Unpicking the Textiles Trade - The Impact of Liberalization on the Global Textiles Sector

The global textiles trade has been subject to major restructuring in recent years due to the phase out of quota restrictions under the Agreement on Textiles and Clothing (ATC). The impact of this liberalization on the EU and US markets has been considered elsewhere (Curran, 2008a). However it is only recently that figures have become available to enable a global picture of the impacts of the quota phase out (and subsequent re-imposition of export restraints on China) to be drawn. This article looks at these global figures and compares them, both to the forecasts made by various researchers prior to liberalization and to the impacts on the EU/US markets analysed previously. It finds that impacts were extensive, both directly in terms of clothing and textiles imports in the liberalized markets and indirectly within the supply chain of the textile sector. Overall, forecasts were correct on several key impacts - such as the increased exports of certain key suppliers, the negative impacts on the exports of certain other suppliers (although forecasts were generally overly pessimistic) and the positive indirect impacts in terms of increased textile demand from increased clothing production. However certain anomalies are identified, reflecting the difficulty in modelling the impact of restrictions on the sector. The overwhelming winners from the globalization of the clothing and textiles markets were China and India. The article looks in somewhat more detail at these two suppliers to disaggregate the factors contributing to their overall positive trade performance. In the aggregate, India increased their exports in value terms to a greater extent than China (although from a lower base). However, this positive performance needs to be seen in the context of the remaining restrictions on Chinese exports to India's two key clothing markets - EU and the United States - and the fall in Indian exports in both textiles and clothing in the years immediately prior to liberalization. In undertaking this exercise, it was necessary to compare the global trade figures which are extracted from the UN's COM-TRADE database, with the EU's own figures on trade from COMEXT, the Eurostat database, on which previous work was based (Curran, 2008a). It is evident that there are major differences in the figures, in particular in relation to declared exports from Hong Kong and China. Clearly, there are unresolved issues in terms of the declaration of the origin of trade between China and Hong Kong in this sector. Unpicking exactly what is happening in the sector is complicated by these differences in what should be 'mirror' trade.