and apparel, particularly those in the newly
industrialized countries (NIC) of Asia (Hong
Kong, Macau, Singapore, South Korea, and
Taiwan). The Asian-NIC share of the global
textile and apparel market halved, falling
from 24 to 12 percent between 1992 and 2002.
In contrast, the market share of developing-country
suppliers, excluding the Asian NICs, increased
15 percentage points to 64 percent during
this period. China was especially successful,
raising its share of the global market to
25 percent in 2002, up 4 percentage points
from 1992. Such competitive pressures from
low-cost, developing-country suppliers are
likely to accelerate following the elimination
of MFA quotas by 2005.
Textile and apparel trade is
strongly influenced by established networks
and geographical proximity. Together, Africa,
the Middle East, and Eastern Europe dominate
the EU market because of preferential trading
agreements and the economics of geographical
location. In contrast, the most important
suppliers to the United States are Latin
America, China, and the Asian NICs. With
improved market access from the ATC, low-income
Asian producers are likely to vie more effectively
with these traditional suppliers for foreign
market shares in the U.S. and EU markets.
The UR reforms are expected to
reduce prices for textiles and apparel,
increasing worldwide demand for products
throughout the fiber-to-clothing supply
chain. Demand for textile and apparel imports
is already rising rapidly among the industrialized
countries (IC). This demand is particularly
strong among importers using MFA quotas
(Canada, EU, Norway, and the United States).
As consumer prices fall due to ATC reforms,
imports of clothing, bed linen, carpets,
and other products are likely to continue
to increase. Envisioned shifts in supply
and demand for textile and apparel will
enhance labor productivity in the developing
countries, leading to income growth and
greater global demand for agricultural products,
including food and raw fibers, such as cotton.
|