Trade Policy Note Final-rev08 - Development

XI.
SECTORAL ANNEXES
Annex 3A: Textiles and Clothing: Still the first step to
Industrialization?
The textiles and clothing (T&C) sector has provided the first step to industrialization
for a large number of countries, including those which are now highly developed. It
currently provides a major source of employment and foreign exchange for a large
number of poor countries. However, these governments are faced with the question of
devising a strategy for enabling their T&C sectors to continue this role in the more
competitive world market that emerged after the full phase -out of quotas with the
implementation of the Agreement on Textiles and Clothing on 1 January 2005.
T&C and the MDGs
The T&C sector has provided an impetus for economic growth and industrialization
in a large number of countries, including those now highly developed. It provides
crucial export earnings and world exports exceeded $453 billion in 2004. 125 T&C was
among the top two most dynamic sectors in world trade over the past two decades
despite being subject to high tariffs and quotas in the main importing countries. The
growth in the world market for clothing in particular can be expected to be
maintained, providing continuing opportunities of all efficient producers. Most
importantly, the T&C sector is a major employer of over 40 million people,
particularly women, providing them with otherwise unavailable employment
opportunities. In many developing countries the achievement of the MDGs is closely
linked to the future of the T&C sector.
For many developing countries, the opportunities for export oriented growth and
employment were a result of the artificial regime (the MFA and it predecessors) that
governed world trade in this sector for a half century. The full implementation of the
WTO Agreement on Textiles and Clothing (ATC) on 1 January 2005, which
“integrated” this sector within the normal multilateral rules , has placed in question the
ability of many developing countries, particularly LDCs, to compete against larger
and more efficient suppliers. Developing countries, both current and potential
exporters of textiles and clothing, are faced with the need for a policy response to a
more competitive trading environment.
Potential new suppliers must assess whether the T&C sector, and especially the
clothing sub-sector still provides opportunities for growth and employment and
warrants priority in development strategies. These strategies have involved (a) the
pursuit of improved access conditions to major markets, (b) national strategies to
enhance productivity and competitiveness (c) actions to ensure that the benefits of
exports are widely shared and (d) improvement of working conditions. 126
125 www.wto.org
126 The Section draws heavily from UNDP Asia Pacific Trade and Investment Initiative, International
Trade in Textiles and Clothing and Development Policy Options: After the Full Implementation of the
WTO Agreement on Textiles and Clothing (ATC) on 1 January 2005, policy paper (Colombo: 2005)
(www.undprcc.lk/Publications/Publications/T&CPolicyPaper.pdf). See also publications of the
International Textiles and Clothing Bureau at www.itcb.org.
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