Asian Textile and Apparel Trade: Moving forward with Regional Integration

8/22/2019 Asian Textile and Apparel Trade: Moving forward with Regional Integration

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Economics and REsEaRch dEpaRtmEnt

a texle arel

tre: mvg Frwr

w Regl iegr

William E. James

January 2008

RD WoRking PaPER SERiES no. 111


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ERD Wrin Paper N. 111

AsiAn TexTileAnd AppArel TrAde: MovingforwArdwiTh regionAl inTegrATion

williAM e. JAMes

JAnuAry 2008

William E. James is Principal Economist, Macroeconomics and Finance Research Division, Economics and Research

Department, Asian Development Bank. This paper was prepared or South Asia Departments Economists Conerence,

Bangladesh Resident Mission, Dhaka, 56 November 2007. The author acknowledges the comments o the participants

and thanks Juan Paolo Hernando or research assistance on Section VI o the paper. The views expressed are those

o the author and not necessarily o the Asian Development Bank. Any errors are the responsibility o the author.


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Asian Development Bank6 ADB Avenue, Mandaluyong City1550 Metro Manila, Philippines

www.adb.org/economics

2008 by Asian Development BankJanuary 2008

ISSN 1655-5252

The views expressed in this paper

are those o the author(s) and do notnecessarily reect the views or policies

o the Asian Development Bank.


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FoREWoRD

The ERD Working Paper Series is a orum or ongoing and recently completedresearch and policy studies undertaken in the Asian Development Bank or onits behal. The Series is a quick-disseminating, inormal publication meant tostimulate discussion and elicit eedback. Papers published under this Series

could subsequently be revised or publication as articles in proessional journalsor chapters in books.


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CoNtENts

Abstract vii

I. IntroductionI. Introduction 1

II. Revealed Comparative Advantage and Investment TrendsII. Revealed Comparative Advantage and Investment Trends 2

III. Barriers to Asian Regional Trade in Textiles and ClothingIII. Barriers to Asian Regional Trade in Textiles and Clothing 4

I. Competitiveness o ASEAN and SAARC in the S Market A Case StudyI. Competitiveness o ASEAN and SAARC in the S Market A Case Study 9

. Perormance in Restricted Items rom the PRC 1. Perormance in Restricted Items rom the PRC 12

I. Saeguard Restrictions and Price Dynamics o S Clothing Imports 2I. Saeguard Restrictions and Price Dynamics o S Clothing Imports 26

II. An Asian Textile CommunityMoving Forward with Regional Integration 29

Reerences Reerences 0


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AbstRACt

Fears that the end o quotas would lead to contraction in exports ogarments rom several low-income Asian suppliers such as Bangladesh, Cambodia,and Indonesia chiey as a result o competition rom the Peoples Republic oChina (PRC) have proven to be unounded. On the other hand, competitive Asian

suppliers o apparel have had resilient results in the largest import market orclothing, the nited States (S). Suppliers rom both the Association o SoutheastAsian Nations and South Asia have steadily improved their market shares in the

S market. The imposition o saeguard quotas on the PRCs shipments in 2006has provided competitive Asian suppliers opportunity to increase their shipmentsto the S. While the relaxation o saeguard restrictions in 2007 has enabledthe PRC to claw back market share, this was not at the expense o competitive

suppliers in the Association o Southeast Asian Nations and South Asia. Ratherit is uncompetitive ormer large quota holders and preerential suppliers thathave seen their shares o the S market retreat. Price dynamics o clothingshipments in restricted items, however, indicate that competition will become

more severe once the saeguards end in 2009. Hence, Asian suppliers will have toimprove efciency and reduce costs. Eliminating high tari and nontari barriersto intraregional trade in intermediate textile products, coupled with eorts toacilitate outward processing arrangements, will help integrate the Asian industry

and enhance competitiveness o Asian clothing suppliers.


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I. INtRoDuCtIoN

The South and Southeast Asian regions along with the Peoples Republic o China (PRC) have

well-developed and competitive textile and apparel industries, and have been major benefciarieso reer world trade in textiles since the Agreement on Textiles and Clothing (ATC) replaced theMulti-Fibre Arrangement in 1994. With the ull implementation o the ATC as o 1 December 2004,

trade or the contracting members o the World Trade Organization (WTO) has been quota-ree, withthe single exception o the PRC.1

The imposition o saeguard quotas on shipments o textile and clothing products rom the

PRC in late 2005 by the nited States (S) and European nion (E) provided other competitive

Asian suppliers with an opportunity to maintain growth and increase market share in these majormarkets. However, to do so, Asian suppliers had to contend with other competitors, particularlythose with preerential access to the S and E markets. In the E market, Asian suppliers could

avail o generalized system o preerence (GSP) duty-ree access up to certain limits. However,preerences under GSP are not available in the S market.

This paper evaluates the competitive position o the members o the Association o Southeast

Asian Nations (ASEAN), the members o the South Asian Association or Regional Cooperation (SAARC),and the PRC in terms o growth in volume and value o apparel and textile shipments, market shares,and unit prices or the period 20042007 in the S market. The results indicate that although the

PRC is a strong competitor in world markets, this does not preclude other developing nations romsucceeding. Competitive Asian suppliers such as Bangladesh, Cambodia, Indonesia, and iet Nam

have demonstrated increasing market shares, and along with other Asian suppliers are fnding nichemarkets where they do not necessarily have to compete head-to-head with suppliers rom the PRC.

Moreover, suppliers o textile abric and accessories rom the PRC play a complementary role byproviding Asian suppliers with quality low-cost inputs that allow the latter to compete successully inthird country markets. India, Indonesia, Malaysia, Pakistan, and Thailand have signifcant capacitiesin textiles as well. Development o outward processing arrangements within the region, however,

has been hampered by signifcant tari and nontari barriers.

The complementary relationships within Asia could be enhanced i Asian suppliers did notace barriers to trade within the region. An evaluation o internal nontari measures (NTMs) in

ASEAN and SAARC member countries show that these barriers are restricting development o tradein intermediate textile products and related inputs. Eorts to create a ree regional market intextiles (e.g., by reducing taris to zero, and removing border measures and behind-the-border

measures that restrict ree intraregional trade in textile intermediate products and related inputssuch as sewing machinery, dyes, needles, and textile abrics and yarns) could signifcantly boostAsias competitiveness in advance o the removal o saeguards on the PRC in the coming years. Thiscould also help Asian suppliers remain competitive even i major markets increase discriminatory

preerences with non-Asian suppliers.

1 iet Nam was under S quotas negotiated in 200 until it became a member o the WTO in late 2006.iet Nam was under S quotas negotiated in 200 until it became a member o the WTO in late 2006.


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asian TexTileand apparel Trade: MovingforwardwiTh regional inTegraTion

williaM e. JaMes

The paper is organized as ollows. Section II provides a summary assessment o the competitiveness

o the textile and apparel industries in the region. Section III considers the treatment o tradein textiles and apparel in the region, including within preerential trade agreements in the twosubregions o ASEAN and SAARC, and tari and nontari measures that act to restrict intraregional

trade. Section I provides a case study o the competitive position o the countries o South andSoutheast Asia in the worlds largest market or imports o textiles and clothing, the S. Section provides statistical analysis o price dynamics o the imposition o saeguard restrictions on importso key clothing categories rom the PRC and their implications or competitors. Section I provides

a perspective on how the Asian region might promote regional integration o textiles and apparelas a strategy to ensure long-term competitiveness in global markets.

II. REvEAlED ComPARAtIvE ADvANtAgE AND INvEstmENt tRENDs

The subregions o Asia considered in this study have attracted massive investments in textiles inanticipation o reer global trade in textiles and apparel. A global survey o competitiveness (SITC

2004) revealed that Asian textile mills accounted or 60% o global fber consumption in 200.

Estimates o global spinning and weaving capacities showed that Asian textile producers had 66%and 68%, respectively, o global machinery in 2000 (SITC 2004). Since 2000, shipments o textile

machinery have been dominated by Asia, particularly by the PRC (James 2007a). For example, theshare o world cotton spinning capacity located within 11 major Asian textile suppliers rose rom64.7% in 2000 to 74.1% in 2005, with the PRC accounting or hal o all Asian cotton spinningcapacity. There is evidence as well that Asian producers have rapidly modernized textile weaving

production, as the share o just nine major producers in Asia in world capacity in shuttleless loomsnearly doubled rom 26% in 2000 to 49.2% in 2005 (James 2007a), with the PRC accounting orthe bulk o the increase. South and Southeast Asian textile capacities are concentrated in the largercountries (India and Pakistan in South Asia; Indonesia, Malaysia, and Thailand in Southeast Asia).

However, new capacities are on the rise in knitting as well with over 62% o world shipments incircular knitting machinery (19962005) going to Asian developing countries, with the PRC accountingor about two thirds o the Asian total (James 2007a). There is evidence that textile production is

migrating rom the East Asian newly industrialized economies (Hong Kong, China; Republic o Korea;and Taipei,China) to the PRC and South and Southeast Asia. For example, iet Nam is attractingoreign investments in textile intermediate production rom Taipei,China.2

Although the smaller countries in South and Southeast Asia are specialized in production oready-made garments, they too can beneft rom the enlarged and modernized capacities in textileintermediate production in larger neighboring countries. Proximity o supply o abrics and accessoriesis an advantage or clothing exporters. This is particularly signifcant since some countries are

overwhelmingly dependent on exports o garments. For example, Bangladesh (8%), Cambodia (85%),Sri Lanka (55%), Nepal (51%), and Lao PDR (42%) are heavily reliant upon exports o apparel intheir total merchandise exports (SITC 2004). Textiles and apparel together also accounted or

approximately 70% o merchandise exports o Pakistan. Thus, it is not difcult to understand theconcerns in these countries over sustaining competitiveness in these industries.

2 The Formosa Chemical and Fiber Corporation, an afliate o Formosa Plastics, initially invested in a textile spinning

plant with 200,000 spindles in an industrial park outside o Ho Chi Minh City in 2001, and has announced plans toexpand capacity in polyester yarn and abric production. See Fibre2ashion (downloaded 7 November 2007).
http://www.fibre2fashion.com/http://www.fibre2fashion.com/


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secTion ii

revealed coMparaTive advanTageand invesTMenTTrends

erd workingpaper seriesno. 111

Balassas index o revealed comparative advantage (Table 1) is an indicator o export

specialization. In the case o countries o SAARC, ASEAN, and PRC, it usually has a value o greaterthan unity (except or Malaysia and Singapore) or clothing and textiles (exceptions are Malaysia,Philippines, and Singapore). The revealed comparative advantage (RCA) index or both clothing and

textiles is above unity in all o the SAARC countries, Indonesia, Thailand, and iet Nam, as well asin the PRC. The ASEAN and SAARC as groupings also appear to have a comparative advantage inclothing, with SAARC also having a comparative advantage in textiles. The index values thus afrmthat Asia has a strong competitive position in these sectors on a global scale. The SAARC region

exhibits strong complementarities in textiles and clothing i one considers that Pakistan has a argreater RCA in textiles than clothing while the opposite is the case or Sri Lanka and Bangladesh.Indonesia, PRC, and Thailand likewise complement more specialized clothing exporters with theirtextile comparative advantage.

TAble 1AsiAn reveAled CoMpArATive AdvAnTAge indiCes: CloThingAnd TexTiles, 2005

CounTry/supplierCloThing rCA

indexTexTile rCA index

SAARC 6.41 6.27

Bangladesh 27.1 1.0

India .21 .90

Nepal 12.56 8.11

Pakistan 8.4 22.27

Sri Lanka 16.67 1.05

ASEAN 1.47 0.82

Indonesia 2.19 2.00

Malaysia 0.65 0.48Philippines 2.04 0.2

Singapore 0.07 0.09

Thailand 1.7 1.26

iet Nam 5.6 1.05

PRC .60 2.69

na means not available.Note In the case o Singapore, the RCA measure is or domestic exports and excludes re-exports.

Cambodia is included in the ASEAN calculation o clothing RCA but not textiles.SourceInternational Trade Statistics 2006(World Trade Organization 2007).

The ability o Asia to take advantage o the potential gains rom intraregional trade in textile-

related products, however, is limited by the presence o border and behind the border restrictionson trade. Regional preerential trade arrangements do not seem to be eective in addressing these

barriers, particularly NTMs.

Balassa (1965) is the pioneering work on revealed comparative advantage. The RCA indices calculated in Table 1 arehighly aggregated and are intended to be illustrative rather than comprehensive.


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III. bARRIERs to AsIAN REgIoNAl tRADE IN tExtIlEs AND ClothINg

The ASEAN Secretariat commissioned a series o studies aimed at identiying and quantiyingthe importance o NTMs in priority sectors (textiles and clothing, electronics and logistics) undera grant rom the Australian Government in 2006. The study o the textile and clothing sectors

(James, Minor, and Dourng 2007) is available in summary orm rom the homepage o the RegionalEconomic Policy Support Facility o ASEAN. The textiles and clothing NTM study used three measureso NTMs in a survey o producers in seven major supplier countries (Cambodia, Indonesia, Lao PDR,

Malaysia, Philippines, Thailand, and iet Nam). These include the occurrence o NTMs (the number otimes respondents cited a particular NTM); consistencyo NTMs (a measure o how oten a particularNTM was encountered by respondents), and restrictiveness o NTMs (a measure o the impact oa particular NTM on trade volume, prices, and costs). The results o the study are presented in

summary orm in Tables 24.

TAble 2rAnkingof oCCurrenCeof nonTAriff MeAsuresin TexTileAnd AppArel seCTorsof AseAn suppliers

MeAsure

nuMberofrespondenTs CiTing

MeAsuresperCenTof

respondenTs

Customs Administration 44 75.86

Technical Barriers to Trade 20 4.48

Taxes and Tax Treatment 19 2.76

Investment Restrictions 16 27.59

Restrictions on OPA 11 18.97

Political Economy and Institutions 11 18.97

Labor Regulations 8 1.79

Trade Remedies 5 8.62

Quantity Controls 5 8.62

Subsidy Problems 5 8.62

Foreign Exchange Regulations 1 1.72

OPA means outward processing arrangements.Source James, Minor, and Dourng (2007) survey results.


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secTion iii

BarriersTo asian regional Tradein TexTilesand cloThing


TAble 3ConsisTenCyof nonTAriff MeAsures AffeCTing inTrA-AseAn TrAdein TexTilesAnd AppArel

mEAsuRE WEIghtED AvERAgE

Restrictions on OPA .58

Taxes and Tax Treatment .5

Investment Restrictions .08

Customs Administration 2.56

Subsidy Problems 2.50

Political Economy and Institutions 2.16

Trade Remedies 1.98

Technical Barriers to Trade 1.9

Labor Regulations na

Quantity Controls na

Foreign Exchange Regulations na

na means no index values are available.OPA means outward processing arrangements.Note Index is calculated based on rating o consistency rom 1 to 51 is rare2 is sporadic is 50% o the time4 is more than 50% o the time5 is alwaysSource James, Minor, and Dourng (2007) survey results.

TAble 4resTriCTivenessof nonTAriff MeAsures AffeCTing inTrA-AseAn TrAdein TexTilesAnd AppArel

MeAsure weighTed AverAge

Restrictions on OPA 4.08

Investment Restrictions .2

Subsidy Problems 2.90

Taxes and Tax Treatment 2.46

Customs Administration 2.16

Political Economy and Institutions 2.16

Trade Remedies 1.98

Technical Barriers to Trade 1.46

Labor Regulations naQuantity Controls na

Foreign Exchange Regulations na

OPA means outward processing arrangements.Note Index is calculated based on rating o restrictiveness rom 1 to 51 is insignifcant (manageable or little impact on prices/costs or trade volume)2 is moderate (some cost incurred, modest impact on trade volume/prices) is signifcant (signifcant cost incurred, costs are integral to pricing and sales decisions)4 is critical (costs are high and oten decisive; actor is not less than any other in pricing)5 is prohibitive (cost o the nontari measure makes trade impossible)Source James, Minor, and Dourng (2007) survey results.


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The ranking o NTMs by number o respondents citing them (occurrences) indicates that customs

administration is where NTMs are most commonly experienced (cited by over 75% o respondents)ollowed by technical barriers such as standards and testing (cited by over 4% o respondents),taxes and tax treatment (over 2%), investment restrictions (28%), restrictions on outward processing

arrangements (19%), and political economy and institutions (19%). Within the NTM category ocustoms administration, the ollowing specifc NTMs occurred (ranked by number o respondentsciting them) inspections (26); documentation (2); import licensing (14); ees/surcharges (1);valuation (12); customs clearance (12); Electronic Data Interchange (11); port handling (10);

product classifcation (8); and rules o origin (5). The other specifc NTMs that had high occurrenceswere in Technical Barriers testing requirements (15) and marking and labeling (7); in Tax and TaxTreatment income tax (12) and AT rebates (11); in Investment Restrictions national treatment (6);in Restrictions on OPA border tax treatment (8)4; in Political Economy and Institutions intellectual

property compliance (8). Labor regulations, trade remedies, quantity controls, subsidy problems andoreign exchange regulations were o relatively minor occurrence in the survey.

The consistency o NTMs was rated on a scale o 15 as indicated (Table 2), ranging rom

rarely encountered (1) to always encountered (5). Restrictions on outward processing arrangements(OPA) (.58); taxes and tax treatment (.5), and investment restrictions (.08) took place with aconsistency o over hal the time. Customs administration NTMs and subsidy problems along with

political economy and institutions had relatively high consistency among respondents while traderemedies and technical barriers were airly low in consistency.

The restrictiveness o NTMs was also measured on a scale ranging rom 1 to 5 (Table 4),

rising rom insignifcant (1) to prohibitive (5), with the latter implying that the measure madeit impossible to conduct legitimate trade in textiles within the region. The restrictiveness o OPAwas above the critical level (4.08) and was signifcant as well in investment (.2). Moderate tosignifcant restrictiveness applies to subsidy problems (2.90) and tax and tax treatment (2.46),

customs administration (2.16), and political economy and institutions (2.16). Restrictiveness otrade remedies (1.98) and technical barriers (1.46) were o little signifcance.

The consistency and restrictiveness with which NTMs on OPA take place is alarming in that

outsourcing is seen as the wave o the uture by investors and industry observers. The surveyrespondents cited the repeated application o AT and import duties on intermediate inputs andsemiprocessed garments at each border crossing and o documentation requirements. The obstacles

to outsourcing may be compounded by investment restrictions and customs administration problems.These restrictions were cited as being prohibitive in developing intraregional trade in textilesand garments in some cases and critical in others. However, there was also a positive example ocustoms cooperation that made outsourcing arrangements possible in the case o Thailand and Lao

PDR. Catalysts to the reorms include success in improving customs procedures in Thailand and LaoPDR, which were implemented in 2005 in anticipation o the reer world trade and improved accessor Lao producers in the E and S markets by virtue o E reorms o the Generalized System o

Preerences (GSP). Another catalyst was a bilateral treaty on trade normalization between Lao PDRand the S. The outsourcing rom Thailand to Lao PDR actories has been quite successul, andwith improved access to the S market, Lao garment producers are expected to enjoy a rise in

4 The tax and tax treatment category covers the application o domestic taxes on the activities o producers that engage

in trade such as calculation o income tax liabilities. In contrast the tax treatment in outward processing arrangements

specifcally reers to customs taris and other taxes applied at the entry point o an import, or exit point o anexport.


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secTion iii

BarriersTo asian regional Tradein TexTilesand cloThing


employment rom 0,000 to 75,000 in the next fve years, and an increase in export value rom

$10 million to $500 million (James, Minor, and Dourng 2007).

Most avored nation (MFN) tari rates or textiles and apparel in all ASEAN and SAARC member

states as well as the PRC remain substantial (except in the cases o Brunei and Singapore), with

average taris in double-digits in most countries with available data (Table 5). The average tarisor textiles tend to be lower than or garments, and within textiles also escalate as processingincreases. The high taris limit the extent o regional integration. MFN taris or textile products are

particularly a problem or SAARC as member states have typically excluded hundreds o tari linesrom liberalization under the South Asia Free Trade Agreement (SAFTA). The exclusions range rom494 tari lines in Nepal to 291 in Pakistan (Table 6) with only Sri Lanka having frmly committedto opening the sectors to intra-SAARC trade.

TAble 5noMinAl TAriff rATesin AseAn And sAArC MeMber CounTriesAnd prC in TexTilesAnd AppArel

AverAge Mfn TAriff (%)

supplierTexTiles

And AppArels TexTiles AppArel

AsEANBrunei 0.8 0.9 0.0

Cambodia na 9.7 28.5

Indonesia 10. 9.2 14.1

Laos na 8.9 10.0

Malaysia 12.0 10.5 16.0

Myanmar na 8.4 17.2

Philippines 11. 9. 14.9

Singapore 0.0 0.0 0.0

Thailanda 21.7 8.1 24.5

iet Nam 7. 0.4 49.

sAARCAghanistan na 4.4 10.0

Bangladesh 21. 20.4 24.

Bhutan na 25.0 0.0

Indiab 22.5 20.2 22.4

Maldives na 19.5 25.0

Nepal na 12.8 24.7

Pakistan na 16.4 24.8

Sri Lanka 5.8 .9 14.8

PRC 11.5 9.7 16.1a

Thailand uses specifc (non-ad valorem) taris or 4 HS tari lines in textiles.b India uses specifc (non-ad valorem) taris or 1.4% o HS tari lines in textiles. The estimatedaverage tari or textiles and apparel is adjusted or these duties, resulting in a higheraverage than or ad valorem taris alone.

Sources Trade Policy Reviews (World Trade Organization, various years) Bangladesh (2006), Brunei(2004), PRC (2006), India (2007), Indonesia (2007), Malaysia (2006), Philippines (2005),Singapore (2004), Sri Lanka (2004), and Thailand (200).Estimates or taris or textiles and apparel separately are rom World Tari Profles 2006(World Trade Organization 2007).WTO Accession documents (World Trade Organization 200a, 200b, 2006) were used or Cambodia(200), iet Nam (2006), and Nepal (200); see World Trade Organization (2008).


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williaM e. JaMes

TAble 6sAArC MeMber CounTries: suMMAryof exClusion lisTsin TexTilesAnd AppArelfor sAfTA

TAriff exClusions

TexTiles AppArel ToTAlBangladesh 261 128 89

India 111 189 00

Nepal 215 279 494

Pakistan 127 164 291

Sri Lanka 20 0 20

Source South Asian Association or Regional Cooperation (available http//www.saarc-sec.org/).

The ASEAN member states have not excluded textiles and apparel rom liberalization underthe ASEAN Free Trade Agreement (AFTA) although preerential taris have not been reduced to zerobut are typically 510% (except or Brunei and Singapore). With common eective preerential

taris (CEPT) o 510% and AT duties applied to imports o raw materials and intermediate textileproducts, AFTA is not as conducive to intraregional trade and development o OPAs as it should be.The prevalence o NTMs at the border and behind the border helps explain why trade in apparel

is very limited within the region. Trade in intermediate inputs is more developed largely as a resulto export processing zones, bonded warehouses, and special industrial zones where exporters areexempted rom import duties on imported inputs. Data on the volume and value o intraregionaltrade under AFTA preerences are unavailable on a consistent basis over time and across countries.

Hence, it is difcult to evaluate the eectiveness o AFTA preerences.

Intraregional trade in textiles and clothing is also quite limited within the SAARC region. As isthe case with ASEAN, SAARC does not provide consistent and timely data on trade ows under SAFTA

preerences. Some idea o the volume o trade within SAARC can be gleaned rom trade statistics

o India, the most important trade partner o the other SAARC countries. Indias trade statisticsindicate that other SAARC countries account or less than 4% o Indias exports o textiles andclothing (Table 7) although such intraregional trade is growing roughly in line with total exports

to the world in recent years. Indias textile exports are most signifcant in the cases o Bangladesh(which imports almost 90% o abrics) and in Sri Lanka. Although India and Sri Lanka have abilateral ree trade agreement, Indias imports o apparel rom Sri Lanka are negligible at less than

$10 million in the most recent fscal year (Kelagama and Mukherjee 2007). Among the reasons orthe low level o trade within SAARC in textiles (and apparel) are extensive nontari measures thatapply at the border and behind the border (Tewari 2007).


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secTion iv

coMpeTiTivenessof aseanand saarcinThe us MarkeT: a case sTudy


TAble 7indiA's TrAdein TexTilesAnd AppArelfroM sAArC MeMber CounTries (Million us$)

CounTry 0000 0000 0000 0000

banade

Imports 4.79 29.67 12.14 51.79

Exports 192.47 269.52 280.42 8.89

ban

Imports 0.28 2.97 8.00 8.1

Exports 0.25 0.12 0.05 0.2

madie

Imports 0.01 0.00 0.00 0.00

Exports 2.85 4.11 2.26 2.5

Nepa

Imports 40.15 76.5 82.41 72.87

Exports 20.16 54.7 0.52 29.25

Paian

Imports .16 7.66 18.9 5.78

Exports 6.42 5.5 18.89 78.5

sri lana

Imports 1.76 .9 5.67 9.55

Exports 140.08 182.0 170.18 219.68

sAARC

Imports 80.15 120.58 127.15 178.12

Exports 62.2 56.68 502.2 714.02

Wrd

Imports 1645.47 2021.96 229.40 2678.94

Exports 11888.14 1515.69 1448.19 17884.89

sAARC sare (percen)

Imports 4.87 5.96 5.68 6.65

Exports .05 4.17 .50 .99

Source Monthly Statistics o the Foreign Trade o India, Ofcial Indian Textile Statistics 2005-2006 (Directorate General o CommercialIntelligence and Statistics 2006).

Iv. ComPEtItIvENEss oF AsEAN AND sAARC IN thE us mARkEt: A CAsE stuDy

Both ASEAN and SAARC member countries have been able to compete in the S market sincequotas were ofcially ended or WTO members in 2005. Although the growth in the volume o

shipments rom ASEAN was lower than the global growth in the S overall or textiles and clothing(Table 8a) in 2005, or clothing the value growth exceeded the global average (Table 8b). Thisimplies that ASEAN suppliers were able to move into higher-value items ater quotas were eliminated.SAARC member states also competed eectively in 2005 with strong volume growth (Table 8a) buteven better value growth (Table 8b), implying a similar move into higher-value items. The ASEAN

members were able to broadly maintain their share o the S market in 2005 while SAARC members


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10 January2008


williaM e. JaMes

TAble8A

CloThing

And

TexTileshipMenTsTo

TheusMArkeTby

MAJorsu

pplier/supplier

group

(voluMe

in

Million

squAreMeTer

equivAlen

T)

2004

2005

perCenT

ChAnge

2006

per

CenT

ChA

nge

yTd2006

yTd2007

perCenT

ChAnge

ASEAN

Cloth

ing

429.

54

69.6

88

6.1

4228.2

27

16

.17

2009.1

05

2107.2

2

4.8

8

Textiles

1667.2

0

147.4

8

-11.6

2

1495.9

16

1

.5

790.6

61

689.4

02

-12.8

1

Total

5096.5

57

511.1

26

0.

5724.1

4

11

.95

2799.7

66

2796.6

4

-0.1

1

SAARC

Cloth

ing

2520.1

72

2965.8

22

17.6

8

286.0

59

10

.80

164.1

4

1728.2

47

5.7

6

Textiles

400.6

02

4512.

6

12.7

1

4944.

9

.57

2599.4

56

266.5

19

-8.9

6

Total

652.7

74

7478.1

58

14.6

820.

92

10

.06

42.5

99

4094.7

66

-.2

8

PRC

Cloth

ing

2972.5

2

588.4

1

97.9

6506.0

7

10

.58

26.9

56

86.0

17

4.2

4

Textiles

8689.7

69

10879.6

70

25.2

0

12104.8

60

11

.26

5772.8

04

688.8

67

10.6

7

Total

11622.2

92

1676.1

01

44.2

18610.8

97

11

.02

816.7

60

9774.8

84

20.1

PreerentialSupplie

rs

Cloth

ing

7469.6

54

71.5

85

-4.5

0

6505.7

96

-8

.80

182.0

76

2999.8

87

-5.7

Textiles

na

597.6

25

na

5010.5

15

-15

.61

267.7

54

204.1

70

-1.8

2

Total

na

1071.2

10

na

11516.

11

-11

.90

5855.8

0

504.0

57

-9.4

2

World

Cloth

ing

19951.0

00

22009.8

10

10.

2

2258.9

70

2

.40

10204.0

00

10915.0

60

6.9

7

Textiles

26985.1

50

28829.0

90

6.8

29607.2

10

2

.70

14921.4

80

14784.8

90

-0.9

2

Total

4696.1

50

5088.9

00

8.

2

52146.1

80

2

.57

25125.4

80

25699.9

50

2.2

9

nameansnotavailable.

ASEAN

includesBrunei,C

ambodia,

Indonesia,

Lao

PDR,

Malaysia,

Philip

pines,

Thailand

and

ietnam.

SAARCincludesBanglade

sh,

India,

Nepal,Pakistan

and

SriLanka.

Spreerentialsuppliersi

ncludeFTA

partnersand

countriesthatarebe

nefciariesounilateralpreerenceprograms,

including

FTA

partnersAustralia,

Bahrain,

Chile,

Egpyt,

Israel,Jordan,M

orocco,and

Singapore

AGOAAricanGr

owth

and

OpportunityAct(covering

7

sub-Saharan

Arican

countries)

ATPDEAAndean

TradePromotion

and

Drug

Eradication

Act(Bo

livia,

Columbia,

Ecuadorand

Peru)

CBTPACaribbean

Basin

TradePromotion

Act(allCaribbean

Basin

countriesexcluding

Cuba)

NAFTANorth

Am

erican

FreeTradeAgreement(Canadaand

Mex

ico)

NotePreerentialsupplier

sincludemembersoallpreerentialagreementsand

reetradeagreementswith

theS.

YT

D

isorJanuary

June2006

versusJanuaryJune2007.

Sourcenited

StatesOf

ceoTextilesand

Apparel(availablehttp//w

ww.o

texa.i

ta.doc.gov/).


21/42

secTion iv

coMpeTiTivenessof aseanand saarcinThe us MarkeT: a case sTudy

erd workingpaper seriesno. 111 11

TAble8b.

CloThing

And

TexTileshipMenTsTo

TheusMArkeTby

MAJorsu

pplier/supplier

group

2004

2005

perCenT

ChAnge

2006

per

CenT

ChA

nge

yTd2006

yTd2007

perCenT

ChAnge

ASEAN

Cloth

ing

109.6

28

11796.8

4

7.8

9

1684.2

99

16

.00

640.2

68

709.7

90

10.7

8

Textiles

990.5

21

80.6

24

-16.1

4

840.5

9

1

.20

442.7

12

407.4

27

-7.9

7

Total

11924.1

49

12627.4

58

5.9

0

14524.8

92

15

.0

6845.9

80

7501.2

17

9.5

7

SAARC

Cloth

ing

6979.6

9

818.1

6

19.1

8

9246.9

90

11

.17

461.8

46

4818.9

52

4.4

5

Textiles

2980.9

77

42.5

96

15.1

5

820.5

04

11

.0

195.8

16

1852.

6

-5.1

9

Total

9960.6

70

11750.7

2

17.9

7

1067.4

94

11

.21

6567.6

62

6671.

15

1.5

8

PRC

Cloth

ing

8927.8

64

15142.8

69

69.6

1

18157.4

87

19

.91

6612.6

6

965.1

98

45.9

8

Textiles

560.2

1

7262.

50

28.9

9

8549.1

86

17

.72

985.4

77

4525.0

07

1.5

4

Total

14558.0

77

22405.2

19

5.9

0

26706.6

7

19

.20

10598.1

40

14178.2

05

.7

8

PreerentialSupplie

rs

Cloth

ing

265.1

54

21850.6

69

-7.6

2

20600.7

44

-5

.72

9890.0

9

9227.7

0

-6.7

0

Textiles

na

408.7

29

na

144.

18

-7

.76

1622.1

8

1584.7

90

-2.

1

Total

na

25259.

98

na

2745.0

62

-6

.00

11512.2

22

10812.4

9

-6.0

8

World

Cloth

ing

64767.6

7

6871.2

51

6.0

9

71629.8

28

4

.24

2208.5

50

485.0

6

6.7

6

Textiles

18542.7

69

20492.2

45

10.5

1

21648.8

75

5

.64

1064.5

71

10911.6

7

2.5

2

Total

810.4

42

89205.4

96

7.0

8

9278.7

0

4

.57

42852.1

21

45296.7

7

5.7

0

nameansnotavailable.

ASEAN

includesBrunei,C

ambodia,

Indonesia,

Lao

PDR,

Malaysia,

Philip

pines,

Thailand

and

ietnam.

SAARCincludesBanglade

sh,

India,

Nepal,Pakistan

and

SriLanka.

Spreerentialsuppliersi

ncludeFTA

partnersand

countriesthatarebe

nefciariesounilateralpreerenceprograms,

including

FTA

partnersAustralia,

Bahrain,

Chile,

Egpyt,

Israel,Jordan,M

orocco,and

Singapore

AGOAAricanGr

owth

and

OpportunityAct(covering

7

sub-Saharan

Arican

countries)

ATPDEAAndean

TradePromotion

and

Drug

Eradication

Act(Bo

livia,

Columbia,

Ecuadorand

Peru)

CBTPACaribbean

Basin

TradePromotion

Act(allCaribbean

Basin

countriesexcluding

Cuba)

NAFTANorth

Am

erican

FreeTradeAgreement(Canadaand

Mex

ico)

NotePreerentialsupplier

sincludemembersoallpreerentialagreementsand

reetradeagreementswith

theS.

YT

D

isorJanuary

June2006

versusJanuaryJune2007.

Sourcenited

StatesOf

ceoTextilesand


ww.o

texa.i

ta.doc.gov/).


22/42

1 January2008


williaM e. JaMes

improved their shares despite the rapid growth in shipments rom the PRC. The main reason appears

to be that preerential suppliers were unable to compete once quotas were lited on nonpreerentialsuppliers. The surge in shipments to the S rom the PRC in 2005 is evident with the 98% growthin volume o clothing shipments in 2005. The S began to impose partial restrictions on shipments

in the latter hal o 2005 on a selective basis. Following extensive consultations, saeguard quotason a large number o product categories were ormalized in memorandum o understanding signedby the governments in November 2005 that entered into orce on 1 January 2006 until 1 January2009.

In 2006 the new saeguard restrictions on the PRC became eective, having the eect odrastically reducing growth in the volume o clothing shipments or all clothing items (rom 98%to under 11%), and or textiles as well (rom 25% to 11%). The deceleration in PRC shipments in

2006 created space or increased shipments rom ASEAN, which accelerated to 16% or clothing involume and value. SAARC also benefted, with shipments rising by 1011% in volume and value.However, the eect o the restrictions was slower growth in world shipments o textiles and clothing.Preerential suppliers ailed to capitalize on the restrictions on the PRC and had negative growth

in volume (about 12%) and value (about 6%) in 2006. In the frst hal o 2007, shipments romthe PRC accelerated over those o the same period in 2006, and ASEAN was able to continue toexpand shipments by about 10% in value, although volume o shipments was at or total and up

by about 5% or clothing. SAARC however experienced a deterioration o perormance in the frsthal o 2007 overall, although clothing shipments remained healthy with 46% growth. Preerentialsuppliers continued to struggle in the frst hal o 2007 with negative growth in volume and valueo shipments.

v. PERFoRmANCE IN REstRICtED ItEms FRom thE PRC

The categories o clothing and textiles that the PRC aces renewed quantitative limits upon inthe S market comprised over 51% o S global imports o textiles and apparel by volume (using

2005 data; compare Table 9a and Table 8a world totals), and over 60% by value (Table 9b andTable 8b). These restricted sectors accounted or almost 57% o clothing shipments rom the PRCto the S by volume in 2005, and or 51% o shipments by value. Hence, they are very signifcantrestrictions. A database covering the restricted items in clothing, textile intermediate products(yarns and abrics), and textile made-ups or every major supplier to the S market between 2004

and the present has been established using the online inormation available rom the Departmento Commerce, Ofce o Textiles and Apparel (OTEXA).5

Summary tables covering all major suppliers (including all individual major shippers rom ASEAN

and SAARC) are presented here on volume, value, unit values, and market shares in the restrictedclothing items through the frst hal o 2007 (Tables 1014). The ocus is on clothing, as theseitems are by ar the most important shipments o ASEAN and SAARC to the S. Clothing items

account or nearly 90% o global shipments to the S o the restricted items by value.The impact o restrictions on clothing shipments in 2006 by volume (Table 10) was quite strong,

with shipments rom the PRC actually declining, and those o ASEAN and SAARC advancing by 26 and

19%, respectively. The restrictions proved to have the impact o redistributing global trade volumein clothing rom the PRC to competitive Asian suppliers, but provided little help to uncompetitive5 The OTEXA data are updated monthly with a two-month lag. Data tables or each individual SAARC and ASEAN suppliers

are available upon request rom the author.


23/42

secTion v

perforManceinresTricTed iTeMsfroMTheprc


TAble

9A

world

shipMenTs

To

Theusin

CATegoriesresTriCTed

by

sAfeguArd

quoTAson

TheprC

(voluMein

Million

squAreMeTer

equivAlenT)

iTeM

2004

2005

2006

perCen

T

ChAng

e

yTd2006

yTd2007

perCenT

ChAnge

Coin

29

Babyga

rments

820.1

1

868.2

19

929.5

75

7.0

7

95.8

4

425.9

81

7.6

1

2

Hosiery,

cotton

474.6

14

512.5

25

529.2

17

.2

6

294.7

84

15.1

18

6.9

0

42

Hosiery,

wool

2.

4

1.9

61

1.7

14

-12.6

0

0.4

49

0.8

78

95.5

5

62

Hosiery,

mm

57.0

81

90.7

29

42.

50

-12.

8

156.0

16

170.7

90

9.4

7

8

mb

knit

shirts,cot.

91.9

9

1049.2

08

1128.6

02

7.5

7

57.4

7

571.6

08

6.

5

9

wg

knit

blouse,cot.

1001.

6

118.9

18

128.9

15

12.2

5

681.8

49

750.8

42

10.1

2

40

Non-

kni

tshirts,cot.

607.0

11

715.7

40

661.1

75

-7.6

2

299.6

12

12.

11

4.2

4

640

Non-

kni

tshirts,mm

265.2

24.

27

214.7

80

-11.7

109.8

47

105.9

82

-.5

2

45

Sweater,cotton

178.

54

240.9

59

257.6

44

6.9

2

51.2

60

57.1

25

11.4

4

645

mb

sweater,mm

41.0

06

29.8

16

24.7

72

-16.9

2

5.9

09

5.5

4

-6.

5

646

wg

sweater,mm

250.6

11

299.0

72

208.4

7

-0.2

9

6.1

85

8.5

96

6.6

6

47

mb

trou

sers,cotton

949.4

01

1068.8

88

1128.8

69

5.6

1

559.

94

589.0

04

5.2

9

48

wg

slacks,cotton

1275.

78

142.2

52

1486.7

60

.8

1

757.6

28

90.5

48

19.2

6

49

Brassier

es,cotton

4.4

6

.9

27

.7

2

-0.5

7

16.5

8

20.2

51

22.4

5

649

Brassier

es,mm

166.9

44

164.1

6

16.

6

-0.5

0

77.5

10

82.7

70

6.7

9

52

nderwear,cotton

20.6

86

2116.0

4

2079.1

95

-1.7

4

975.

64

981.5

95

0.6

4

652

nderwear,mm

62.9

28

622.5

52

615.1

88

-1.1

8

290.7

45

294.2

57

1.2

1

59

Othercotton

apparel

596.5

5

62.0

78

667.

45

5.5

8

29.6

02

24.2

90

-1.6

1

659

Otherm

mapparel

1478.5

89

1754.5

8

1805.9

6

2.9

779.6

77

80.6

7

.0

8

44

mb

woo

lsuits

25.2

2

29.7

89

25.0

49

-15.9

1

12.4

69

12.8

07

2.7

1

447

mb

woo

ltrousers

19.9

5

22.8

24

20.4

47

-10.4

1

9.1

60

9.8

01

7.0

0

68

mb

knit

shirts,mm

62.8

06

699.6

29

652.9

41

-6.6

7

25.5

45

00.1

11

-7.8

1

69

wg

knit

blouse,mm

548.4

10

528.6

88

56.6

29

6.6

1

27.6

45

246.4

4

.7

0

647

mb

trou

sers,mm

48.1

58

507.

28

491.

85

-.1

4

248.5

6

269.5

2

8.4

4

continued

next

page.


24/42

1 January2008


williaM e. JaMes

iTeM

2004

2005

2006

perCen

T

ChAng

e

yTd2006

yTd2007

perCenT

ChAnge

648

wg

slacks,mm

4.2

82

40.7

09

414.0

85

2.5

7

181.5

75

191.0

24

5.2

0

847

mb

silk

trousers

294.7

88

25.7

4

242.6

55

-4.

7

148.8

20

129.2

6

-1.1

4

SubtotalClothing

1455.2

12

1

5805.6

16

16017.7

69

1.

4

7519.4

5

791.1

16

5.2

4

texieInerediae

200

Yarn

&

sewing

thread.

95.8

25

14.9

41

107.8

01

-20.1

1

52.

82

57.0

59

8.9

01

Combed

cotton

yarn

600.9

1

600.

99

602.6

7

0.

7

59.

19

191.4

15

-46.7

222

Knitab

ric

1657.0

1696.4

47

1622.

0

-4.

7

870.4

41

724.7

01

-16.7

4

229

Special

abric

2071.7

74

2158.8

28

1842.

18

-14.6

6

98.7

07

871.4

17

-11.4

1

619

Polyfla

mentabric

40.4

72

49.2

22

262.7

68

-24.7

6

124.7

72

109.

1

-12.

8

620

Othersynthetic

flament

284.0

29

520.0

16

615.1

27

18.2

9

1.5

60

02.4

89

-.5

622

Glassa

bric

8.

51

89.9

55

79.7

59

-11.

41.0

01

9.0

42

-4.7

8

SubtotalTextileInt

ermediate

Products

51.

97

5549.8

08

512.7

1

-7.5

2

2745.1

82

2295.4

54

-16.

8

texiemade-up

6

Piletow

els

190.8

54

259.

86

264.1

91

1.8

5

19.

20

145.2

57

4.2

6

666

Otheru

rnishingsmm

472.2

76

5096.4

41

5408.0

72

6.1

1

228.

78

2261.9

90

-0.9

4

SubtotalTextileMade-ups

4914.1

0

555.8

27

5672.2

6

5.9

1

2422.6

98

2407.2

47

-0.6

4

grandtoaReric

ed

24582.7

9

2

6711.2

51

26822.7

45

0.4

2

12687.

15

12615.8

17

-0.5

6

NoteYTD

isJanuary

June

2006

versusJanuary

June2007.

Sourcenited

StatesOf

ceoTextilesand

Apparel(available;http//w

ww.o

texa.i

ta.doc.gov/).

TAble9A.conTinued.


25/42

secTion v

perforMancein resTricTed iTeMsfroMThe prc


TAble9b

world

shipMenTsTo

Theusin

CATegories

resTriCTed

by

sAfeguArd

quoTAson

TheprC(vAluein

Million

us$

)

iTeM

2004

2005

2006

perCenT

ChAnge

yTd2006

yTd2007

perCenT

ChAnge

Coin

29

Babygarments

2021.8

1

2104.0

09

229.

0

9.0

0

1007.7

99

1111.9

49

10.

2

Hosiery,co

tton

669.6

80

687.1

1

776.0

54

12.9

4

75.1

71

86.6

97

.0

7

42

Hosiery,wo

ol

21.6

25

20.2

8

18.4

76

-8.7

1

4.7

1

5.6

97

20.8

8

62

Hosiery,mm

554.7

18

610.4

28

57.7

28

-6.0

1

250.1

02

27.7

8

-4.9

4

8

mb

knitshirts,cot.

5182.

66

5556.6

95

611.1

29

10.0

1

2795.2

29

025.1

19

8.2

2

9

wg

knitblo

use,cot.

6095.8

82

6825.6

5

7776.5

40

1.9

756.5

11

4272.7

18

1.7

4

40

Non-

knitsh

irts,cot.

266.0

2

2664.8

81

2420.4

5

-9.1

7

1092.8

02

1151.

46

5.

6

640

Non-

knitsh

irts,mm

68.7

60

617.1

42

572.4

4

-7.2

4

288.6

41

288.

0

-0.1

2

45

Sweater,co

tton

558.9

90

675.6

89

78.

41

9.2

7

159.9

21

170.9

28

6.8

8

645

mb

sweater,mm

78.6

08

58.

79

47.9

0

-17.9

0

10.

09

9.2

21

-10.5

5

646

wg

sweater

,mm

50.9

52

568.6

24

45.1

7

-2.4

7

80.6

48

75.

90

-6.5

2

47

mb

trousers,cotton

502.

70

5291.4

99

5541.9

76

4.7

2661.5

20

2809.5

72

5.5

6

48

wg

slacks,

cotton

62.2

27

6867.0

5

6879.8

18

0.1

9

44.7

89

799.6

9

10.6

2

49

Brassieres,

cotton

199.2

95

199.5

81

205.2

89

2.8

6

105.0

89

11.9

52

8.4

649

Brassieres,

mm

1564.

18

158.5

66

1810.4

45

14.

875.7

19

891.1

84

1.7

7

52

nderwear,

cotton

2557.5

99

2598.

99

2545.

95

-2.0

4

1172.8

90

1144.1

7

-2.4

5

652

nderwear,

mm

752.8

27

77.4

51

769.6

19

4.

6

59.4

4

68.2

60

2.4

5

59

Othercotto

n

apparel

99.2

72

102.2

71

1095.9

96

7.1

1

564.0

67

546.4

90

-.1

2

659

Othermm

apparel

2114.1

69

22.7

51

2426.0

80

4.0

0

1152.5

55

1192.5

2

.4

7

44

mb

woolsu

its

548.7

5

584.6

44

540.

60

-7.5

7

264.0

98

282.7

6

7.0

7

447

mb

wooltr

ousers

26.8

6

48.4

1

28.5

20

-5.7

1

147.4

8

162.7

57

10.

6

68

mb

knitshirts,mm

152.1

75

154.8

1

1548.0

56

0.2

7

712.6

92

751.7

88

5.4

9

69

wg

knitblo

use,mm

257.0

28

2268.1

55

298.6

80

5.7

5

948.4

2

1054.0

78

11.1

4

647

mb

trousers,mm

1805.7

07

182.0

1

1847.4

41

0.8

4

891.1

967.9

45

8.6

2

648

wg

slacks,m

m

172.4

26

1607.0

72

1727.5

6

7.5

0

717.5

97

729.7

18

1.6

9

847

mb

silktrousers

1179.8

00

10.7

85

1105.

20

6.9

2

691.

82

615.5

0

-10.9

7

contin

ued

next

page.


26/42

1 January2008


williaM e. JaMes

iTeM

2004

2005

2006

perCenT

ChAnge

yTd2006

yTd2007

perCenT

ChAnge

SubtotalClothing

45726.4

15

4816.

44

5256.1

01

9.1

4

24520.7

26

26165.4

51

6.7

1

texieInerediae

200

Yarn

andsewing

thread

172.1

05

208.0

26

156.0

47

-24.9

9

78.6

08

76.8

-2.2

6

01

Combed

cotton

yarn

24.5

8

206.5

19

215.4

57

4.

129.1

04

69.

28

-46.

0

222

Knitabric

742.8

69

746.1

66

79.7

76

-0.8

6

81.8

65

7.0

85

-11.7

229

Specialabric

878.6

82

972.8

4

888.1

95

-8.7

0

449.1

0

401.

77

-10.6

619

Polyflamentabric

241.7

41

246.7

61

205.2

29

-16.8

95.8

0

90.8

1

-5.2

1

620

Othersynth

etic

Filament

267.1

26

26.9

12

7.4

26

.2

2

165.9

84

194.7

18

17.

1

622

Glassabric

87.

65

90.9

17

100.8

02

10.8

7

50.

55

54.5

08

8.2

5

SubtotalTextileInt

?).

Products

26.4

71

2798.1

5

2642.9

2

-5.5

5

150.8

22

1224.6

62

-9.

4

texiemade-up

6

piletowels

871.6

6

1098.4

8

115.

92

5.0

0

622.8

28

655.8

08

5.

0

666

Otherurni

shingsmm

1975.1

60

2149.9

27

21.0

70

7.5

9

997.8

67

976.8

67

-2.1

0

SubtotalTextileMade-ups

2846.8

2

248.4

10

466.4

62

6.7

1

1620.6

95

162.6

75

0.7

4

grandtoaReric

ed:

51206.7

09

54182.8

89

58645.4

95

8.2

4

27492.2

4

29022.7

88

5.5

7

Note;YTD

isorJanuary

June2006

versusJanuary

June2007.

Sourcenited

StatesOf

ceoTextilesand


ww.o

texa.i

ta.doc.gov/).

TAble9b.conTinue

d.


27/42

secTion v



suppliers whether or not they enjoyed preerential access to the S market. The picture slightly

changes when scrutinized in value terms (Table 11). Growth rates are close to those in volumesor ASEAN (2%) and are almost identical or SAARC (19%). Bangladesh, Cambodia, and Indonesia,three countries that had anxiety about the postquota environment, were the best perormers in Asia

in 2006, and only Egypt (a preerence-receiving supplier) had higher growth in value. nit valuesheld their ground in SAARC in 2006 and declined only slightly in ASEAN as a whole by 2% (Table12). Despite the sharp rise in the PRC unit values (reecting a shit to higher value items withinquota categories), unit values o all Asian competitive suppliers with the exception o Bangladesh

and Pakistan remained well above the PRCs levels in 2006.6

nit values o Asian competitive suppliers initially ell sharply ater quotas were abolished on1 December 2004 (or aggregated clothing items the change was rom $4.0 per square meter to

$2.89), but recovered once restrictions were reimposed on the PRC (to $.11 in 2006 and $.26in the frst hal o 2007).7 nit values o preerential suppliers in contrast to competitive Asiansuppliers ell minimally in 2005 compared to 2004, but ater rising slightly in 2006, plunged to

below Asian levels on average in the frst hal o 2007 ($.07 per square meter). The largest groupo preerential suppliers, the Central American Free Trade Agreement-Dominican Republic (CAFTA-DR)had very low unit values at under $2.50 per square meter since the global quotas were abolished.This may reect production o low-quality but high-volume clothing within the restricted categories.

Despite their geographic advantage, this group o suppliers may still have difculty competinghead-to-head with the PRC and Bangladesh producers at the low end o the market.

The perormance measure o market share in volume (Table 1) and value (Table 14) is particularly

revealing in the PRC-restricted clothing items. ASEAN market share by volume in these items rosesteadily ater the restrictions were implemented rom 14% to 19%. Similarly, SAARC suppliers increasedvolume market share rom 12% to 16%. The PRCs volume share in these important categoriesplunged rom 21% in 2005 to 16% in the frst hal o 2006. However, the PRCs administration o

quotas improved greatly in 2007, and more than ully recovered its previous volume market share(Table 1). In value terms, ASEANs share increased rom 17% in 2005 to 22% in the frst halo 2007, reecting rising volume and unit values. In the case o SAARC, however, value share rose

less impressively rom 12% to 14%, reecting lower unit values than in ASEAN. The PRCs valueshare plunged rom 16% in 2005 to under 14% in the frst hal o 2006 but recovered to 21% inthe frst hal o 2007 (Table 14). The surge in value share indicates that American consumers werepaying higher prices or the volume-restricted items. ncompetitive nonpreerential suppliers such

as ormer large quota holders rom East Asia, E, and Turkey had pronounced deterioration in marketshares. Preerential suppliers did not are any better. Hence, most o the gain in competitive Asiansuppliers in the SAARC and ASEAN regions came at the expense o these suppliers rather than the

PRC. As a group, preerential suppliers had a 6 percentage point drop in volume share in the Smarket and an over 9 percentage point decline in value market share. The losses reect the ruleso origin that mandate use o yarn-orward intermediate products in clothing originating within the

region. Fabric costs are estimated to be as much as 0% higher than or Asian supplies in NorthAmerica. Hence, even with signifcant tari preerences (about 15%), clothing suppliers fnd itdifcult to compete in the S market (James 2007b).

6 There are concerns about the possible transshipment o PRC-restricted items in countries with large declines in unitvalues (e.g., Cambodia; Hong Kong, China; Malaysia; and Pakistan). The S has imposed quantitative restrictions on

two categories o shipments rom Hong Kong, China (8 and 9cotton knit shirts and blouses) that are underquotas or the PRC.

7 More rigorous analysis o unit values as proxies or price dynamics is being conducted. Also see Section I below ora brie summary o the analysis.


28/42

1 January2008


williaM e. JaMes

TAble10

usiMporTsof

CloThing

froM

MAJor

suppliersin


by

sAfeguA

rdsiMposed

on

TheprC(voluMe

in

sMe)

supplier

00

00

00

perCenT

ChAnge

ytD00

ytD00

perCenT

ChAnge

CopeiiveAian

suppier

PRC

1811.

9

41.7

58

19.6

69

-0.6

6

1187.1

18

1802.2

72

51.8

2

Indonesia

445.9

02

56.0

42

714.8

59

.

6

5.5

87

95.7

84

17.9

4

Bangladesh

707.4

24

815.0

75

998.4

48

22.5

0

494.8

2

562.9

4

1.7

6

Cambodia

202.5

15

291.8

77

461.

92

58.0

8

210.8

1

27.1

17

29.5

5

India

14.0

21

40.6

19

467.2

5

8.5

0

249.6

1

266.

7

6.7

0

Malaysia

15.0

95

145.

7

181.8

40

25.0

9

89.6

7

79.4

69

-11.

8

Pakistan

46.4

25

97.5

9

509.

4

28.1

0

249.7

76

269.6

98

7.9

8

Philippines

295.9

19

24.1

65

405.2

7

25.0

1

216.0

151.2

1

-0.0

0

SriLanka

212.6

4

270.5

51

08.1

5

1.8

9

145.2

91

165.7

47

14.0

8

Thailand

99.2

57

41.9

81

461.6

28

11.5

1

225.9

74

21.7

57

-5.4

1

ietNam

46.

77

471.4

52

566.1

78

20.0

9

01.0

92

65.9

2

21.5

Subtotal

5.9

08

748.4

86

89.9

55

P12.8

4

705.8

02

4546.2

69

22.6

8

landockedAiansuppier

Lao

PDR

0.0

00

0.0

00

1.7

44

*

0.0

00

.0

51

*

Mongolia

na

2.

10

25.

20

-21.6

12.

60

9.0

70

-26.6

2

Nepal

19.5

25

12.8

69

10.0

22

-22.1

2

5.7

11

.7

41

-4.4

9

AsIANPtA

ASEAN

2049.5

11

2250.6

21

2841.5

99

26.2

6

1401.2

25

1504.9

06

7.4

0

SAARC

1600.0

29

1926.7

07

229.1

74

19.0

2

1145.2

2

1268.4

66

10.7

6

contin

ued

next

page.


29/42

secTion v



supplier

00

00

00

perCenT

ChAnge

ytD00

ytD00

perCenT

ChAnge

AianForerlareQuoahoder

Korea,

Rep.o

504.8

58

11.0

4

272.4

52

-12.4

1

19.4

09

84.5

55

-9.

5

Taipei,China

446.6

11

21.0

80

09.1

10

-.7

151.7

8

120.1

08

-20.8

7

Hong

Kong,

China

507.5

96

500.7

07

484.6

07

-.2

2

227.8

47

125.1

68

-45.0

6

Macau,

China

282.5

7

20.1

21

29.0

24

.8

7

11.6

7

102.8

57

-21.8

8

Subtotal

1741.6

8

162.9

51

105.1

9

-4.2

4

650.7

12

42.6

88

-.5

1

majorNon-aianN

onprefereniasuppier

E

15

95.2

12

78.4

05

56.8

69

-27.4

7

28.1

84

24.

65

-1.5

5

Turkey

195.1

24

152.6

59

12.9

2

-18.8

2

68.4

70

51.8

72

-24.2

4

Subtotal

290.

6

21.0

64

180.7

92

-21.7

6

96.6

54

76.2

7

-21.1

2

majorPreferenia

suppier

Mexico

1654.8

50

1514.5

68

15.9

1

-11.8

0

681.9

92

557.9

1

-18.1

9

Canada

18.8

29

148.6

87

129.2

54

-1.0

7

70.9

60

50.5

04

-28.8

CAFTA-

DR

80.7

8

478.4

62

182.6

01

-8.5

1

15.5

77

1522.5

99

-0.7

2

Egypt

17.

19

18.9

12

177.

6

27.6

8

94.7

2

99.

42

4.8

8

Jordan

188.

90

222.8

0

251.6

90

12.9

5

125.5

10

108.5

08

-1.5

5

CBI*

210.6

00

245.7

5

285.9

47

16.

6

11.0

40

14.0

95

9.2

0

ANDEAN

211.0

92

211.5

69

19.6

70

-8.

46

92.8

26

82.2

92

-11.

5

AGOA

91.8

80

45.5

45

06.0

7

-11.

42

150.6

4

159.8

09

6.0

8

Others

186.4

62

15.

28

111.4

06

-17.

68

54.9

7

44.2

75

-19.4

6

Sub-

total

6545.1

60

6441.6

6

597.9

17

-7.

26

296.2

44

2768.

7

-5.7

2

WORLD

1455.2

12

15805.6

16

16017.7

69

1.

4

7519.4

5

791.1

16

5.2

4

Note;YTD

isorJanuary

June2006

versusJanuary

June2007.

SourceCompilationsbya

uthor.Seealso

Table1

ordefnitionsogrou

psopreerentialsuppliersand

originaldatasource.

TAble10.conTinued.


30/42

0 January2008


williaM e. JaMes

TAble11

usiMporTsofCloThing

froM

MAJor

suppliersin


by

sAfegu

Ardson

TheprC(vAluein

Millio

n

us$)

supplier

00

00

00

perCenT

ChAnge

ytD00

ytD00

perCenT

ChAnge

CopeiiveAian

suppier

PRC

4992.9

24

77

42.9

45

925.5

55

19.5

1

76.9

2

5570.1

24

64.9

5

Indonesia

1575.5

7

19

90.4

64

2720.4

26

6.6

7

1216.2

58

1526.2

25.4

9

Bangladesh

1418.1

41

17

61.1

0

240.2

79

2.8

9

1115.5

9

119.4

15

18.2

8

Cambodia

865.1

81

11

6.4

5

1654.6

57

42.2

2

71.

22

952.8

56

0.2

9

India

1279.9

51

17

21.

81

1954.1

97

1.5

2

108.5

72

117.5

61

9.5

Malaysia

56.0

54

5

.7

14

564.9

7

5.8

6

261.2

40

26.8

2

0.9

9

Pakistan

924.8

79

10

41.5

15

121.8

55

16.5

5

548.

91

615.9

17

12.

1

Philippines

1118.

56

12

84.2

97

1514.6

84

17.9

4

754.7

4

651.1

08

-1.7

SriLanka

916.0

27

11

1.

46

1250.1

10.5

0

614.0

21

649.9

86

5.8

6

Thailand

1226.1

69

1

7.2

51

146.4

1

9.4

4

715.8

60

711.6

1

-0.5

9

ietNam

1644.9

6

17

90.0

20

2188.1

2

22.2

4

1160.8

95

1409.6

4

21.4

Subtotal

16498.2

18

214

97.4

98

26118.

1

21.4

9

115.7

7

14808.2

88

28.

9


Lao

PDR

0.0

00

0.0

00

1.7

*

0.0

00

2.8

54

*

Mongolia

na

1

16.

4

92.

69

-20.6

0

4.6

94

0.1

98

-0.8

9

Nepal

6.

08

41.5

72

2.5

51

-21.7

0

18.5

92

11.4

25

-8.5

5

AsIANPtA

ASEAN

7455.1

86

84

14.1

54

1080.2

09

2.

7

4997.0

65

5677.4

29

1.6

2

SAARC

4602.

06

56

96.9

44

6791.0

15

19.2

0

5.1

15

74.

04

11.9

7


Korea,

Rep.o

141.6

60

9

42.6

44

776.0

92

-17.6

7

97.5

2

258.7

92

-4.9

0

Taipei,China

121.0

18

9

62.7

88

884.

58

-8.1

5

425.9

10

48.8

84

-18.0

9

Hong

Kong,

China

2506.6

04

28

97.2

29

2554.1

55

-11.8

4

1280.4

50

71.8

87

-42.8

4

Macau,

China

992.0

67

10

14.9

91

1044.8

66

2.9

4

576.

24

47.2

2

-24.1

Subtotal

6071.

49

58

17.6

52

5259.4

71

-9.5

9

2680.2

07

1776.7

95

-.7

1

contin

ued

next

page.


31/42

secTion v



supplier

00

00

00

perCenT

ChAnge

ytD00

ytD00

perCenT

ChAnge

majorNon-aianN

onprefereniasuppier

E

15

1042.1

21

9

18.5

80

819.6

11

-10.7

7

406.7

98

410.1

5

0.8

2

Turkey

81.8

26

6

44.0

6

487.0

59

-24.

7

252.2

05

217.6

08

-1.7

2

Subtotal

187.9

47

15

62.6

16

106.6

70

-16.

8

659.0

0

627.7

61

-4.7

4

majorPreferenia

suppier

Mexico

607.5

95

55

7.6

89

488.4

96

-12.6

2408.1

65

2042.5

69

-15.1

8

Canada

1121.4

94

9

41.0

47

879.8

98

-6.5

0

466.9

09

70.8

95

-20.5

6

CAFTA-

DR

8714.5

06

84

61.9

68

7921.5

5

-6.

9

771.8

67

652.

6

-.1

7

Egypt

92.1

42

4

09.1

84

582.7

06

42.4

1

271.9

81

42.5

66

25.9

5

Jordan

861.9

75

9

87.4

56

1118.8

77

1.

1

521.

9

496.

57

-4.7

9

CBI*

414.

82

4

7.9

9

511.4

62

7.9

0

29.1

59

248.1

81

.7

7

ANDEAN

1182.1

07

12

96.0

29

1275.4

51

-1.5

9

598.9

78

557.4

55

-6.9

AGOA

16.4

48

1

91.1

45

127.4

00

-11.0

5

570.0

08

599.4

05

5.1

6

Others

850.9

52

6

6.1

81

502.7

42

-20.9

8

248.1

79

190.5

88

-2.2

1

Subtotal

21208.6

01

201

4.6

92

18868.5

85

-6.2

9

9096.5

85

8500.

52

-6.5

5

Word

45726.4

15

481

6.

44

5256.1

01

9.1

4

24520.7

26

26165.4

51

6.7

1

NoteYTD

isorJanuary

June2006

verusJanuary

June2007.


uthor.Seealso

Table1

ordefnitionsogrou


originaldatasource.

TAble11.conTinued.


32/42

January2008


williaM e. JaMes

TAble12

uniTvAlue

ofshipMenTsTo

Theusin

CloThin

g


bysAfegu

Ardson

TheprC(uniTvAlueus$/sMe)

supplier

2004

2005

2006

perCenT

ChAnge

yTd2006

yTd2007

perCenT

ChAnge

CopeiiveAian

suppier

PRC

2.7

56

2.

02

2.7

87

21.08

2.8

45

.0

91

8.6

5

Indonesia

.5

.7

1

.8

06

2.49

.6

24

.8

56

6.4

0

Bangladesh

2.0

05

2.1

61

2.

44

8.48

2.2

54

2.

44

.9

9

Cambodia

4.2

72

.9

86

.5

86

-10.04

.4

69

.4

89

0.5

8

India

4.0

76

.9

99

4.1

82

4.57

4.1

61

4.2

71

2.6

4

Malaysia

.9

68

.6

71

.1

07

-15.6

.1

11

.

46

7.5

5

Pakistan

2.6

70

2.6

20

2.

8

-9.02

2.1

96

2.2

84

4.0

1

Philippines

.7

79

.9

62

.7

8

-5.66

.4

94

4.

06

2.2

4

SriLanka

4.

08

4.1

82

4.0

57

-2.98

4.2

26

.9

22

-7.1

9

Thailand

.0

71

.2

0

.1

70

-1.86

.1

68

.

29

5.0

8

ietnam

.5

50

.7

97

.8

65

1.79

.8

56

.8

52

-0.1

0

Subtotal

4.0

0

2.8

90

.1

12

7.68

.1

12

.2

57

4.6

6


Lao

PDR

none

none

0.9

94

*

none

0.9

5

*

Mongolia

na

.6

01

.6

48

1.1

.5

5

.

29

-5.8

Nepal

.2

42

.2

0

.2

48

0.56

.2

55

.0

54

-6.1

8

AianPtA

ASEAN

.6

8

.7

9

.6

5

-2.0

.5

66

.7

7

5.8

0

SAARC

2.8

76

2.9

57

2.9

61

0.14

2.9

12

2.9

44

1.1

0


Korea,

Rep.o

2.6

57

.0

1

2.8

48

-6.01

2.8

51

.0

61

7.

7

Taipei,China

2.7

56

2.9

99

2.8

60

-4.62

2.8

06

2.9

05

.5

Hong

Kong,

China

4.9

8

5.7

86

5.2

71

-8.91

5.6

20

5.8

47

4.0

4

Macau,

China

.5

11

4.4

11

4.

71

-0.89

4.

77

4.2

51

-2.8

8

Subtotal

.4

86

4.2

68

4.0

29

-5.60

4.1

19

4.1

06

-0.

2

contin

ued

next

page.


33/42

secTion v



supplier

2004

2005

2006

perCenT

ChAnge

yTd2006

yTd2007

perCenT

ChAnge

majorNon-aianN

onprefereniasuppier

E

15

10.9

45

1

1.6

94

14.4

10

2.22

14.4

4

16.8

4

16.6

Turkey

4.2

6

4.2

19

.9

0

-6.84

.6

8

4.1

95

1.9

0

Subtotal

6.4

54

6.7

6

7.2

27

6.86

6.8

18

8.2

4

20.7

7

majorPreferenia

suppier

Mexico

.6

48

.6

56

.6

22

-0.95

.5

1

.6

61

.6

8

Canada

6.1

01

6.

29

6.8

08

7.56

6.5

80

7.

44

11.6

1

CAFTA-

DR

2.5

78

2.4

2.4

89

2.2

2.4

60

2.

99

-2.4

8

Egypt

2.8

56

2.9

46

.2

85

11.51

2.8

71

.4

48

20.1

0

Jordan

4.5

75

4.4

1

4.4

45

0.

4.1

54

4.5

74

10.1

1

CBI

1.9

61

1.9

21

1.7

88

-6.94

1.8

25

1.7

4

-4.9

9

ANDEAN

5.6

00

6.1

15

6.5

72

7.47

6.4

5

6.7

74

4.9

7

AGOA

4.1

68

4.0

26

4.0

4

0.42

.7

84

.7

51

-0.8

7

Others

4.5

6

4.7

01

4.5

1

-4.00

4.5

15

4.

05

-4.6

5

Subtotal

.2

40

.1

25

.1

58

1.06

.0

98

.0

71

-0.8

7

Word

.1

46

.0

46

.2

80

7.69

.2

61

.

07

1.4

1

NoteYTD

isorJanuary

June2006

versusJanuary

June2007.


uthor.Seealso

Table1

ordefnitionsogrou


originaldatasource.

TAble12.conTinued.


34/42

January2008


williaM e. JaMes

TAble 13iMporTMArkeTshAreof MAJor foreign suppliersin us CloThingin CATegories resTriCTed

by sAfeguArdsonThe prC (voluMeinMillionsquAreMeTerequivAlenTs, %)

supplier 00 00 00 00 ytD 00 ytD

Cpeiie Aian sppier

PRC 12.462 21.14 20.725 15.787 22.776

Indonesia .068 .91 4.46 4.46 5.002

Bangladesh 4.867 5.157 6.2 6.581 7.114

Cambodia 1.45 1.919 2.878 2.804 .451

India 2.160 2.72 2.914 .20 .66

Malaysia 0.929 0.920 1.15 1.19 1.004

Pakistan 2.8 2.516 .180 .22 .408

Philippines 2.06 2.051 2.50 2.87 1.911

Sri Lanka 1.46 1.712 1.924 1.92 2.095

Thailand 2.747 2.619 2.882 .005 2.701

iet Nam .188 2.98 .55 4.004 4.624

Subtotal 6.756 47.14 52.98 49.28 57.452

Aian PtA

ASEAN 14.100 14.29 17.740 18.65 19.018

SAARC 11.008 12.190 14.16 15.20 16.00

Aian Frer lare Qa hder

Korea, Rep. o .47 1.968 1.701 1.854 1.069

Taipei,China .07 2.01 1.90 2.019 1.518

Hong Kong, China .492 .168 .025 .00 1.582

Macau, China 1.944 1.456 1.492 1.751 1.00

Subtotal 11.982 8.62 8.148 8.654 5.468

oer Nnpreferenia sppier

E-15 0.655 0.497 0.55 0.75 0.08

Turkey 1.42 0.966 0.774 0.911 0.656

Subtotal 1.997 1.46 1.129 1.285 0.96

majr Preferenia sppier

Mexico 11.85 9.582 8.40 9.070 7.050

Canada 1.265 0.941 0.807 0.944 0.68

CAFTA-DR 2.259 22.008 19.869 20.95 19.241

Egypt 0.944 0.879 1.107 1.260 1.255

Jordan 1.296 1.410 1.571 1.669 1.71

CBI 1.449 1.555 1.785 1.74 1.808

ANDEAN 1.45 1.9 1.209 1.24 1.040

AGOA 2.696 2.186 1.911 2.00 2.020

Others 1.28 0.856 0.696 0.740 0.595

Subtotal 45.00 40.756 7.296 9.049 4.984

Note YTD is or JanuaryJune 2006 versus JanuaryJune 2007.Source Computed rom Table 10.


35/42

secTion v



TAble 14iMporTMArkeTshAreof MAJor foreign suppliersin us CloThingin CATegories resTriCTed

by sAfeguArdsonThe prC (vAlueinMillion us$, %)

supplier 00 00 00 00 ytD 00 ytD

Cpeiie Aian sppier

PRC 10.919 15.982 17.614 1.772 21.288

Indonesia .446 4.15 5.178 4.960 5.8

Bangladesh .101 .659 4.455 4.549 5.04

Cambodia 1.892 2.417 .149 2.982 .642

India 2.799 .576 .718 4.25 4.48

Malaysia 1.168 1.108 1.075 1.065 1.008

Pakistan 2.02 2.164 2.10 2.26 2.54

Philippines 2.446 2.668 2.88 .078 2.488

Sri Lanka 2.00 2.50 2.80 2.504 2.484

Thailand 2.682 2.778 2.786 2.919 2.720

iet Nam .597 .719 4.165 4.74 5.87

Subtotal 6.076 44.555 49.71 47.07 56.595

Aian PtA

ASEAN 16.04 17.480 19.758 20.79 21.698

SAARC 10.065 11.85 12.926 1.601 14.272

Aian Frer lare Qa hder

Korea, Rep. o 2.94 1.958 1.477 1.621 0.989

Taipei,China 2.692 2.000 1.68 1.77 1.

Hong Kong, China 5.482 6.019 4.862 5.222 2.797

Macau, China 2.170 2.109 1.989 2.50 1.671

Subtotal 1.278 12.086 10.011 10.90 6.791

oer Nnpreferenia sppier

E-

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Asian Textile and Apparel Trade: Moving forward with Regional Integration