WELCOME TO OUR

Presentation

OUR TOPIC IS
Case Analysis on "Trade in Textiles-Holding the Chinese Juggernaut in Check"

PREPARED BY: SKY

Serial No. Student Name Student ID No.

01.
02. 03. 04.

Md. Abdus Salam

Md. Nazmul Hasan Md. Sohanul Haque(C) Md. Nazrul Islam

09102101185
09102101221 09102101214 09102101215

OBJECTIVE OF THE PRESENTATION

To require the pattern of Trade in Textiles-Holding the Chinese Juggernaut in Check. Have sufficient knowledge about Trade in Textiles in whole countries like China, US, Bangladesh, Sri Lanka, India, etc. To find out the position of Chinese textiles. To find out the position of Bangladesh RMG sector.

CASE BRIEF
From

1974 through 1994, the Multi-Fiber Arrangement (MFA) governed world trade in the textile industry. The MFA provided the basis on which the United States (US) and European Union (EU) countries restricted imports from developing countries. Without the MFA, many poor countries like Bangladesh, Sri Lanka, etc that have benefited from quotas especially China, the country that many expect to gain the most from a quota-free world.

CASE BRIEF (CONT.)

There

is a particular area in which China has become a leader: the textile industry. After the end of the Multi-Fiber Arrangement, China's textile exports rose astonishingly. American and Chinese trade negotiators are tried to resolve an ongoing textile dispute.

QUESTION OF THE CASE

1. Was the removal of the Multi-Fiber Agreement a positive thing for the world economy? Why? 2. As a producer in a developing nation such as Bangladesh that benefited from the MFA agreement, how should you respond to the expiration of the agreement? 3. Do you think China was right to place a tariff on exports of textiles from China? Why? Does such action help or harm the world economy? 4. Whose interests were served by the November 2005agreement between the United States and China to limit the growth of Chinese textile imports into the United States? Do you think the agreement was a good one for the United States? 5. What kind of trade barrier was erected by the November2005 agreement between China and the United States?

ANSWER TO THE QUESTION OF THE CASE

Q 1.Was the removal of the Multi-Fiber Agreement a positive thing for the world economy? Why?

The removal of the Multi-Fiber Agreement was not positive for the world economy because it allowed more growth for strong economies and weakened the small economies. Multi -fiber Agreement (MFA) is designed to protect developing nation from foreign competition. The quota system restricts competition and allows less competitive exporters to export more than their competitive share. Export countries will face lower prices as a result of increase competition, which was previously limited by MFA.

ANSWER TO THE QUESTION OF THE CASE

o

Some reasons of the removal of the Multi-Fiber Agreement are: Country such as China will monopolize the industry due to the comparative advantage, low wage, and productive work force, economies of scale, good infrastructure, reliable delivery and commitments as compared to other countries like Bangladesh. With the expiration of MFA (elimination of trade quotas), it brings countries to a more open trade economy; reduce trade barriers.

ANSWER TO THE QUESTION OF THE CASE

Q 2.As a producer in a developing nation such as Bangladesh that benefited from the MFA agreement , how should you respond to the expiration of the agreement?

The Multi-Fiber Agreement (MFA hereafter) was set up in 1974. As a producer in a developing nation such as Bangladesh, the expiration of the Multi-Fiber Agreement would hurt the economy tremendously. Having a set quota for the country would allow continual growth of the economy. the United States, European Union and other industrialized nations forced developing countries to use export quotas on textiles and clothing. This was to protect the import-competing firms of industrialized nations who wanted time to adjust to the rising foreign competition. A developing country like China, which was one of the big textiles and clothing exporters at the time, would be adversely affected by this MFA arrangement.

ANSWER TO THE QUESTION OF THE CASE

Q 3.Do you think China was right to place a tariff on exports of textiles from China? Why? Does such action help or harm the world economy? We feel as if by placing tariffs on exports of textiles from China it is actually hurting the world economy. The tariff might not be too much but China will still produce and export the same amount, whether the tariffs are there or not, therefore, when they export, the price will be higher for the importers of textiles from China. This is going to hurt the economies of different countries.

ANSWER TO THE QUESTION OF THE CASE

Q 4.Whose interests were served by the November 2005 agreement between the United States and China to limit the growth of Chinese textile imports into the United States? Do you think the agreement was a good one for the United States? The United States and China have reportedly reached a tentative agreement on imported Chinese textiles in November 2005. Negotiators have agreed to allow US imports of Chinese textile and apparel products to increase up to 10 percent in 2006 and 16 percent in 2007. Comprehensive agreement on Chinese exports that compete with US made clothing and textiles. The issue flared because of a surge in Chinese exports to the US after textile quotas were lifted at the start of the year.

ANSWER TO THE QUESTION OF THE CASE

Q 5.What kind of trade barrier was erected by the November 2005 agreement between China and the United States? 2005, the U.S. textile imports from China entered into bilateral negotiations as prescribed limit by 2008, imports from China, which imports 15 percent of the maximum amount prescribed by the conclusion was determined. The elimination of the last set of quotas of the Agreement on Textiles and Clothing (ATC) on January 1, 2005, ostensibly brought about the end of decades of quantitative restrictions on the international exchange of clothing and textiles.

PROBLEM STATEMENT

The Agreement on Textiles and Clothing (ATC) was implemented to eliminate the Multi Fiber Arrangement in stages by the year 2005. The Multi Fiber Arrangement has been governing the world trade in textiles and garments for the past thirty years. The MFA provided the industrialized countries the ability to limit imports from developing countries. These restrictions provided protection to domestic textile producers but allowed them to give preference to particular partner countries. The execution of the ATC will affect countries in different ways. This agreement benefits some of the developing countries but can also hurt others.

FINDINGS & RECOMMENDATION

Findings:

From the study in this case following Findings may be made those are given below: The removal of the Multi-Fiber Agreement was not positive for the world economy. As a producer in developing nation such as Bangladesh is not benefited from the expiration of Multi-Fiber Agreement. China was not right to place a tariff on exports of textiles from china. Capped the growth in Chinese imports in to the United States at around 15% per annum until 2008. There might be evidence of textile market failure in the less comparative developing nations.

FINDINGS & RECOMMENDATION

Recommendation:

The following points are recommended after studies are given below: Should be reduced the trade barriers between United States and China. Should be reduced the tariff rate in china on textiles. Should be avoided the monopolize business in china and United States. Bangladesh should think more about survival and try to be more efficient in the production of textiles. The removal of MFA for the developing nations was not the best decision.

CONCLUSION

This paper aims at dealing with the textile issue. First we will deal with the Chinese openness to the world especially through its WTO membership and the consequences of the end of the Multi-Fiber Agreement on the Chinese textile. Then, we will analyze the Chinese textile industry and see why China is getting so huge benefits from this sector. Finally, we will conclude by asking ourselves whether China is truly a threat for Europe.