1. ATDPThe Arab Textile Industries Forum 1 Challenges to the Arab World Systemic Challenges Quota free World Preference Erosion Constrained Policy Space A Changing Business Environment Global Slowdown Policy-induced Changes International Developments in the Textile and Clothing Industries: Challenges for Arab Countries Speakers: Dr. Luis Abugattas Dr. Ahmed Moustafa United Nations Development Programme Regional Bureau for Arab States Arab Trade and Development Programme (ATDP)

2. ATDPThe Arab Textile Industries Forum 2 Challenges to the Arab World Systemic Challenges: Quota free World Preference Erosion Constrained Policy Space A Changing Business Environment Global Slowdown Policy-induced Changes

3. ATDPThe Arab Textile Industries Forum 3 A Quota Free World The end of the Multi-Fibre Agreement (MFA) in 1995: WTO Agreement on Textiles and Clothing (ATC) All products integrated into GATT according to schedule, 10 year transition process Most quotas remained in place till the end of the ATC, further quotas against products of the most successful exporting countries (China)

4. ATDPThe Arab Textile Industries Forum 4 A Quota Free World Quotas introduced heavy distortions to Textile Trade: on January 1, 2009, all quotas have been abolished Consequences: Sharp decline in prices Adverse affects on many exporting countries, including in the Arab World Concentration of production in less countries China gain extended market shares

5. ATDPThe Arab Textile Industries Forum 5 A Quota Free World Table: EU imports from China in % 1999200320052007 Growth 1999- 2007 Textiles China9.9416.823.427.18174% Clothing China20.9325.4935.3238.3283%

6. ATDPThe Arab Textile Industries Forum 6 A Quota Free World Table: US imports from China in % 1995200020052007 Textiles China13.7814.0335.4442.59 Clothing China10.57.8622.0430.77

7. ATDPThe Arab Textile Industries Forum 7 Preference Erosion No reduction in tariff protection: in the US up to 32% and up to 12% in the EU. Non-reciprocal preferential schemes and ever- growing number of bilateral Free Trade Agreements diminish the value of preferences. WTO negotiations will decrease MFN in the US and the EU

8. ATDPThe Arab Textile Industries Forum 8 Constrained Policy Space Up to 70% of Textile Exporting Firms benefit from Export Processing Zones (EPZs) or similar institutions Agreement on Subsidies and Countervailing Measures (ASCM) prohibits export subsidies, abolishment at the latest 2015 The need to revise current policies and consider open and hidden Export Subsidies

9. ATDPThe Arab Textile Industries Forum 9 A Changing Business Environment Trends: Concentration of the clothing retailing industry in the EU and the USA Long term arrangements between producers and buyers More sophisticated information technologies and logistics: a key competitive aspect Private Codes of Conduct

10. ATDPThe Arab Textile Industries Forum 10 Global Slowdown World Economy heads towards recession Uncertainty about future demand Table: Percentage Change of US Imports of textile and clothing 2008 vs. 20072007 vs. 2006 Q1Q2Q3Q4Q1Q2Q3Q4 Total Textiles & Clothing-5-6-4-73121 Total Apparels-5-3-2952 Total Non-apparels-5-8-6-11 22

11. ATDPThe Arab Textile Industries Forum 11 Global Slowdown Figure: Actual and projected GDP growth rates for the US

12. ATDPThe Arab Textile Industries Forum 12 Policy-induced changes  Trade Liberalization in Arab countries ends decades of market protection and, therefore, requires adequate flanking policies  Imports surged in recent years due to trade liberalization  WTO negotiation deepens trade liberalization

13. ATDPThe Arab Textile Industries Forum 13 Arab textile exports to the EU Table: Shares of leading Arab textile exporters in extra-EU imports of textiles

14. ATDPThe Arab Textile Industries Forum 14 Arab clothing exports to the EU Table: Shares of leading Arab clothing exporters in extra-EU imports of clothing

15. ATDPThe Arab Textile Industries Forum 15 Arab textile and clothing exports to the US Table: Arab exports to the US in % 1995200020052007 Textiles US1.391.421.241.32 Clothing US2.242.453.032.98

16. ATDPThe Arab Textile Industries Forum 16 Concluding remarks Dismantling of quote system, preference erosion, global slowdown and new dynamics of international trade pose great threats to textile and clothing industry in Arab countries New trading environment offers also interesting possibilities for further development Devised strategies and implemented policies are necessary to confront the systemic changes Appropriate flanking measures are inevitable

17. ATDPThe Arab Textile Industries Forum 17 Thank you for your attention!