The restrictiveness of the multi-fibre arrangement on Eastern European trade

Historically, Eastern Europe has not been favorably treated in terms of quota growth in the European Community and U.S. markets - often quite the contrary. But the EC and U.S. treatment of these countries has already changed since their reform and can be expected to become even more favorable. Eastern Europe's exports of textiles and clothing have tended to be more capital-intensive and less specialized than those of other major suppliers, including Asia's newly industrialized economies. Erzan and Holmes argue that Eastern Europe's expansion of relatively labor-intensive products has probably been inhibited byquotas and by the weak adjustment mechanisms inherent in a centrally planned economic system. If so, given market reforms in Eastern Europe, exports of labor-intensive textiles and clothing should expand more than proportionately and the degree of specialization should increase if the Multi-Fibre Arrangement is abolished or its grip on Eastern Europe's exports is relaxed in the EC. Putting aside questions of the composition of exports, textile and clothing exports are to expand considerably because they make up a large part of labor-intensive manufacturers, where Eastern Europe's comparative advantage lies in the near future.Markets and Market Access,Economic Theory&Research,Environmental Economics&Policies,Economic Adjustment and Lending,Access to Markets

Protection facing exports from sub-Saharan Africa in the EC, Japan, and the United States

The authors address two questions in this report : 1) have exporters in sub - Saharan Africa (SSA) faced more or less protection in Japan, the EC, and the United States than other developing countries and 2) to what extent has protection in those markets constrained SSA's export growth. The authors find that on the whole SSA suffered relatively little from either tariff or nontariff protection in the major industrial markets. In part, this is because they often get a better preferential treatment, especially in the EC, and also, it is because their exports are heavy in primary goods which aregenerally subject to less protection. The authors finally point out that there is no compelling evidence that protection in the major industrial markets has constrained export growth in SSA.Economic Theory&Research,Trade Policy,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Environmental Economics&Policies,Export Competitiveness

Tariff valuation bases and trade among developing countries : do developing countries discriminate against their own trade?

In establishing the value of imports for tariff assessment, most countries apply duties either to the cost-insurance-freight (c.i.f.) or the free-on-board (f.o.b.) value of the traded good. One effect of using the far more common c.i.f. base is to place a disproportinate burden on countries that have higher freight and insurance costs. Distant countries often not only pay higher transport costs, but are further penalized by disproportionate tariff costs that worsen their competitive disadvantage. The f.o.b. valuation procedure does not penalize exporters for their location, but applies a nominal tariff rate directly to the export costs of each country. Using cost information for six Latin American countries, this paper examines the influence of the two procedures on the level and incidence of tariff protection. It concludes that transport and insurance costs generally put developing countries at a disadvantage (compared to developed countries) on interregional trade and that the relatively high Latin American tariffs on c.i.f. prices further worsen their competitive position. To correct the bias against trade between developing countries, it is recommended that f.o.b. valuation procedures used by developed countries be adopted. This change would also reduce tariff barriers considerably.Economic Theory&Research,Common Carriers Industry,Transport and Trade Logistics,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Environmental Economics&Policies

An evaluation of the main elements in the leading proposals to phase out the Multi-Fibre Arrangement

Two approaches took the lead in the negotiations to dismantle the Multi-Fibre Arrangement (MFA): (a) a phaseout with the framework of the MFA, proposed by developing countries, the European Community, Japan, and the Nordic countries; and (b) a new transitional structure relying on global quotas with country allotments for current quota holders, suggested by the United States and Canada. Under both scenarios, accelerated quota growth is the main device for phaseout. Country quotas, in the first approach, and global quotas in the second, will have to expand in such a way to avoid a"shock"when they are abolished at the end of the phaseout. The second most important element in the phaseout proposals, besides expanding quotas and abolishing them at the end of the phaseout period, is scrapping them along the way according to some predetermined criteria and scheme. In the proposals, this is defined in terms of country characteristics, specific products, product characteristics, or some criterion pertaining to the historical record, such a quota use. The historical record reveals that growth in highly utilized quotas was significantly lower compared with unfilled quotas. There is one important virtue in a phaseout based on the current structure of the MFA. Not only are the mechanisms in place familiar to the negotiating parties, but so are the magnitudes of most of the parameters: current quota levels, quota growth rates over the last few years, and their use ratios.Achieving Shared Growth,Economic Conditions and Volatility,Economic Theory&Research,Governance Indicators,Environmental Economics&Policies

The role of officially supported export credits in sub-Saharan Africa's external financing

This paper addresses the question of how important officially supported export credits (OSECs) were, both in quantity and quality, in Sub-Saharan Africa's (SSA) external financing during the last two decades, and examines the prospects for the 1990s. The paper begins by briefly explaining the financial structure of foreign trade, the role of export credits in this context, and the basic functions of export credit agencies (ECAs). It goes on to present the trends in OSECs during the 1970s and the 1980s as a source of external finance for developing countries in general, and for SSA in particular. The authors deal with some of the distortions caused by export credit subsidies, including the problems of"moral hazard"and"adverse selection". The paper looks at the current need and prospects for external finance in the 1990s and addresses how to enhance the efficiency of OSECs, emphasizing the cooperation between ECAs and multilateral development agencies, an issue which is particularly important for poorer developing countries such as those found in SSA.Economic Theory&Research,Banks&Banking Reform,Environmental Economics&Policies,Financial Intermediation,International Terrorism&Counterterrorism

Would general trade liberalization in developing countries expand South-South trade?

For most developing countries, the proportion of exports going to other developing countries has steadily increased since the early 1970's. Until that time, most of the developing countries with an outward-looking trade strategy did proportionately less trade with other developing countries, particularly manufacturers. Since the early 1970's, however, an outward orientation has often gone hand in hand with more South-South trade. The proportionate increase in South-South trade occurred despite relatively higher protection in most developing countries against the products for which they, as a group, have a comparative advantage. As the annual growth rate slowed, it greatly affected the direction of developing countries trade. But the resumption of growth in industrial countries did not alter the increasing trend in South-South trade. The structure of tariff and nontariff protection in most developing countries discriminated against products that other developing countries could supply competitively. Hence, across the board, nondiscriminatory liberalization would generally favor South-South trade - particularly if liberalization focused on the most heavily protected sectors.TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Trade Policy,Earth Sciences&GIS,Poverty Assessment

Effects of the multifibre arrangement on developing countries'trade : an empirical investigation

This paper addresses two issues: (i) the extent of the restrictiveness/effectiveness of the Multifibre Arrangement (MFA) with respect to the developing country suppliers of textile products during the 1980s, and (ii) the extent to which these restrictions yield trade gains for the less established developing suppliers. After analyzing data, the author's made the following conclusions. Rather than ease up, the MFA became more restrictive. Proportionately more shipments were subject to quotas and volume generally grew less where quotas were binding. The unit value of shipments subject to binding quotas also increased substantially more than the unit value of unconstrained items. Developing countries that were new exporters of textile products also hoped to capture a larger share of the textile market as a result of quotas for other developing countries. However, the needy countries have benefited little from the MFA, and countries whose exports grow soon find themselves on the restricted list. Finally, domestic producers in the United States have benefited most from the MFA.Environmental Economics&Policies,Economic Theory&Research,Markets and Market Access,Access to Markets,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT

How changes in the former CMEA area may affect international trade in manufactures

The authors give a long-term perspective on how changes in the former CMEA areas will affect international trade in manufactures. They show that expanding Eastern European exports to the West should be viewed as a step toward normalizing the Eastern European countries'trade patterns. First, proportionally less of the Eastern European economies'trade will be with each other, especially with the former Soviet Union. Second, Western Europe will be their major trading partner but their trade with (especially imports from) Japan and North America may increase dramatically (from a small base). Their exports to and imports from developing countries may also change dramatically. The volume of Eastern European trade is in line with the low income of these economies. In the long run manufactures trade will increase four- to sixfold, once Eastern European income levels catch up with industrial country levels. Until incomes in Eastern European and former Soviet economies increase significantly, labor-intensive goods are likely to dominate their exports to market economies, and sophisticated goods their imports. The authors contend that, since the end of the Cold War, the West has successfully improved the Eastern European countries'access to Western trade, and that the Eastern European countries should now enjoy equal or favorable treatment. Czechoslovakia, Hungary, and Poland, in particular, may become the most favored outsiders in the European Economic Space, the largest single market in the world. One short-term effect of the Eastern European countries'improved outlook may be that developing countries that rely on manufactures for export revenues may have tougher times in major Western markets. But the emancipation of Eastern European and former Soviet economies - and the pent-up demand for consumer goods likely from deprived populations - should provide important opportunities for the dynamic developing countries. The former Soviet Union was not a large market for developing countries - except for India and Yugoslavia and to a lesser extent Algeria and Egypt. Countries such as India that did supply the former Soviet Union with manufactures may soon have to seek alternative markets.Economic Theory&Research,Environmental Economics&Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade Policy,Transport and Trade Logistics

Customs Union with EU and the Impact of Foreign Competition on the Structure and Performance of Turkish Manufacturing Industry

Using industry level panel data, we study how increasing openness to international markets, including the customs union with EU, have affected the structure and performance of Turkish manufacturing industries over the 1980-1999 period, with special emphasis on the market disciplining role of imports. We find that changes import penetration did not reduce (output-) concentration in concentrated industries, while for the less concentrated industries it had a mildly significant negative impact. It was also observed that changes in import penetration had a significant positive, rather than negative, effect on price-cost margins (PCM) with a one-year lag in high PCM industries; while for the low PCM industries current changes in import penetration had again a significant positive impact on profit margins. Thus, imports do not seem to provide discipline for either the low or high PCM industries.import-competition; market structure; customs union; Turkish manufacturing industry