World Textiles Trade and the WTO

Transcription

1 ITMF 2014 ANNUAL CONFERENCE Beijing, China, October 2014 World Textiles Trade and the WTO Speech by WTO DDG Xiaozhun Yi Distinguished participants, Ladies and gentlemen, 1. It is a great honour and privilege for me to participate in this Annual Conference of the ITMF. I am very pleased to have this opportunity to expand on our Director General's remarks. 2. Textiles and clothing is a very important sector of international trade that has served as the engine of growth, particularly for developing and least-developed countries. 3. Over the past two decades, the growth of the world textiles industry and trade has been influenced substantially by three major developments. The first two are directly related to the WTO: 4. First, the return of the textiles and clothing sector to the "normal rules" of the GATT/WTO in other words, phasing out the longstanding Multi-Fibre Arrangement (MFA) which, for almost 40 years,

2 allowed countries to protect their domestic textile industry through quotas. This was a major departure from the normal GATT/WTO rules. Next January will mark the 10th anniversary to end the quota system; and 5. Second, the accessions to the WTO by China in 2001 and Viet Nam in 2005 have allowed both China and Viet Nam to benefit from the phasing-out of the MFA quota system and enlarge their share in the global textile and clothing market. 6. Based on these two developments, the world trading system became more open to trade in textiles and clothing which made it possible to have the third major development - which is the significant transformation of the world textile industry through increased outsourcing, and the proliferation of global value chains and global production networks. 7. These three major developments have had a substantial impact on the pattern of world trade, the distribution of market shares, as well as the global value chains in the textiles and clothing sector, including the adjustment to new emerging powers in the field of manufacturing and export.

3 8. According to a paper prepared jointly by OECD, WTO and UNCTAD for G-20 last year, "Multinational Enterprise (MNE) coordinated GVCs account for 80% of global trade. But it is also estimated that the contribution of local firms is very significant (in the range of 40-50% of export value added." 9. Since the return of normal trading rules in 2005, when the Multi-fibre Arrangement quota system ended, world trade in textiles and clothing has increased by more than 68 percent, more or less at the same pace as the world trade in manufactures. It has surged from US$454 billion in 2004 to US$766 billion in Even with the significant economic downturn in most countries during the period of , trade data points to the enormous success of export-oriented textiles and clothing products (see slide 1). Slide 1:

4 10. Today, developing economies and LDCs contribute to almost 70 percent of world exports of textiles and clothing (see slide 2). Slide 2: 11. In 2013, China alone accounted for 34.8 percent of world textile exports and 38.6 percent of world clothing exports. However, it is interesting to note that, with the rising production cost in China and the shifting into higher-value goods and services, in recent years China has started to import finished textiles and garments from other countries, such as Bangladesh and, perhaps, very soon Sri Lanka. In 2013, Viet Nam accounted for 1.6 percent of world textile exports (it was 0.2 percent in 2000) and 3.7 per cent of world clothing exports (0.9 percent in 2000).

5 12. Other developing and least developed countries have also strengthened their positioning in this sector - notably India, Turkey, Bangladesh, Pakistan and Cambodia (see slides 4 and 5). Slide 4:

6 Slide 5: 13. The increased share of these countries in the world textiles market has had a great impact in their poverty reduction and economic development. Although textile production is always an important first step towards industrialization, this sector continues to provide an alternative for workers in low-wage agriculture or service jobs even after other manufacturing sectors are established, especially for women and the less-skilled. 14. Given the important role of your industry, I am very impressed with the theme of your meeting, Shared Opportunity/Shared Responsibility, because this is what the WTO is all about. The WTO is where governments negotiate and oversee the global rules for trade between nations. Its main function is to ensure that trade flows as smoothly,

7 predictably and freely as possible. But the preamble to the agreement establishing the WTO states that this must happen with a view to: -raising standards of living, -ensuring full employment, -protecting the environment, -expanding production, AND -ensuring that developing, and especially the least-developed, countries secure a share in the growth of international trade commensurate with the needs of their economic development. 15. Members are trying to further the goals of the Organization through the current round of negotiations - the so-called Doha Round. These negotiations cover about 20 areas of trade - which allows Members to give and take in the different areas when they negotiate. 16. In December of last year, at the 9th WTO Ministerial Conference held in Bali, Indonesia, WTO Members concluded negotiations in several areas in a package of agreements, the so-called Bali Package. 17. As the DG mentioned, the Bali Package contains a number of decisions which may have an impact on the world textiles industry and trade, such as:

8 - More effective action on duty free quota free market access which extends exemptions from tariffs and quotas to exports from least-developed countries; - Members also agreed on - "Guidelines on preferential rules of origin" - that should help LDC exports to qualify for the preferences accorded to them; - They also reaffirmed and deepened political commitments with regard to the reduction of trade-distorting support to cotton; 18. and - Probably the biggest accomplishment was the Trade Facilitation Agreement. This new Agreement is extremely important for industries that depend on the value chain. 19. When intermediate goods cross borders multiple times before they are incorporated into the final product, the cost of any type of trade restriction or delay is magnified. It is therefore crucial for the WTO to help reduce the costs of cross-border trade by streamlining and standardizing customs procedures. 20. By streamlining customs procedures, this Agreement could provide a major boost to the global economy and the majority of the benefits will accrue to developing and least-developed countries.

9 21. The estimates vary but economists think this could lead to an expansion in developing country exports of up to 9.9% and the creation of up to 18 million jobs in developing economies. 22. Trade is particularly important for developing countries: the smaller the economy, the more relevant trade becomes as a tool for economic growth, job creation and technological improvements. 23. Although negotiations have been completed on this new Agreement, it has not yet entered into force. In order for this to happen, each Member must first ratify or officially accept it. 24. However, as you probably know, only a few months after the trade facilitation negotiations were concluded, this considerable achievement is now at risk. Delegations missed the deadline for the adoption of the Trade Facilitation protocol at the end of July. This protocol is the document that Members would have to ratify or accept before the Agreement can enter into force. 25. But trade facilitation is not the issue. As I just mentioned, Members negotiate several issues at the same time to allow for some give and take in the process.

10 26. Progress in the area of trade facilitation was blocked because some Members are concerned about implementation of the Trade Facilitation Agreement going ahead before certain issues in other topics of negotiation in the Doha Round are resolved. 27. To overcome this impasse, the Director-General launched a process of intensive consultations with a view to getting us out of this crisis as soon as possible. At the moment, there is a lot of engagement, but a solution has not been found. 28. Our main objective is to ensure the implementation of the Bali Package. This is what ministers agreed to do last December and what we are committed to following through. 29. Right now, the future is somewhat uncertain, but I am confident that, as soon as we solve this issue, we will be able to resume our work on the broader negotiating agenda, which will allow WTO Members to focus on other issues that harm the textiles and clothing industry such as high tariffs, tariff peaks and tariff escalation. 30. It is expected that the Doha negotiations, once concluded, can provide improved and more predictable market access conditions,

11 including in your sector through new tariff bindings, reductions, and eliminations; and new rules and disciplines on non-tariff barriers. 31. Once work on trade facilitation is back on track I would like to encourage all of you to play an active role to ensure that governments take the needs of your industry into account when implementing this new Agreement. 32. To conclude, once again I would like to applaud the theme of your conference. I am very impressed with the conference programme and look forward to the results. I am sure that your gathering here this week will make a positive impact on the future; I wish you a great success. 33. Thank you for your attention.

12 Source: WTO Secretariat. World merchandise exports, (Index, 2004 = 100)

13 In 2013, developing economies and LDCs contributed to almost 70 per cent of world exports of textiles and clothing Note: provisional results; final results will be released on 27 October. Source: WTO Secretariat.

14 Leading exporters & importers of textiles, 2000 and 2013 (percentage share in world exports)) Exporters Importers Note: provisional results; final results will be released on 27 October. Source: WTO Secretariat.

15 Leading exporters & importers of clothing, 2000 and 2013 (percentage share in world exports)) Exporters Importers Note: provisional results; final results will be released on 27 October. Source: WTO Secretariat.