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The End of Enchainment: Will the Removal of Textile and Clothing Quotas Bring Us Enchantment? World Bank Seminar 25-26/04/05

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Title: The End of Enchainment: Will the Removal of Textile and Clothing Quotas Bring Us Enchantment? World Bank Seminar 25-26/04/05


1
The End of EnchainmentWill the Removal of
Textile and ClothingQuotas Bring Us
Enchantment?World Bank Seminar25-26/04/05
  • Dr. Dean Spinanger
  • Kiel Institute for World Economics
  • dspinanger_at_ifw.uni-kiel.de

2
Contents
  • Introduction and overview
  • What might happen?
  • What is going on?
  • Where are the dangers?
  • Conclusions

3
I. Introduction and Overview
  • There are some WTO issues not clarified
  • .....why not???
  • Many countries are growing......
  • at a rate far above many other countries.
  • But in what areas???
  • ......and how strong???

4
I. Introduction and Overview
  • It all started when....
  • Japan was no longer economic powerhouse,
  • Germany was no longer an economic miracle,
  • Europe was trying to get closer, and
  • The United States was pumping up the world with
    high GDP growth rates.

5
I. Introduction and Overview
  • It is not incorrect to contend that
  • The biggest exporter, China, started from
    scratch some 25 years ago
  • Just as Japan and much of Europe did the same
    almost 60 years ago.
  • But what about the other countries?
  • Some hesitated...

6
I. Introduction and Overview
  • But others threw themselves onto the mercy of
    free trade.
  • Unfortunately free trade seems to be
    interpreted differently around the world.
  • Often free trade is associated with unfair
    competition.
  • That, of course, is BS.....

7
Introduction and Overview
  • Free trade means letting in all goods into a
    country that are sold at a price which reflects
    production costs.
  • It does not mean not letting all those goods into
    a country that are very competitive.
  • Take a look at what some economies accomplished.

8
TOTAL EXPORTS BY COUNTRIES/REGIONS (bn )
9
TOTAL IMPORTS BY COUNTRIES/REGIONS (bn )
10
I. Introduction and Overview
  • But now with almost all countries in the WTO,
  • With quotas having been removed on TC
    products..,
  • With other industries being more open.....
  • What might be happening as a result of all
    this????

11
II WHAT MIGHT HAPPEN?
  • What does the future hold for all those countries
    after Chinas WTO accession?
  • I am not a charlatan...but an economist.
  • There are basic economic principles which tell
    us what might be..
  • And these basic economic principles are packed
    into a cutting edge model.

12
II WHAT MIGHT HAPPEN?
  • The model is called GTAP5.......
  • General Trade Analysis Project version 5.
  • Its robust,
  • very realistic,
  • and adaptable to specific needs.

13
The GTAP5 Model
  • General equilibrium multi-sector, with
    linkages through intermediate inputs and factor
    markets.
  • Calibrated the model is bench-marked to
    baseline scenario in 1997.
  • Data GTAP social accounting matrix data.
  • Policy data include GTAP tariffs, final WTO
    accession tariffs for P. R. China Chinese
    Taipei, service sector protection, newly
    calculated quota rents and imputed competitive
    advantage for China.

14
The Sectoral Breakdown (23)
Wool Leather Wh-ret-trade
Natural fibers Chem. ref. Transport.
Primary food Steel Commun.
Other primary NF-metals Const.
Sugar Motor veh. Fin-ins-rel.
Proc. food Electronics Consum. serv.
Textiles Other mach. Other serv.
Clothing Manuf. nes
15
The Regional Breakdown (25)
Hong Kong Other S. Asia Brazil
China, P. R. MERCOSUR
Chinese Taipei Australia Chile
New Zealand Other Lat. America
Japan
Korea Canada European Union
ASEAN5 United States Turkey
Vietnam
Mexico AfricaMid-East
India CBI Rest of World
Bangladesh ATP
16
Competitive 10 Plus for PRC
  • Chinas opening up implies greater potential than
    expressed in relative price changes.
  • Based on personal interviews of CEOs of major TC
    producers/traders in Hong Kong.
  • Conclusions drawn from various questions re.
    corp. policies after PRCs WTO entry.

17
Percent Impact of ATC Phaseout and Chinas
Accession on Total Exports
18
PRC Impact of China WTO Accession by Sector
Change in Output
Sector Post ATC Post China Total
Clothing 50.3 75.5 125.7
Textiles 13.9 32.0 45.9
Electronics -5.1 -3.9 -9.0
Steel -4.0 -9.1 -13.1
Motor vehicles -4.1 -36.7 -40.8
Transport services -1.9 -2.0 -3.9
Fin/ins/r-estate -0.7 -0.4 -1.1
Oth. comm. ser. -0.8 -5.8 -6.6
19
EU-China Trade, 1980-2002
Source Tauber based on OECD (2004).
20
Top-10 Exports into the EU-15
China's top 10 exports into the EU in total X to EU NMS, Candidatetop 10 in total X to EU
752 Automatic data processing machines, n.e.s. 8.57 Czech Rep. Hungary 2.45 4.39
764 Telecommunication equipment, n.e.s. parts, n.e.s. 6.53 Czech Rep. Hungary 2.19 9.42
778 Electrical machinery apparatus, n.e.s. 3.07 Czech Rep. Hungary 4.40 3.25
775 Household type equipment, electrical or not, n. e.s. 2.89
845 Articles of apparel, of textile fabrics, n.e.s. 2.71 Turkey 11.77
851 Footwear 2.65
759 Parts, accessories for machines of groups 751, 752 2.53 Hungary 3.99
831 Travel goods, handbags similar containers 2.47
793 Ships, boats floating structures 2.29 Poland 4.36
848 Articles of apparel, clothing access., excl. textile 2.14
21
EU trade with FIE in PRC, 1991-2003
Source Taube based on MOFCOM, Chinese Customs
Statistics (2004).
22
III WHAT IS GOING ON?
  • Industries with major shifts
  • Textiles and clothing
  • - - - Automotive

23
III WHAT IS GOING ON?
  • But what does all this mean for TC industries
    and for importers?
  • What options are open....and what other countries
    might serve as a base for production and/or
    sourcing?
  • Those who know best are in Hong Kong.

24
III. WHAT IS GOING ON?
  • Theres a saying
  • You have to know where you came from in order
    to know where you might be headed.
  • In other words
  • What are the trends from the past telling us
    about where we are and might be heading?

25
WHERE HAVE WE COME FROM WHITHER?
Trade Growth Shares 1965-2010 () Trade Growth Shares 1965-2010 () Trade Growth Shares 1965-2010 ()
Total trade Textiles Clothing
1965-73 15.2 14.0 4.3 20.4 1.4
1973-80 19.4 13.7 4.0 20.1 2.0
1980-90 5.9 6.7 2.8 10.2 3.1
1990-95 8.3 7.4 3.0 7.8 3.2
1995-10 3.0 -2.2 2.9 3.7 3.1
2001-10 6.0 1.0 2.4 6.0 3.2
Share in total trade in initial year Share in total trade in initial year Share in total trade in initial year
26
World Exports in Bill. US 1965 - 2003
27
Textile, Clothing and World Exports in Bill. US
28
The ATC Where Are We Now?
  • Liberalization was a FARCE
  • Final tranche 2004 only sensitive products
  • Faking liberalization finagling protection
  • Of course, guidelines were not precise
  • Motto was Mañana is better than now

29
ATC Liberalization 1995 - 2005
30
A trap set by past politicians (backloading)
100
Quota protection
31
III. WHAT IS GOING ON?
TEXTILE EXPORTS TO WORLD TEXTILE EXPORTS TO WORLD TEXTILE EXPORTS TO WORLD
Economy 90 90-94 94 94-03 01
China (3) 13.1 (2) 5.2 (1)
Germany (1) -2.6 (1) -1.9 (3)
USA (9) 7.0 (8) 6.9 (5)
India (14) 15.1 (12) 5.9 (10)
Turkey (18) 11.1 (15) 8.6 (13)
Rank in given year. Bold numbers designate above average growth rates. Rank in given year. Bold numbers designate above average growth rates. Rank in given year. Bold numbers designate above average growth rates.
32
III. WHAT IS GOING ON?
CLOTHING EXPORTS TO WORLD CLOTHING EXPORTS TO WORLD CLOTHING EXPORTS TO WORLD
Economy 90 90-94 94 94-03 03
China (2) 25.2 (1) 6.4 (1)
Hong Kong (3) 0.5 (3) -0.3 (3)
Mexico (32) 30.5 (21) 24.8 (4)
India (13) 9.8 (11) 7.3 (8)
Bangladesh (33) 25.6 (26) 19.6 (10)
Rank in given year. Bold numbers designate above average growth rates. Rank in given year. Bold numbers designate above average growth rates. Rank in given year. Bold numbers designate above average growth rates.
33
III. WHAT IS GOING ON?
  • In the time period 9003 Mexico was beaten by
    Bangladesh in increasing its share in global
    clothing market among the top 25 exporters.
  • But Vietnam came from nowhere to 15,while Mexico
    climbed just 30 places based on its preferential
    access to North American markets.

34
Ranking of Factors Influencing Investment
Decisions 2000
35
Ranking of Factors Influencing Investment
Decisions 2003
36
Average Ranking of Factors Influencing Investment
Decisions from 01/2000 and 02/3003
37
III. WHAT IS GOING ON?
  • These are THE 7 KEY FACTORS to get in shape
  • 1. Politics and stability
  • 3. Quality of transport infrastructure
  • 5. Policies affecting trade and investment
  • 4. Quality of telecom infrastructure
  • 6. Labor costs
  • 8 Policies re. labor, health environment
  • 10.Lack of capital/profit transaction
    restrictions.

38
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39
Telecomm Infrastructure
  • s

40
Service Infrastructure
  • bh

41
Difficult to Understand Regulations - NTBs
  • s

42
III. WHAT IS GOING ON?
  • The message is clear
  • Without coming up to the cut in these areas, TC
    exporters will lose out in the battle for market
    shares now that quotas are eliminated.
  • And of course with China being a full-fledged
    member of the WTO since Doha, competition is all
    the greater.
  • WHATS GOING ON OUT THERE???

43
Sweden's Clothing Imports from Selected Regions
in Percent of Total Non-OECD Imports plus
Portugal, Spain and Greece (1980-2001)
Source Own calculations based on Swedish import
data. Moving 3-year-average.
44
Sweden's Clothing Imports from Selected Regions
in Percent of Total Non-OECD Imports plus
Portugal, Spain and Greece (1980-2001)
Source Own calculations based on Swedish import
data. Moving 3-year-average.
45
Clothing Imports of Sweden from China, 4 South
Asian Countries and EURO-RIM in of NON-OECD
Clothing Imports, 1990-2001
46
Clothing (SITC 84) Imports of Major EU Countries
and USA from Selected South Asian Countries in
of Non-OECD Imports, 19902003
Sweden United Kingdom
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
47
Clothing Imports of Sweden from 4 South Asian
Countries and EURO-RIM in of NON-OECD Clothing
Imports, 1990-2001
4 South Asian Countries
48
Clothing (SITC 84) Imports of Major EU Countries
and USA from Selected South Asian Countries in
of Non-OECD Imports, 19902003
Germany France
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
49
Clothing (SITC 84) Imports of Major EU Countries
and USA from Selected South Asian Countries in
of Non-OECD Imports, 19902003
Italy Netherlands
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
50
Clothing (SITC 84) Imports of Major EU Countries
and USA from Selected South Asian Countries in
of Non-OECD Imports, 19902003
United States Canada
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
51
Clothing (SITC 84) Imports of Major EU Countries
and USA from Selected South Asian Countries in
of Non-OECD Imports, 19902003
Japan Australia NewZealand
2003 only Australia
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
52
US Textile (SITC 65) and Clothing (SITC 84)
Imports from Africa and Latin America
SITC 65
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
53
US Textile (SITC 65) and Clothing (SITC 84)
Imports from Africa and Latin America
SITC 84
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
54
Canadian Textile (SITC 65) and Clothing (SITC 84)
Imports from Africa and Latin America
SITC 65
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
55
Canadian Textile(SITC 65) and Clothing (SITC 84)
Imports from Africa and Latin America
SITC 84
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
56
EU Textile (SITC 65) and Clothing (SITC 84)
Imports from Africa and Latin America
SITC 65
2003 without Greece, Finland and Sweden
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
57
EU Textile(SITC 65) and Clothing (SITC 84)
Imports from Africa and Latin America
SITC 84
2003 without Greece, Finland and Sweden
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
58
Japanese Textile (SITC 65) and Clothing (SITC 84)
Imports from Africa and Latin America
SITC 65 SITC 84
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
59
Australian and New Zealand Textile (SITC 65) and
Clothing (SITC 84) Imports from Africa and Latin
America
SITC 65 SITC 84
Source OECD, ITCS (http//www.sourceoecd.org),
own calculations.
60
The Car Industry
  • But TC products arent everything..look at the
    Chinese car industry it is forging on as in no
    other country, but knowing that its domestic
    production is not competitive...
  • Lets look at whats up...

61
Cars and Per Capita Income
Cars per 1000 residents vs. GDP / capita (ppp)

China
62
Many,Many People per Car in PRC

63
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64
Some Comparative Stats 2001
PRC USA EU15 Japan Brazil
Area (1000 km) 9635 9365 3245 380 8500
Population 1290 285 380 125 172
Registd vehicles 23.9 216.7 211.2 73.4 19.8
Vehicle production 2.3 11.4 17.2 9.8 1.7
People/vehicle 53.9 1.3 1.8 1.7 8.5
GDP/CAP. (US) 910 36300 20900 32850 3070
millions registered

65
Motor Vehicle Facts 2001
PRC USA EU15 Japan Brazil
Car production 2002 1088 12017 14780 8619 1537
change from 95 235.0 9.2 10.8 13.2 33.3
Cars registered 8.5 128.7 184.5 53.5 15.8
People per car 152 2.2 2.1 2.3 10.9
Trucks registered 15.4 88.0 26.7 19.9 4.0
People per truck 83.8 3.2 14.2 6.3 43.0
millions

66
Motor Vehicle Production - China
67
Total Motor Vehicles
68
1981-98 Fruits of Open-door Policy.
  • Open-door policy in 1978 kick started industry.
  • From 83 85 no. of cos almost doubled from 65
    to 114 units. By 1998 roughly 2500 units.
  • Provincial govs. further regionalized production.
  • Major international cos began to invest and then
    towards end quite rapidly. VW had already started
    in 1978.
  • These JVs accounted for about 60 of production
    in period

69
1999-?? Opening up and beyond
  • Major investments by foreign companies.
  • All major Japanese cos in China.
  • All major Germany producers in China.
  • French and Italian producers nominally present.
  • US producers also nominally present.
  • Currently much expansion. Capacity now near 2.5
    mill. units.
  • Much capacity developed in costal areas.

70
Final Comments Car Industry
  • Without restructuring auto sector not
    competitive.
  • With restructuring the sector becomes competitive
    and expand share of market.
  • Parts industry further integrates with global
    industry.
  • Regional scattering will become more
    contentrated.
  • Costal areas will be preferred so export
    potential can be tapped.

71
III. WHAT IS GOING ON?
  • And what about other products?
  • How have they performed?
  • Look at changes over time using revealed
    comparative advantages

72
Dynamic Development of Chinas RCA
Winners
Source Taube based on OECD EUROSTAT Wifo
(2004).
73
Dynamic Development of Chinas RCA
Losers
Source Taube based on OECD EUROSTAT Wifo
(2004).
74
Similarity of Trade Structure Similarities
China NMS
Source Taube based on OECD (2004).
75
AND WHERE ARE THE DANGERS??
  • The dangers are clear
  • When countries are too, too successful they get
    hit with NTBs.
  • This could mean, for instance, antidumping
    measures (ADMs) or other non-tariff measures
    (NTMs).
  • Remember the impct of the dumping measures
    portrayed earlier.

76
DANGERS ARE LURKING EVERYWHERE
77
TARIFFS DOWN, ADMS UP!!
78
The Future Is Uncertain
  • Of course the future is uncertain....but that is
    life.
  • However, the large economic model, set up to map
    future trade and growth after quota removal and
    Chinas WTO accession (Francois Spinanger,
    2001), shows that China, India, Taiwan, Hong
    Kong and Vietnam would gain most ().
  • But the above 7 factors have to be taken into
    account here when viewing the results!!!!!

79
The Future Is Less Uncertain
  • If the affected economies were to change their
    policies and rid themselves of outdated baggage,
    they could perform much better.
  • Carpe diem, as the Romans said...it is not too
    late.

80
ADMs by Initiators and Afflicted 1/95-12/02
Economy Initiations Initiations Afflicted Afflicted
Economy TC Total TC Total
Total 142 2160 142 2160
IEs 45 860 19 610
DEs 97 1300 123 1550
E. EUR 16 68 13 328
L. Amer 23 428 9 173
S. Asia 42 357 19 100
E/SE A. 8 198 75 853
81
Anti-Dumping Measures (ADMs) Initiated by ICS
and DCs 1985/86 2001/02
82
Who Hit Whom??
83
EUs Anti-dumping Measures by Countries/Regions
85-03
Country/ Region 85-90 90-94 94-99 99-03 Total
E. Europe 40 14 23 13 90
CIS 0 20 18 17 55
PRC 0 19 21 20 60
E.Asia-PRC 28 15 20 16 79
SE Asia 1 18 28 13 60
SW Asia 2 8 21 14 45
Other 43 24 33 23 123
Total 114 118 164 116 512
Source Own calculations based on GATT/WTO documents. Source Own calculations based on GATT/WTO documents. Source Own calculations based on GATT/WTO documents. Source Own calculations based on GATT/WTO documents. Source Own calculations based on GATT/WTO documents. Source Own calculations based on GATT/WTO documents.
84
Ratio of Measures (M) to Initiations (I)
  • In the following diagrams the ratio of measures
    enacted to initiations announced over the period
    95 02 is shown in the caption.
  • The yearly values of measures enacted has been
    lagged by one period.

85
And Which Sectors Were Affected?
  • Base metals (XV) and chemical products (VI) were
    by far the most affected areas.
  • TC products (XI) were hit by a relatively small
    number of ADMs, similar to machinery (XVI) but
    less than plastics (VII).
  • Other sectors hit were stone, glass/glassware
    etc (XIII) and agricultural products (I IV).
  • However, the ratio of applied measures to
    initiated proceedings (M/I) was by far the
    highest for TC products (72) showing that
    economies were more serious about trying to
    protect the sector.

86
AD Initiations By Sector - 01/01/95 to
31/12/02
87
AD Initiations By Sector - 01/01/95 to
31/12/02
88
Ratio of Measures (M) to Initiations (I)
  • In the following diagrams the ratio of measures
    enacted to initiations announced over the period
    95 02 is shown in the caption.
  • The yearly values of measures enacted has been
    lagged by one period.

89
 
XIII Products of Stone, Glass, etc M/I 41
90
VII - Plastics and Rubber M/I 50  
91
I IV Agricultural Products M/I 51
92
VI - Chemical Allied Industries M/I 55
93
XVI Machinery M/I 55
94
Rest M/I 58
95
XV - Base Metals M/I 67
96
XI - Textiles and Clothing M/I 72
97
Anti-Dumping vs. Competition Laws
  • Objective
  • Basic Protects Protects
  • (domestic) competition
  • competitors
  • Actual Protects Generally
  • domestic no distinction
  • from foreign between domestic
  • competitors foreign competition

98
Anti-Dumping vs. Competition Laws
  • Initiation
  • Actions can only be In addition
  • initiated by executive private litigants
  • branch and the can initiate
  • relevant industry proceedings.

99
Anti-Dumping vs. Competition Laws
  • Administration
  • Partly/mostly through Subject to full
  • executive branch/ supervision
  • commerce or foreign by courts.
  • trade ministry appeals
  • through courts.

100
Anti-Dumping vs. Competition Laws
  • Standards
  • Injury
  • Requires only Requires direct
  • showing that unfair causation and
  • practice contributed showing of
  • to material injury reasonable restraint
  • above so-called of trade or
  • minimum injury substantial
  • level (i.e. de minimus) lessening of
  • competition

101
Anti-Dumping vs. Competition Laws
  • Standards
  • Pricing
  • Requires no Requires showing
  • evidence predatory intent
  • on intent. re. pricing aimed at
  • competitors.
  • Does not require Requires showing
  • showing of selling below-cost pricing
  • below cost. and capability of
    recoupment.

102
What Can Be Done????
  • Boils down to 2 key questions
  • DOES PROCESS PRODUCE ALLEGED EVIDENCE??
  • DOES EVIDENCE PROVE CRIME WAS COMMITTED??

103
Problem Areas
  • Determination of dumping (Art. 2)
  • Determination of injury (Art.3)
  • Investigation procedures (Art.5 6)
  • Price undertakings (Art. 8)
  • Imposition/Collection of duties (Art. 9)
  • Review (Art.11)
  • Dispute settlement (Art.17)

104
Conclusions
  • ADMs are going to increase all the more as
    liberalization opens up markets.
  • The DOHA ROUND must do something.
  • But even if...other NTMS are lurking.
  • Competition policy is a true alternative, but
    stands little chance of approval.
  • Ergo AD rules have to be tightened!!!!!

105
May the Future Be Brighter...
  • For sure the ATC must rest in peace after
    2004...even if NMS countries have to struggle all
    the more with restructuring.
  • All calculations show that - aside from
    agriculture the most welfare gains can be made
    by burying the quotas ASAP.
  • But what do policymakers/businessmen think about
    the future of TC trade?
  • BIG EU CONFERENCE IN MAY, 2003, ADDRESSED THE
    ISSUES........

106
Scope and Thrust of EU ATC Conference
  • Attended by over 800 participants from 70
    countries.
  • 65 speakers from governments, international
    organizations, industry, unions and academia.
  • Addressed key challenges facing TC sectors in
    post ATC period

107
Scope and Thrust
  • Dealt with impact of quota elimination and DDA on
    ICs, DCs and LDCs.
  • Looked at implications within RTAs
  • Discussed promotion of sustainable development
    and ethical trade.
  • Debated overall trading rules and their
    effectiveness.

108
Specifics Lamy
  • Commissioner Lamy said quotas will definitely
    fall as of 31/12/05.
  • He didnt say that just 15 of the quotas have
    been removed by the ICs.
  • Feared that quota elimination might give way to
    other forms of protection.

109
Specifics Supachai
  • Director General of WTO pointed to the over 80
    of the quotas remaining and feared contingent
    protection.
  • Between USA, EU and Canada over 1100 quotas will
    have to be eliminated.
  • Suggested possible earlier voluntary
    liberalization to ease logjam as of 31/12/04.

110
Specifics Ricupero
  • Secretary General spoke at length about the
    benefits of trade liberalization and of missed
    opportunities in case of TC products.
  • He pointed to what the benefits would be for the
    EU without the quotas, namely 250/year for 4
    person household, more with younger kids.
  • Invited WTO members to find a compromise between
    competitiveness and solidarity with the weak in
    which GSP principle would apply.

111
Specifics General
  • Reciprocity issues were emphasized by the EU and
    US...no favors in advance.
  • US, EU and Japan cant go on providing over 75
    of TC trading opportunities India, China,
    Pakistan, Brazil et al must open up.
  • AD/CV seen by EURATEX US as ligit to counter
    NTBs in countries like India and China, whereby
    China was accused of currency dumping 40.

112
Specifics General
  • China was seen by many as a problem, coz they are
    taking too large shares of market.
  • Developing countries revealed their fears here
    too, worried also about losing their quota
    protected market shares.
  • Developing countries worried about lower tariff
    rates as a result of liberalization coz it
    decreases the preferences they receive by the ICs.

113
SpecificsFinal
  • Reps from Carrefor, Levi Strauss, CA and Marks
    and Spencers laid down their successful
    strategies in taking ethical dimensions into
    consideration.
  • All in all it revealed the deep-seated worries of
    many DCs about how the system will be working
    against them.
  • IC reps continued to point out that All players
    must abide by the rules.
  • AMEN..but what about ADMS and NTBS?

114
ADMs by Initiators and Afflicted 1/95-12/02
Economy Initiations Initiations Afflicted Afflicted
Economy TC Total TC Total
Total 142 2160 142 2160
IEs 45 860 19 610
DEs 97 1300 123 1550
E. EUR 16 68 13 328
L. Amer 23 428 9 173
S. Asia 42 357 19 100
E/SE A. 8 198 75 853
115
Anti-Dumping Measures (ADMs) Initiated by ICS
and DCs 1985/86 2001/02
116
Who Hit Whom??
117
EUs Anti-dumping Measures by Countries/Regions
85-03
Country/ Region 85-90 90-94 94-99 99-03 Total
E. Europe 40 14 23 13 90
CIS 0 20 18 17 55
PRC 0 19 21 20 60
E.Asia-PRC 28 15 20 16 79
SE Asia 1 18 28 13 60
SW Asia 2 8 21 14 45
Other 43 24 33 23 123
Total 114 118 164 116 512
Source Own calculations based on GATT/WTO documents. Source Own calculations based on GATT/WTO documents. Source Own calculations based on GATT/WTO documents. Source Own calculations based on GATT/WTO documents. Source Own calculations based on GATT/WTO documents. Source Own calculations based on GATT/WTO documents.
118
Ratio of Measures (M) to Initiations (I)
  • In the following diagrams the ratio of measures
    enacted to initiations announced over the period
    95 02 is shown in the caption.
  • The yearly values of measures enacted has been
    lagged by one period.

119
And Which Sectors Were Affected?
  • Base metals (XV) and chemical products (VI) were
    by far the most affected areas.
  • TC products (XI) were hit by a relatively small
    number of ADMs, similar to machinery (XVI) but
    less than plastics (VII).
  • Other sectors hit were stone, glass/glassware
    etc (XIII) and agricultural products (I IV).
  • However, the ratio of applied measures to
    initiated proceedings (M/I) was by far the
    highest for TC products (72) showing that
    economies were more serious about trying to
    protect the sector.

120
AD Initiations By Sector - 01/01/95 to
31/12/02
121
AD Initiations By Sector - 01/01/95 to
31/12/02
122
Ratio of Measures (M) to Initiations (I)
  • In the following diagrams the ratio of measures
    enacted to initiations announced over the period
    95 02 is shown in the caption.
  • The yearly values of measures enacted has been
    lagged by one period.

123
 
XIII Products of Stone, Glass, etc M/I 41
124
VII - Plastics and Rubber M/I 50  
125
I IV Agricultural Products M/I 51
126
VI - Chemical Allied Industries M/I 55
127
XVI Machinery M/I 55
128
Rest M/I 58
129
XV - Base Metals M/I 67
130
XI - Textiles and Clothing M/I 72
131
Anti-Dumping vs. Competition Laws
  • Objective
  • Basic Protects Protects
  • (domestic) competition
  • competitors
  • Actual Protects Generally
  • domestic no distinction
  • from foreign between domestic
  • competitors foreign competition

132
Anti-Dumping vs. Competition Laws
  • Initiation
  • Actions can only be In addition
  • initiated by executive private litigants
  • branch and the can initiate
  • relevant industry proceedings.

133
Anti-Dumping vs. Competition Laws
  • Administration
  • Partly/mostly through Subject to full
  • executive branch/ supervision
  • commerce or foreign by courts.
  • trade ministry appeals
  • through courts.

134
Anti-Dumping vs. Competition Laws
  • Standards
  • Injury
  • Requires only Requires direct
  • showing that unfair causation and
  • practice contributed showing of
  • to material injury reasonable restraint
  • above so-called of trade or
  • minimum injury substantial
  • level (i.e. de minimus) lessening of
  • competition

135
Anti-Dumping vs. Competition Laws
  • Standards
  • Pricing
  • Requires no Requires showing
  • evidence predatory intent
  • on intent. re. pricing aimed at
  • competitors.
  • Does not require Requires showing
  • showing of selling below-cost pricing
  • below cost. and capability of
    recoupment.

136
What Can Be Done????
  • Boils down to 2 key questions
  • DOES PROCESS PRODUCE ALLEGED EVIDENCE??
  • DOES EVIDENCE PROVE CRIME WAS COMMITTED??

137
Problem Areas
  • Determination of dumping (Art. 2)
  • Determination of injury (Art.3)
  • Investigation procedures (Art.5 6)
  • Price undertakings (Art. 8)
  • Imposition/Collection of duties (Art. 9)
  • Review (Art.11)
  • Dispute settlement (Art.17)

138
Conclusions
  • ADMs are going to increase all the more as
    liberalization opens up markets.
  • The DOHA ROUND must do something.
  • But even if...other NTMS are lurking.
  • Competition policy is a true alternative, but
    stands little chance of approval.
  • Ergo AD rules have to be tightened!!!!!

139
Summary and Conclusions
  • Given structure of the ATC a real danger exists
    that other forms of protectionism will take over
    after quotas are lifted as of 1/1/05.
  • This could particularly hit China which is
    expected to attract much more TC activities due
    to competitive advantages beyond what relative
    prices might predict. Already machinery for TC
    sector in China is pouring in.

140
Textile Clothing Machinery Exports to Major
Regions / Countries 1990 - 2003 3 Year Moving
Average (US Mill.)
141
Concluding Remarks
  • Will China continue to dominate?
  • Can NTBs be avoided given current trends?
  • What role will the time factor (i.e. nearness to
    market for JIT production) play?
  • Are there other factors?
  • Whats the bottom line?

142
I Tried to Focus on the Essence...I Hope I
succeeded
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