A new study published by the World Bank revealed China and India as the biggest winners in the global trade in textiles, highlighting the trend of emerging economies reaping the benefits of trade liberalization at the expense of poorer states.
The World Bank’s 2006 Global Economic Prospects report estimates that Chinese textiles exports to the developed world surged by about 50% in value in the first half of 2005 compared with the same time last year. The hike came immediately after a global quota system in the textile trade ended at the start of the year. Indian textile exports rose by an estimated third. Sri Lanka and Turkey’s textile sales to rich countries rose by about a quarter.
Conversely, Tajikistan, Myanmar and Nepal saw their textile exports plummet. In the first six months of 2005, Tajikistan’s exports sank almost 60%. Myanmar, which relies heavily on textile exports, lost more than a third of its exports in terms of value; Nepalese exports fell about 20%.
“Countries that were previously constrained and that are relatively competitive are increasing their participation in world markets,” said Carlos Braga, the World Bank’s Senior Advisor on trade issues in Europe. Poor countries that so far benefited from preferential export conditions “have been affected by these changes,” he said.
The explosion of above all Chinese textile exports since the beginning of the year has outraged not only China’s poorer rivals but also textile makers in both the EU and the US. Alarmed by what they say are millions of potential job losses, the EU and US have re-imposed emergency ceilings on products such as Chinese lingerie, T-shirts and trousers through 2007 and 2008 respectively.
Chinese exports overshot their European ceilings within weeks of the new quotas being imposed, leading to a stand-off between Beijing and Brussels as millions of garments piled up at European borders and ports.
Emerging economies such as China, Brazil and India are widely expected to gain if the World Trade Organization succeeds in forging a global trade accord next year. Such an accord would free up global trade in everything from farm products and industrial goods to services. Designed to boost world wealth, a world trade accord is also widely acknowledged to creating short-term upsets as trade patterns readjust to freer trade conditions.
Yet any change will not be as pronounced as that of the textile industry, predicted Braga.
“There is no single product whose trade is so constricted by distorting quotas as textiles and clothing were until the beginning of this year,” Braga said.