1. The Future of Textiles and Clothing after 2005
The importance of the Doha Development　Agenda on trade and investment of textiles and clothing sector after quota elimination
Conference:
The Future of Textiles and Clothing after 2005
5-6 May, 2003
Kazu Toyoda
Director General for Manufacturing Industries
Ministry of Economy, Industry and Trade
Government of Japan

2. Japan’s fundamental idea on trade and investment of textiles and clothing sector after quota elimination
MFA quota elimination post 2005
A world-wide expansion of trade and investment can be expected. However…
High tariff rates
Non-tariff barriers (NTBs)
Uncertain environment for investment
Abuse of anti-dumping (AD) measures
Remaining problems
Not only North-South trade, but also South-South trade will not fully develop.
Trade would be seriously disturbed by the abuse of anti-dumping measures.
Due to uncertainty, developing countries are less recipient of investment.
Improvement of market access → harmonization by sectoral approach
Clarification of anti-dumping rules
Establishment of investment rules
Proposed solutions １

3. Japanese textiles and clothing trade
・Japanese textile market, where imported products occupy 70%, has become one of
the most liberalized among the major countries as the result of the utmost tariff
reduction during the UR negotiations.
・Japan has never invoked MFA quotas nor transitional safeguard measures under
the ATC.
Import penetration ratio of Japanese textile market（2001)
○　67.4％　（based on weight）
○　33.0％　（based on value） 2

4. Tariff rates of main items from selected countries3

5. The importance for developing countries
/2000
The amount of textile consumption market of all developing countries
The amount of textile trade (intra-developing countries）
About $ 700 billion
　　 $ 46.5 billion
×1.4
　　　1999　　 　$ 81.6 billion
ＥＵ＋ＪＡＰＡＮ＋ＵＳＡ：$ 500　billion　
(About 20% of world textile trade)
Developing countries could reap income gains of over $500 billion from the full trade liberalization. This will lift more than 300 million people above the poverty.
(World Bank, Global Economic Prospects, 2002) 4

6. The importance for LDC (least developed countries）
LDC can enter textiles and clothing sector, especially in sewing which is highly labor-intensive.
- a case study - Bangladesh
The clothing industry of Bangladesh, mainly sewing, has dramatically developed past 10 years and become a major exporter.
・Shares of clothing in total export have doubled (or about 76% of total export).
・Value of clothing export has increased about seven times.
(Source - Bangladesh Bureau of Statistics)
・GDP rates continue to grow at average 5% over the past 10 years.
$ 31 billion in 1991　→　$ 47 billion in 2001
The Improvement of market access provides export opportunities in textiles and clothing trade. 5

7. Ten developing countries(INDIA etc）
Overview of proposals submitted in textiles and clothing sector at the WTO market access negotiations
Swiss formula. Elimination all tariffs by 2015.
Although “zero-for-zero” was proposed for other sectors, there is no proposal for sectoral approach on textiles and clothing sector.
Developed countries: individual reduction formula.
Developing countries: average of coverage products.
“zero-for-zero” and “harmonization”: voluntary basis.
Non-sectoral
approach
USA
Ten developing countries(INDIA etc）
Average target tariff reduction formula
Line-by-line basis reduction formula
Sectoral
approach
E U
JAPAN
Separate from average target tariff reduction formula, sectoral approach & harmonization for textiles and clothing sector.
In the “compression mechanism” proposal, “all Members ...deeper cuts for textiles, clothing, and footwear… these tariffs within a narrow common range as close to zero as possible.” 6

8. Initiation of anti-dumping (AD) measures targets textiles and clothing sector (so called “double jeopardy”)
The textiles and clothing sector accounts about 10% of the total initiation of anti-dumping measures to developing countries.
Phasing-out of MFA quotas is likely to lead to abuse of anti-dumping measures after the end of 2004.
anti-dumping measures initiated during the period, 1/1/ /12/1999
Targeting developing countries: 1,603 cases
Targeting developed countries: cases
source: WTO Rules Division database 7

9. International collaboration in textiles and clothing sector
・International division of labor in textiles and clothing sector can be developed, based on competitive advantage. However, there exist some impediments (high tariffs, limited flow of investment, abuse of anti-dumping measures etc.)
・Each developing country can receive substantial benefit by elimination of above mentioned impediments.
A case of high quality cotton shirts
Planning / design
Japan
Spinning
India
Dyeing / finishing
Japan
Fabrics
Indonesia
Dyeing / finishing
Malaysia
Sewing
China / Cambodia 8

10. The importance of Foreign Direct Investment (FDI) to textiles and clothing sector of developing countries
- case 1 -
The companies in Asia　which the Japanese textile companies invested export about 50～60% of all their production to the other nations (including to Japan)．　
100 MILLION YEN FY ９

11. The importance of Foreign Direct Investment (FDI) to textiles and clothing sector of developing countries
- case 2 -
FDI by Japan and USA in the textiles and clothing sector has been downward trend since late of 1990’s.
An example - FDI by Japan and USA in the textiles and clothing sector in 1990’s.
To promote FDI in the textiles and clothing sector, the establishment of WTO investment rules is essential. １０