WORLD TRADE  
ORGANIZATION  WT/COMTD/LDC/W/36 
20 October 2004 
 (04-4434) 
Sub-Committee on Least-Developed Countries Original: English 
   
MARKET ACCESS FOR LEAST-DEVELOPED COUNTRIES 
IN THE TEXTILES AND CLOTHING SECTOR AFTER THE EXPIRY OF ATC 
 
Initial Submission from the Least-Developed Countries
 
  
 The following communication, dated 18 October 2004, is being circulated at the request of 
the Delegation of Tanzania on behalf  of the least-developed countries. 
 
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1. International trade in Textiles and Clothing is to be integrated into the normal rules and 
disciplines of the GATT/WTO from the beginning of 2005.  This will bring an end to a quota system that prevailed almost half a century, and heavily influenced the pattern of trade in Textiles and 
Clothing. 
2. The MFA, and subsequent ATC, although a derogation from the basic principles of the 
multilateral trading system – was not the only derogati on.  It immensely contributed to the growth of 
LDCs' exports of textiles and clothi ng.  The quota availability has gi ven predictable market access for 
LDCs, and motivated local as well as foreign en trepreneurs to develop local industries.  
3. Along with quota availability, preferential mark et access played a critical role in the export 
growth of LDCs.  The EBA initiative of EU (a dopted by EU in 2001), the AGOA initiative (adopted 
by US in 2000), and recent market access impr ovements in favour of LDCs adopted by many, 
including Canada and Australia, have provided unprecedented opportunities to expand markets for 
LDCs' exports.  With a view to taking advantag e of these preferential schemes, many LDCs have 
started building their capacity in sectors such as Tex tiles and Clothing.  Several LDCs have been able 
to attract FDI in Textiles and Clothing sector as a result of the preferential schemes.  Some other LDCs are now in the process of developing thei r Textiles and Clothing Industry, and have been 
preparing themselves to effectively u tilize the preferences given to them.   
4. Textile and Clothing, particularly the latter,  play a vital role in economic development of 
LDCs.  It offers opportunities for diversification, generates foreign exchange earnings, contributes to 
the development of Small and Medium scale en terprises and, most importantly, generates 
employment at comparatively low cost.  In fact, women make up the vast majority of workforce in 
garment factories.  Any dislocation in this sector would have severe consequences in terms of job and 
income losses, jeopardizing thei r socio-economic situation.  
5. The export basket of LDCs is very narrow.  While half of the LDCs, for their export earnings, 
rely on the export of primary products, a large number of LDCs entirely depend on two/three-
manufactured products, including textiles and clothi ng.  The overall performance of their economies 
is thus highly contingent on the success of these sectors.  
6. With the imminent phase out of the ATC, the est ablished pattern of trade would be disturbed.  
The market structure evolved over the past decad es would undergo massive change.  Existing supply 
network will be upset.  In this process, some countri es will emerge as winners, while many others will WT/COMTD/LDC/W/36 
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be crowded out.  Already, we have seen the im pact in areas where quotas have been lifted.  
Preliminary studies indicate a possible major loss of LDCs ' market share in textiles and clothing trade.   
7. The LDCs have made whatever market in roads they could, despite operating under severe 
structural handicaps.  Effective backward linkage h as not taken place to encourage vertical integration 
in this sector.  Port, shipping and related infrastructure is fragile.  Given the present level of 
development, if the preferences are eroded, many LDCs  may be driven out of business.  They are also 
highly vulnerable in areas which will determine the futu re of trade in this sector after the withdrawal 
of quotas.  These include, but are no t limited to, proximity to major ma rkets, links in the supply chain 
and distribution network, bargaining position with  the transnational intermediaries, and sheer 
economic size.  The impact of phase out of ATC and other preferences may be significant for LDCs. 
8. It is recognized that given different leve ls of development, benefits from MFN trade 
liberalization cannot be evenly distributed.  Countries that benefit most are those that have developed 
competitive productive capacities and have created  a diversified export base to take maximum 
advantage of new trade opportunities.  The low level of economic development in the LDCs attests to 
the fact that their industrial capacity needs to be strengthened before they embark on any adjustment 
process, and participate under free play of market forces. 
9. Historically, trade policy in Textiles and Cl othing has always been selective.  The early 
industrializers traversed the ladder of growth w ith the boom of Textiles and Clothing, and which 
flourished under protection and activ e government intervention.  Even now, this sector is subject to 
tariffs peaks and non-tariff barriers.  Most LDCs ar e at the initial stage of their industrial development 
and need the gestation period, and appropriate cu shion, to move up to a mature stage.  The 
sine qua non  of a robust economic growth is a booming manufacturing export sector.  
10. With the emerging trends, particularly in th e clothing sector, the scenario of LDCs’ market 
access after the expiry of ATC appears bleak.  Apar t from the projected loss of share in textiles and 
clothing, the preferential margins that the LDCs cu rrently enjoy are also soon to be eroded under the 
NAMA negotiations.  The LDCs will need to be assis ted through concrete measu res to adjust to the 
new and more competitive market access conditions, a nd to prevent their further marginalization in 
the world economy. 
11. The challenges for the LDCs to survive in the post ATC environment are daunting.  Without 
international support and intervention in the WTO, most LDCs will not be able to withstand this 
shock.   
12. LDCs are committed to the multilateral tradi ng system, and are ready to discuss the issue 
within the parameters of the system, and to accept an y solution that is consistent with the objectives 
and principles of the system.  The Marrakech agreement establishing the WTO recognized the need 
for positive efforts designed to ensure that devel oping countries, and especially the LDCs, secure a 
share in the growth in international trade.  The LDCs see trade as an instrument of development, and 
the Members can ensure that in a developmen t round the LDCs do not lose an opportunity for 
accelerated economic development. 
13. These concerns have prompted the LDCs to request the WTO to:  (a) identify the problems 
associated with the phase out of the ATC;  (b) anal yze the scenario of market  access in the textiles and 
clothing sector for LDCs after the expiry of ATC;  and (c) suggest measures so that market share of LDCs is retained, the adjustment process in the pos t ATC period is less painful, and the transition to 
the integration of the Textiles and Clothing sector into the multilateral trading system for LDCs is 
smooth, while market disruption is minimal.  
  WT/COMTD/LDC/W/36 
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14. A group of countries had made a submission in the Council for Trade in Goods held on 
1 October 2004 requesting WTO to undertake a study on the impact of the phase out of ATC and to 
develop a work programme.  Several LDCs have joined that initiative.  Any outcome from the 
consideration of this issue in the Sub Committee on the LDCs could assist the CTG in their effort. 
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