The textile and clothing industries accounted for USD 350 billion or 5.6% of total merchandise exports in 2002. They provide employment for tens of millions of people, primarily in developing countries.
A New World Map in Textiles and Clothing identifies the most recent market developments throughout the entire supply chain, from natural fibres to retail distribution. It outlines the policy and regulatory challenges in the fields of trade, labour adjustment, technology and innovation, and suggests a policy framework to help deal effectively with such changes as well as to capitalise on the trade opportunities that are being created through improved market access.
Chapter I: Adjustment Challenges in Textiles and Clothing
Considerable worldwide restructuring is anticipated following the termination of quantitative restrictions at the end of 2004, as agreed under the WTO Agreement on Textiles and Clothing (ATC). This chapter summarises the key adjustment challenges facing these industries with a view to assist governments in establishing a coherent policy and regulatory framework that facilitates the adjustment of the private sector. This multifaceted process involves: supporting the emergence of qualified pools of expertise and the adaptability of the workforce; improving the regulatory environment for essential business services; stimulating collaborative innovation processes in the fields of dissemination and technology transfer; and negotiating improved market access for textile and clothing products, especially eliminating remaining obstacles to the establishment of retail distribution systems and distorting production measures.
Chapter II: Market Developments and Trade Policies
This chapter reviews recent market developments in production, consumption and trade in textiles and clothing and assesses the trade policy framework in the post-ATC trading environment. It examines: the pattern of the international fragmentation of the supply chain; the role of large retail groups in production decisions; the productivity gap between producing countries; and the emergence of China as a leading producing country with an integrated supply chain. It assesses remaining sources of trade protection and the impact of regional and preferential trade arrangements. Countries that aspire to maintain an export led strategy in textiles and clothing need to expand their manufacturing expertise to reach the higher value added segments of the supply chain by upgrading their domestic skills in design, material sourcing, quality control, logistics and retail distribution.
Chapter III: Trade-Related Labour Adjustment Policies
Although trade liberalisation yields economy-wide benefits, the opening of markets to international competition puts pressure on labour markets and results in both temporary and permanent hardships for displaced workers. This chapter outlines the main characteristics of displaced workers in the textile and clothing sectors in OECD countries and analyses recent developments and policy reforms in labour adjustment programmes. The analysis underscores the difficulty of isolating the causes of worker displacement and suggests the need for broad labour adjustment programmes, regardless of the causes of worker displacement. It notes the increasing reliance on training as part of the toolbox of labour market adjustment programmes and the advent of wage insurance programmes.
Chapter IV: Technology and Innovation
This chapter focuses on recent world trends in applied technology in textile and clothing industries and reviews innovation and technology diffusion approaches in OECD countries, including production and trade of textile and clothing machinery. It summarises recent technological changes in the transformation stages of textiles into final clothing products, outlining productivity gaps between the various production stages and highlighting opportunities for fragmenting the supply chain on the basis of comparative advantages. It examines various policy approaches taken by OECD countries to promote innovation and innovative clusters in the textile and clothing industries and notes best practices. The role now played by textile and clothing production in the industrialisation process of developing countries is far more differentiated than it was a generation ago. While low wages can still give developing countries a competitive edge in world markets, quick turnaround times now play a far more crucial role in determining international competitiveness in these fashion oriented and time sensitive markets.
Chapter V: Business Facilitation
Exporting countries seeking to maintain an export-led development strategy in textiles and clothing have to address competitive weaknesses due to: inefficient domestic regulatory regimes; obsolete infrastructure in essential business services; cumbersome customs procedures; and other distorted market structures. The chapter highlights the business environment in which trade in textiles and clothing takes place, underscoring the importance of a sound macroeconomic environment for facilitating the process of structural adjustment. It emphasises the importance of minimising the time involved in the international movement of textile and clothing products through more efficient transportation infrastructure and customs procedures as well as the value of modern electricity and telecommunications infrastructure for the competitiveness of textile and clothing firms. Moreover, it stresses the importance of nurturing a culture of entrepreneurship to support these industries where small- and medium-sized enterprises predominate.
Annex A: Literature Review of Quantitative Studies
This annex summarises the main results of 29 quantitative assessments of the economic effects to be expected from the ATC reforms. It aims to help readers understand the differences in the various modelling approaches, assumptions and results. All the reviewed studies foresee increases in global welfare as a result of liberalisation of trade in textiles and clothing. However, the estimates of welfare gains vary significantly, with expected annual global benefits ranging from USD 6.5 billion to USD 324 billion.
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