Trade Policy Note Final-rev08 - Development

Market Access
Even after the abolition of the quota system, exporting countries face difficult
conditions of access to the major markets. A number of exporting countries are
partners with the United States or the European Union in FTAs or otherwise benefit
from preferential tariff treatment. Most major countries have com plied with their
obligation (MDG 8), to provide duty free access all imports from LDCs. However, the
USA appears unwilling to extend such treatment to T&C. Other developing countries
benefit from GSP treatment in the T&C sector, again except in the United States.
Tariff protection thus remains high in this sector. 127
However, exporting countries are obviously extremely concerned that they should
receive the most favourable access conditions possible to meet international
competition. They can pursue multilateral initiatives to secure duty free treatment in
the context of the GSP, or special duty free regimes for LDCs. LDCs are pressing for
this treatment to be bound, i.e. that it would constitute a “right”” in the WTO and
become defensible under the dispute settlement mechanism. However this has not yet
been accepted. LDCs suffered a setback at the Hong Kong Ministerial Conference
when it was agreed that developed countries could exempt 3 percent of their imports
from LDCs from the duty free obligation after the deadline of 2008! LDCs should
continue to pursue 100% duty free, quota free access which coincides with MDG 8,
target 13, as the best means of ensuring preferential access to major world markets.
The Doha Round NAMA negotiating group has also considered the zero-zero option,
(i.e. sectoral free trade) in T&C. The most likely outcome would seem to be a tariff
harmonizing formula.
The remaining tariff barriers to T&C imports have led to pressures from the industries
in exporting developing countries to negotiate FTAs with major importing countries,
particularly the USA, which does not accord GSP treatment in this sector. Duty free
access for textiles and clothing is usually subject to complex rules of origin which
accord different treatment to different preferential trading partners. These rules of
origin usually are intended to ensure a “captive market” for yarn and fabric exporters
of the “importing” country. FTAs usually require important reciprocal concessions on
the part of the exporting developing country. The FTA option entails the risk that
T&C exporters will have excessive influence on the FTA negotiation, leading to
apparent gains for T&C exporters being “purchased” at the expense of excessive
reciprocal concessions in other sectors which could undermine development efforts
by the exporting developing country. In negotiating FTAs, rules of origin which
maximize the scope for sourcing of inputs, and contain reasonable value added
criteria are crucial, if real benefits are to be derived by the developing T&C exporting
country. The various considerations involved in following the FTA option are set out
in Section X.
T&C has been included in FTAs among developing countries, and in some cases,
given priority in an “early harvest list”. Some countries such as Thailand have made
127 See Chapter 4 of the UNDP Human Development Report 2005, International Cooperation at a
Crossroads: Aid, Trade and Security in an Unequal World (New York, 2005)
(http://hdr.undp.org/reports/global/2005/).
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