Post‐quota directions of global textiles & clothing trade ‐ a legal and policy analysis

Abstract

The textiles & clothing (T&C) sector has been one of the most regulated and protected sectors in global trade. Even though T&C occupies a lesser share of international trade than other sectors, it remains crucial to developing countries and least developed countries (LDCs). Issues in T&C trade revolve around the trade flow of T&C products from developing countries/LDCs to the prime markets of the EU, US and other developed countries. Developing countries compete for greater market access, which is often manipulated by developed countries to meet goals other than economics and trade. One of the key instruments in this manipulation were quantitative restrictions (better known as quotas). Quotas violated fundamental obligations under GATT. Adoption of the quota system meant that T&C was treated as an exception to the GATT framework. Quotas regulated global T&C trade from post-World War II through to 31 December 2004. From 1 January 2005, quotas were abolished in international T&C trade. This thesis examines the impact of quota elimination on international T&C trade. The objective of the thesis is to estimate the future direction of T&C trade after quota expiration. The thesis begins with a historical analysis of the quota system. The main observation from history is that T&C production always eventually moves to new countries which have comparative advantage. Imposing restrictions on trade in T&C merely postpones the day that production will shift to poorer nations. As such, measures which guarantee market access to specified developing countries are merely postponing the time when even poorer developing countries or LDCs will have the opportunity to produce and export T&C. The thesis analyses pre-expiration predictions and the conflicting interests on trade liberalisation amongst third world countries. These conflicting interests continue to this day. The thesis also examines major issues that affect global T&C trade and conducts case studies on major Asian T&C manufacturers, with a special focus on China and Pakistan. The underlying objective of the case studies is to analyse the pre-elimination estimates in order to predict the future direction of global T&C trade. Additionally, the thesis also assesses the efficacy of safeguards and anti-dumping measures as instruments of trade regulation after quota expiry.