Catalog

	Table of Contents
p. 16 of 36 BACK | NEXT Foreword 1. Developing Asia and the world Overview Prospects for developing Asia, 2006 and 2007 Prospects for the world economy, 2006 and 2007 Subregional summaries Suspension of Doha talks and emerging trade issues Suspension of Doha Development Round negotiations Renewed momentum for preferential trade agreements Textile and clothing trade: Performance of Asian suppliers What developing Asia can now do II. Economic trends and prospects in developing Asia III. Developing Asia's imprint on global commodity markets Appendix Statistical notes and tables ADO forecasting performance for GDP growth and inflation

Asian Development Outlook 2006 Update : 1. Developing Asia and the world

---

What developing Asia can now do

It is now clear that the textile and clothing industries in much of Asia have succeeded in competing in the absence of global quotas under the terms of the WTO Agreement of 1994 (for discussion see ADO 2006, pp. 36-38). Although some isolated marginal suppliers have fallen by the wayside, developing Asian suppliers that had expressed concern over their ability to compete have actually done quite well, including Bangladesh, Cambodia, and Indonesia. Former large Asian quota-holders, such as Korea and Taipei,China, have already moved their clothing factories to more competitive locations and are expected to similarly move textile production abroad.

A threat to the efficient development of the Asian supply chain, however, exists within the region itself and that is the proclivity of some countries to enter into bilateral FTAs that actively discriminate against efficient suppliers within the region. On a global scale, tariff discrimination and increasingly complex and inconsistent trade rules under a burgeoning web of PTAs are threats as well. Opportunities are there for the taking—not least by Asian countries’ own efforts to unilaterally open trade on an MFN basis. Regional arrangements could also be designed that will stimulate rather than suppress efficient production networks in these industries (as was discussed in ADO 2006). The ability of ASEAN to hold out for comprehensive coverage, cumulation, and flexible rules of origin in negotiations with large trading hubs will be crucial for avoiding trade-diverting blocs that could impair Asian competitiveness in the global textile and clothing trade.

ASEAN’s ability to serve as a connector of spokes in bilateral negotiations, however, is uncertain. The limited institutional capacities call into question whether ASEAN can implement the bold objectives of AEC. For example, the ASEAN Ministerial Conference in Kuala Lumpur in August 2006 agreed to bring forward AEC to 2015 from 2020, and stated that a “standstill” in the use of nontariff measures would be implemented. However, a standstill does nothing to remove existing nontariff measures, many of which apply to trade in textiles and clothing. Hence, it will be more effective if ASEAN members push ahead with plans to eliminate all nontariff measures that prevent efficient development of the single ASEAN market and extend such treatment to all trade partners on an MFN basis.

The way forward is for all competitive Asian suppliers of intermediate textile products and clothing to proceed with unilateral reforms of both border measures such as tariff reductions and behind the border barriers and trade costs. This will encourage the most efficient development of regional production networks and will further boost development of consumer markets in the region. In turn this will enhance Asia’s ability to continue to compete effectively in large nonregional markets, despite the discriminatory tariffs that Asian suppliers face in those markets relative to preferential suppliers.

References

Anderson, Kym and Will Martin (eds.). 2006. Agricultural Trade Reform and The Doha Development Agenda. A copublication of Palgrave Macmillan and The World Bank, London: Palgrave Macmillan, and Washington, DC: World Bank.

Anderson, Kym, Will Martin, and Dominique van der Mensbrugghe. 2006. “Doha Merchandise Trade Reform: What’s At Stake for Developing Countries?” World Bank Economic Review 20(2). July.

Asian Development Bank (ADB). 2006. Asian Development Outlook 2006, especially Part 3. “Routes for Asia’s Trade.” Manila: Asian Development Bank. April. Available: http://www.adb.org/documents/books/ado/2006/default.asp.

Consultative Board (Peter Sutherland, Jagdish Bhagwati, Kwesi Botchwey, Niall FitzGerald, Koichi Hamada, John H. Jackson, Celso Lafer, and Thierry de Montbrial). 2004. The Future of the WTO: Addressing Institutional Challenges in the New Millennium. Report to the Director-General Supachai Panitchpakdi. Geneva: World Trade Organization Secretariat.

Emerging Textiles.com. 2006. “China’s Exports of Polyester Filament Fabrics curbed by EU and US protections.” Statistical Report, 9 August, downloaded from http://www.emergingtextiles.com/*.

Hertel, Thomas W. and L. Alan Winters (eds.). 2006. Poverty and The WTO: Impacts of the Doha Development Agenda. London: Palgrave Macmillan and Washington, DC: World Bank.

Inside Southern African Trade (INSAT). 2005. USAID Southern Africa, Special Issue: WTO Hong Kong Ministerial. Issue 3, December.

International Monetary Fund (IMF). 2006. Regional Economic Outlook: Asia and Pacific, World Economic and Financial Surveys, Washington, DC. May.

International Trade Centre (ITC). 2006. World Tr@de Net Newsletter, Geneva: UNCTAD/WTO No. 7 (2). July.

James, William E. 2006. Rules of Origin in Emerging Asia-Pacific Preferential Trade Agreements: Will PTAs Promote Trade and Development? UNDP/UNESCAP ARTNeT Working Paper.

Limao, Nuno. 2006. “Preferential Trade Agreements as Stumbling Blocks to Multilateral Trade Liberalization: Evidence for the United States.” American Economic Review, Vol. 96 (3). June.

Lloyd, Peter and Penny Smith. 2004. Global Economic Challenges to ASEAN Integration and Competitiveness: A Prospective Look, ASEAN Secretariat REPSF Project 03/006a. September.

United Nations Conference on Trade and Development (UNCTAD). 2001. Generalized System of Preferences: Handbook on the Scheme of Canada. UNCTAD Technical Cooperation Project on Market Access, Trade Laws, and Preferences, Geneva: UNCTAD/ITCD/TSB/Misc.66. December.

____. 2005. UNCTAD GSP Newsletter. “Recent Developments in the GSP Scheme of the European Union, the United States and Canada Regarding Textiles and Clothing.” UNCTAD/DITC/TNCD/MISC/2005/6. No. 7. Geneva. December.

*The ADB website provides links to external websites that are not under its control. ADB is not responsible for the content of these sites.

Back Textile and clothing trade: Performance of Asian suppliers	Next II. Economic trends and prospects in developing Asia