The WTO after the Singapore ministerial: Much to do about what?

The World Trade Organization's (WTO) Singapore Ministerial Conference in December, 1996, represented the first review of where the WTO was almost two years after the Marrakech signing. Unfortunately, neither in implementing Marrakech agreements nor in dealing with new issues is the post-Singapore state of the world trading system fundamentally better off than before. Nothing was done to correct the "sham liberalization" in the phasing out of market access restrictions in textiles and clothing. By backloading liberalization of the most sensitive clothing products to the latest possible time, an impasse is being created which could well cause but yet another delay in eliminating these quantitative restrictions, which are very costly in terms of allocative efficiency. The core of market access was seemingly brushed over to make room for an agreement on free trade in information technology products, which is flawed for two reasons. First, it excludes highly protected consumer electronics and second, it expanded the international marketing "cartel" for semiconductors to include the EU and Korea (plus founding members US and Japan). Anti-dumping measures (ADMs), the essence of so-called contingent protection, have continued to play a major role in trying to reduce competition, but the Ministerial widely ignored this fact. Though their use by industrialized countries has slowed down noticeably, developing countries pose a new threat by enacting ADMs all the more, particularly against other developing countries. The Singapore Ministerial failed to clearly set the stage for fulfilling the WTO's brief as a universal institution. No clear guidelines were established to quickly and effectively bring Russia and China into the WTO. Instead, the status quo of enforcing unilateral actions against a state-trading economy still appeals to industrialized countries, probably for mainly non-economic reasons. In perhaps one of its most important decisions, the Singapore Ministerial set up a working group to examine competition policies. Yet the key question is whether trade liberalization and GATT/WTO discipline will be best served by adding to the trading system a global codex, harmonizing national competition policies ex ante, or by mutually recognizing well-functioning national competition policies. While sound economic arguments support the latter, prevailing country-of-destination principles conjure up concerns that the former will dictate the approach. Finally, it may be too early to extrapolate the current success of the dispute settlement mechanism (DSM). It still remains to be seen whether Contracting Parties will really accept decisions against their expressed interests in issues of critical importance, or where national security arguments are invoked. So far, however, the success of the DSM has exceeded expectations. --

Wage rigidities, barriers to entry and the welfare state: Their impact on labor markets in industrialized countries

The above quotes exemplify quite well the strange world in which we live: on the one hand governments over the last 30 years have generally attempted to enact measures to liberalize international trade (and as a matter of fact the movement of factors of production) so as to be able to profit - in the form of higher employment levels - from a more efficient allocation of resources. On the other hand, in many of the same countries governments (and/or unions) have effected (or supported) measures for domestic labor markets, the impact of which runs counter to the expected gains from a reduction in trade barriers. In other words, while a rapid expansion of international trade may have contributed significantly to creating employment, measures affecting the training, employment, remuneration and/or social security of the working-age population may well have caused jobs or job opportunities to disappear or job-seeking activities to be otherwise structured.

THE WTO, ATC AND TEXTILES AND CLOTHING IN A GLOBAL PERSPECTIVE: WHAT’S IN IT FOR BANGLADESH?

The paper examines the conditions shaping the global demand for textile and clothing products from a given country or rather determining whether a country is a suitable investment location for the production of T&C products. It also highlights the trends in Bangladesh’s RMG exports and examines the medium to longer term prospects of Bangladesh’s export-oriented garment industries, and in particular the impact of the removal of the Multi-Fibre Arrangement in 2005.WTO, ATC, Textiles and Clothing, Bangladesh

Prosperity for all? Real adjustment in the MFA complex after Marrakech

More than thirty years after Ludwig Erhard suggested a breathing spell for European textile/clothing (T+C) industries to adjust to new market conditions, the Final Act in Marrakech foresees yet another transitional period before liberalization is achieved. During the breathing spell factors shaping trade/production patterns of MFA products led to production shifts to NON-ICs and concomitantly exports back to ICs. While initially and primarily clothing production - given technological constraints - continued expanding in labor-abundant countries, recent shifts in the production location of textiles underline the erosion of ICs' capital-intensive/high-tech advantages. At the same time, the high-tech equipment demanded for manufacturing MFA products originated - contrary to most other engineering products - ever more from ICs. Since competitiveness of textile machinery firms depends upon interfacing with textile producers, might there be danger of reneging on Marrakech promises? For European producers this danger does not seem imminent as Eastern European manufacturing sites are rapidly evolving. And the impact of the Final Act on future T+C production/trade patterns? If an EC strategy initially excludes liberalization of highly restricted MFA products, Eastern Europe seems to have a head start, whereas Hong Kong will have to wait. While countries like Hong Kong may still pocket quota rents, early liberalization will help promote more efficient production, hence prosperity.

Liberalizing international trade in services: Challenges and opportunities for developing countries

Several developments in international trade in services impact strongly on developing countries: First, the world-wide diffusion of information technologies (IT) has created new export opportunities for developing countries in IT services. Second, the recently proclaimed Millennium Development Goals for poverty reduction can only be attained if key services are provided more efficiently in developing countries - particularly through the liberalization of service imports. Third, in the ongoing Doha Development Round (DR) of trade negotiations, developing countries are asked to formally commit to liberalizing their service imports under the terms of the General Agreement on Trade in Services (GATS). Developing countries will benefit from liberalizing service imports if liberalization enhances competition on the supply side. This is typically the case for producer services, such as domestic and international transport, financial services, and telecommunications. The lifting of restrictions on the market access by foreigners (including through direct investment) will often improve service quality or lower prices and thereby enhance the international competitiveness of downstream industries. In Doha Development Round negotiations, therefore, developing countries may find it useful to commit to liberalizing imports of producer services. By contrast, the benefits of import liberalization are less clear for some consumer services where supply is subject to network monopolies (e.g., water and energy distribution) or demand is constrained by poverty (health care, education). Here, achieving a socially optimal level of supply may require carefully calibrated government policies, possibly with international donor support. For developing countries, such sectors should not be priority areas for commitments on service imports under the GATS. Most service exports by developing countries, especially IT services transmitted electronically, face few import barriers in industrialized countries. However, under the GATS, service exports may also be delivered through temporary movement of natural persons, e.g., developing country nationals working in industrialized countries without becoming residents there. If Doha Development Round negotiations were to increase opportunities for such temporary labor migration, the benefits to developing countries could be huge. --

Prosperity for all? Real adjustment in the MFA complex after Marrakech

More than thirty years after Ludwig Erhard suggested a breathing spell for European textile/clothing (T+C) industries to adjust to new market conditions, the Final Act in Marrakech foresees yet another transitional period before liberalization is achieved. During the breathing spell factors shaping trade/production patterns of MFA products led to production shifts to NON-ICs and concomitantly exports back to ICs. While initially and primarily clothing production - given technological constraints - continued expanding in labor-abundant countries, recent shifts in the production location of textiles underline the erosion of ICs' capital-intensive/high-tech advantages. At the same time, the high-tech equipment demanded for manufacturing MFA products originated - contrary to most other engineering products - ever more from ICs. Since competitiveness of textile machinery firms depends upon interfacing with textile producers, might there be danger of reneging on Marrakech promises? For European producers this danger does not seem imminent as Eastern European manufacturing sites are rapidly evolving. And the impact of the Final Act on future T+C production/trade patterns? If an EC strategy initially excludes liberalization of highly restricted MFA products, Eastern Europe seems to have a head start, whereas Hong Kong will have to wait. While countries like Hong Kong may still pocket quota rents, early liberalization will help promote more efficient production, hence prosperity

Factor market distortions and export performance: An eclect. review of the evidence

This paper is based on a report commissioned by UNCTAD to serve as an input for the 1986 Trade and Development Report. The views expressed here within are solely those of the authors. Furthermore, the publication of this report should in no way be interpreted as official sanctioning or approval of the contents by UNCTAD, nor should even tacit agreement by UNCTAD with the approach, analysis or conclusions be assumed. The report itself attempts to shed some light on a subject which is of paramount importance in international economics, but which has been given surprisingly little attention. The approach taken is based on mainstream economic thought, whereby every effort has been taken to couch the text in terms understandable to informed politicians, businessmen and laymen. This seemed to be essential should the message embodied in this paper be easily absorbed. The authors nonetheless admit that whether the message is accepted depends - inter alia - on the willingness of the reader to allow deductions from an eclectic approach to be generalized upon. Despite this weakness the authors hope that serious discussions will be induced with the aim of improving the international allocation of resources so as to increase the welfare of all parties concerned. In light* of current or rather continuing financial constraints faced by many developing countries, a more efficient use of resources leading to higher income levels must surely be a goal which can be generally agreed upon.

The reliability of macro-economic forecasts

In Germany since early 1981 a consensus has emerged predicting that an economic recovery is due for the second half of the year. This forecast of an upturn was put-forth for 1981 and for 1982. Despite these consensus, the forecasts proved to be wrong. Nonetheless in autumn 1982 the consensus forecast for 1983 again explicitly included a recovery starting mid-year, and again the forecast seems to be proving to be wrong. This time, however, the failure is not forecasting a recovery, only to find out its not there, but rather miscalculating in the other direction as the economic recovery has already been' on the move since the beginning of 1983.

Managing trade but mangling the consumer: Reflections on the EEC's and West Germany's experience with the MFA

The paper begins with a brief overview of the developments leading up to the MFA and the role played by the European Economic Community (EEC), the largest market in the world for textiles and clothing. Next, the EEC is used as a reference point for an overview of protectionistic measures taken within the framework of or sanctioned by the MFA. Finally, it is examined how these measures affected an important individual MFA product at a low level of aggregation. This analysis is performed for shirts imported to West Germany.