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WTO Finds Mexico May Be OK in Free Textile Trade

August 12, 2004|From Reuters

Clothing exporters like Mexico and Eastern Europe that border big markets will not suffer as much as previously thought after trade barriers start to come down next year, the World Trade Organization said today.

In a new study, the WTO poured cold water on the theory that export powerhouses China and India, whose cheap labor markets give them a comparative advantage, will push all competitors aside in a free-trade world for clothing exports.

Instead, because of the quick turnaround in the sector, where fashions are fleeting to the point that some are transported like perishable foods, countries physically close to big buyers might do better than previously thought, the study said.

"Countries close to the major markets are likely to be less affected by competition from India and China than has been anticipated in previous studies," said the Geneva-based WTO.

"Mexico, the Caribbean, Eastern Europe and North Africa are therefore likely to remain important exporters to the U.S. and EU [European Union] respectively, and possibly maintain their market shares," the WTO said.

According to some studies, China alone is set to control 50% or more of the world trade in clothing and textiles once the 1960s-era system that has controlled global textile trade falls away next year, the WTO said.

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