Catalog

	Table of Contents
p. 21 of 77 BACK | NEXT Foreword, Acknowledgments, Contents, Acronyms and Abbreviations, Definitions I. Developing Asia and the World Developing Asia and the Pacific: Performance and Prospects Prospects for the World Economy in 2006-2007 Subregional Summaries Textiles and Clothing in the Post-Quota Era: The Outlook for Asian Suppliers Introduction: An end to quotas? Historical perspective on textiles and clothing in Asian development Recent performance under the ATC and in the (almost) post-quota era Impact of new US restrictions on the PRC's shipments of textiles and clothing Agenda for future trade reform Endnotes and references The Doha Development Agenda: Asian Challenges and Prospects after the Ministerial Meeting in Hong Kong, China II. Economic trends and prospects in developing Asia III. Routes for Asia's Trade Statistical appendix

Asian Development Outlook 2006 : I. Developing Asia and the World : Textiles and Clothing in the Post-Quota Era: The Outlook for Asian Suppliers

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Impact of new US restrictions on the PRC's shipments of textiles and clothing

Looking forward, the situation in the US market appears to be favorable for continued penetration by Asian competitive suppliers, provided that they do not run up against more systematic protection through US antidumping measures or other forms of contingent protection.¹⁶ Some of the new US bilateral free trade agreements may move some trade from Asia in the coming years, yet this shift may be offset as several Asian suppliers seek bilateral trade agreements with the US to attain preferential access of their own (not least of which are Malaysia and Thailand-see Table 3.3 in section 3 of Part 3 of Asian Development Outlook 2006). Viet Nam may also see its terms of market access improve when it becomes a WTO member (possibly this year).

The most significant event influencing market access in the US for Asian suppliers in the next 2—3 years, however, is likely to be the negotiated new quantitative limits on 21 categories of imports of clothing and textile yarns, fabrics, and made-up products from the PRC as set out in the 5 November 2005 memorandum of understanding between the US and the PRC concerning trade in textile and apparel products. This sets out agreed levels of imports by volume for the next 3 years (2006—2008) and provides for progressive increases in quota growth but well below growth attained in 2005 before the safeguards were invoked (James 2005). Most of the restrictions apply to clothing categories that are quite broad in the sense that two or even three types of fiber (cotton, wool, MMF) are subject to restriction in the merged categories (Table 1.4.7). For example, in the categories of sweaters and hosiery, all such items made from cotton, wool, and MMF are restricted. For knit shirts, woven shirts, brassieres, underwear, and swimwear, restrictions are applied to cotton and MMF items. In the case of trousers, coverage includes all possible fabrics: cotton, wool, MMF, and silk and vegetable fibers. The coverage of total shipments of textiles and clothing to the US in terms of the value and volume of shipments in 2005 from the PRC (Table 1.4.7) is significant, but even more important is that these are high-growth sectors in US imports and therefore of strong commercial interest to competitive Asian suppliers. This point is confirmed by an examination of data for the first semester of 2005 (i.e., post-quota) versus the same period in 2004 (ATC quotas in effect). The growth rate of the items that the US restricted was, in value terms, 143% from the PRC (Table 1.4.8) and would certainly be nearly 200% in volume terms. Overall growth of imports in value terms from the world to the US reached 12% and would certainly have reached 20% in volume terms. Thus, there is confirmation that the US targeted high growth and growth potential categories for application of the safeguards.

Evidence suggests that the quota restrictions may well halt the advance of the PRC's market share in US imports or even reverse some of the gains made in 2005. This is because the categories restricted are among those with the highest actual growth and potential for future growth for the PRC and other competitive Asian suppliers in the US market (Tables 1.4.9 and 1.4.10).

The restriction of imports from the PRC appears to be benefiting a number of Asian suppliers based upon data for the first month of 2006, with high volume rates of growth in restricted categories for India, Cambodia, Indonesia, Bangladesh, and a few others, in contrast to contraction for the PRC and for preferential suppliers to the US market including CAFTA, Mexico, Sub-Saharan Africa, Jordan, and Andean countries (Bolivia, Colombia, Ecuador, and Peru) (Table 1.4.9). India (2.15 points), Bangladesh (1.28 points), Indonesia (1.08 points), Cambodia (1.01 points), Pakistan (0.91 points), Viet Nam (0.54 points), Thailand (0.49 points), Philippines (0.42 points), and Sri Lanka (0.11 points) add a cumulative 7.99 percentage points to market share in the US import volume in 2006 compared with 2005. These gains come mostly at the expense of preferential suppliers that all together suffered a 6.15 percentage point drop in the first month of 2006 compared with the same month in 2005. There were similar changes in value market share (Table 1.4.10) and once more the gains by the competitive Asian suppliers of 9.87 percentage points cumulatively are mainly at the expense of preferential suppliers (down 6.49 percentage points). The PRC's loss of market share by volume was less than by value, reflecting the impact of restrictions on unit prices. Hong Kong, China also shows modest gains in market share in volume (0.41 percentage points) and value (1.59 percentage points) in 2006, reversing losses in 2005 somewhat.

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