matthias knappe unc ee & dc competitiveness final
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- 1. Business for Development Trade in Textiles and Clothing Eastern Europe and Developing County Clothing Manufacturers and Competitiveness after 2005 Presentation by Mr. Matthias KNAPPE International Trade Centre UNCTAD/WTO Chapel Hill, North Carolina, 14 October 2004
- 2. ITC has 5 Organisational Goals
- Facilitate integration into the world trading system.
- Support national efforts to design & implement trade development strategies.
- Strengthen key trade support services.
- Improve export performance in priority sectors.
- Foster international competitiveness within the small and medium-sized enterprise (SME)
- 3. The importance of the product sector of T&C for
Developing Countries
- World trade in T&C 353 billion US$ (clothing 201 billion US$)
- Accounts For 7% of Global Merchandise Trade & 14% of Employment. Share of clothing in total merchandise trade: LA 10%, Africa 21%; Asia 9%
- Many DCs (extremely) dependent on clothing exports
- 4. Structure
- Selected
- regions
- trade in T&C
- 5. Dependence of the EU market (% of total T&C exports Source: EU
- 6. EU Imports: 1995 to 2003 Source: EU
- 7. Close linkages with EU due to OPT business Source: EC)
- 8. US Imports from SSA 2001 - 2003 Source: OTEXA
- 9. Who is using AGOA Preferences? Source: OTEXA
- 10. US Apparel Imports from Africa by Product Source: OTEXA
- 11. US Imports from CBI by Product in 2003 Source: OTEXA
- 12. US Imports from Andean Countries by Product in 2003 Source: OTEXA
- 13. Summary
- Since early 1990s exports to EU have been growing
- Almost 50% of exports is in knit or woven garments
- Highly constraint categories with high quota utilisation rates
- In DCs this product dependence is even higher
- High dependence on European and North American market
- 14. Structure
- Selected
- regions
- trade in T&C
- 15. 1. Challenge: Removal of the Quota System
- 1 January 2005: Integration of T&C into the normal WTO rules after 30 years of restrictions
- Artificial advantages will disappear and existing trade patterns will blow up
- Companies will gain market share based on competitiveness rather than quotas
- But: What after loss of quota-free benefits?
- 16. And with it prices will fall further More supply and quota rents disappear Source: Robin Anson, Director Textiles Intelligence; ITMF, Dresden October 2003; www.textilesintelligence.com and Textile Outlook International No. 110 March-April 2004
- 17. China: Unit Value Change in EU after product integration in 2001 Underwear Parkas Pile Farbrics Art. Fabrics Track Suits
- 18. Post-2004 Sourcing Pattern Source: US Department of Commerce: Report to the Congressional Textile Caucus on the administrations efforts on textile issues; Washington, September 2002
- 19. Quota Removal: Norway experience
- Quoatas were removed in 1998
- 20. 2. Challenge: Erosion of Preferential Duty-free Market
Access: DDA
- What remains: Duty advantage
- EU: 4% Yarns; 8% Fabrics; 12% Clothing
- US: 12-17% Cotton Apparel; 25-32% MMF Apparel
- DDA aims at reducing high tariffs, tariff peaks and tariff escalation
- 21. Erosion of Benefits: EU FTAs & RTAs
- If not multilateral then bilateral!
- EU envisaged a Euro-Mediterranean Zone
- Diagonal cumulation: Use fabrics from Egypt, trims from Turkey, assemble in Morocco and export duty-free to EU
- But: all countries need to have FTAs among them in place with identical rules of origin requirements
- 22. 3. Challenge: EU Enlargement
- Adaptation of EU lower tariffs (except Czech Rep., Slovakia, Hungary) i.e. more competition
- New EU members to apply quotas for 8 months
- DCs: This violates WTO rules: Article 2.4 ATC & DSP following EU-Turkey customs union
- EU quota increase pro rata for new EU 10: China & HGK quota increase extensive (old trade links)
- category 6 (trousers):+50%;
- category 4 (knit shirts): +41%
- 23. 4. Challenge: Erosion of OPT Benefits
- Quota system & trade liberalisation with EU has faclitated OPT
- Based on competitive EU fabrics & low labour costs in OPT countries
- OPT to survive where EU fabric is competitive (mainly wool) & where labour costs are low (CIS & Mediterranean)
- Highly dependent on outside skills & decision making
- 24. 5. Challenge: Use of Trade Remedies
- Safeguards (fairly traded imports).
- Antidumping & countervailing duties (unfairly traded imports).
- T&C products as targets for retaliation in dispute settlement cases.
- New EU members take over EU cases
- 25. 6. Challenge: New Requirements
- Social sourcing as a criteria for trade.
- Corporate Social Responsibility project of FTA: EU platform for monitoring social standards
- EU: New origin marking and social label initiatives
- ECO Labelling: Remain voluntary but can reduce market access
- 26. 7. Challenge: China as a WTO Member
- US clothing imports from China: 2002: +60%; 2003: +46%
- Japan: In 2001 85% of all clothing imports from China
- Australia: 69% (clothing) & 21% (textile) imports from China
- EU: 3 rd stage liberalisation: Imports from China increased by 46% (value) and 192% (volume)
- However, accession protocol introduces possibility of new quotas against China
- USA: 3 cases under transitional textile safeguards.
- 27. Summary: / Challenges
- 1. Loss of Quota-free benefits
- 2. Erosion of Duty-free benefits
- 3. EU Enlargement
- 4. Change of OPT Business
- 5. Use of trade remedies
- 6. Changing Buyers Requirements
- 7. China as a WTO member
- 28. Structure
- Selected
- regions
- trade in T&C
- 29. Manufacturing Manufacturing & Sourcing Manufacturing & Sourcing & Product Development Full Service Value-Added Buyers requirements Time 2005 1970 Changing Trade Competitiveness
- 30. A Sector Strategy (Action Plan )
- Develop overall country response
- Build critical country mass
- Build PPP based on strong sector associations
- Do a sector value chain analysis
- 31. Knowledge about competitors
- Quotas stifle competition
- Now competitors are everywhere
- 32. Information on Sourcing and Supply Chain Management Skills are key 75% of cost = sourcing Cost-structure of a woven shirt up to the FOB point
- 33. Any reduction in purchasing and logistics costs has a direct and large impact on export competitiveness A 10 % reduction in the supply cost of fabric and trimmings = A 60 % increase in its Gross profits without increasing sales Input supplies & Logistics $0.75 Labour $0.07 Overheads $0.08 Profit now $0.16 $0.69 ! Woven shirt: For every 1 Dollar earned approximately 60cts is spent on inputs Action Plan: Sourcing (SCM) to Increase Profit Fabrics: $0,59 Trimmings:$0.16 Labour $0.07 Overheads $0.08 Profit $0.10
- 34. Understand changing markets , adapt products &
penetrate new markets
- Numerous competitors and complex trade structure;
- Opportunities in higher-end and niche markets with value-added products;
- Exploit market potential in other developing countries, especially in a regional context .
- 35. Forming Partnerships with Buyers/Retailers Today Producer Producer Conflicts Conflicts Conflicts Retailer Retailer Competition Competition Future Response Demand Response Retailer Producer Retailer Producer Demand Competition Customer Customer
- 36. 4.- Understanding changing markets 1.- Sector Strategy Development 2.- Understanding its own and competitors performance 3.- Developing fabric sourcing skills to become full-packagesuppliers 5.- Applying e-applications in the T&C sector Implementing tailor- made market penetration approaches in line with buyer requirements New ITC T&C website Workshops Tailored Product & Market Development The SHAPE The FiT Sourcing Guide and database Business Guide in e-commerce for T&C ITC Tailored Consultation What can ITC do for you Sourcing Manufacturing Sales (+Marketing, and Services) Inbound Logistics Customs, Import Clearance Outbound Logistics Customs-GSP/Quota Export Clearance Sourcing Manufacturing Sales (+Marketing, and Services) Inbound Logistics Customs, Import Clearance Outbound Logistics Customs-GSP/Quota Export Clearance
- 37.
- THANK YOU !
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