• Liberalisation and textiles

Liberalisation and textiles

Following the elimination of export quotas textiles and apparel industries and the anticipated rise of other larger industrialised developing countries like China at the expense of smaller, less industrialised developing countries, the paper explores policy responses that could mitigate the negative effect of the quota elimination on less industrialised developing countries.

The paper points out that for smaller developing countries the loss of the sector will result in unemployment and exacerbate already severe poverty at a household level. At the countrywide level, loss of the sector jeopardises the path of industrial development that many of these countries had hoped to pursue—namely, using export-oriented apparel production as a stepping stone to other industrial development. At the international level, a downturn also may have national security consequences for the United States and other countries, if political instability results from economic turmoil in countries such as Bangladesh, Haiti, and Sri Lanka.

This paper argues that developed country policy makers should therefore pursue a more comprehensive response. Such a response includes four key elements:

• enhanced trade preferences for smaller, less industrialized developing countries likely to be seriously affected by quota elimination
• targeted technical assistance to help affected countries improve their overall competitiveness (for example, through improvements to infrastructure and customs facilitation)
• assistance to help affected countries "differentiate" their exports in the global marketplace
• assistance to help affected countries manage inevitable dislocations.

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