The completion of the WTO free trade agenda will produce both winners and losers in the EU - To what extend do you agree?
- Introduction to the WTO and its free trade agenda.
- The European textile sector.
- The consequences of the free trade agenda on the European textile sector.
- The positive aspects for the EU.
- The negative aspects for the EU.
The World Trade Organization (WTO) is an international body, the purpose of which is to promote free trade by persuading countries to abolish import tariffs and other barriers. It has little by little become closely associated with globalisation. The WTO is the only international institution supervising the rules of world trade. It rules the free trade agreements, controls trade disputes between states and organizes trade negotiations. The WTO was created in 1995 and is based in Geneva. It is the successor of another international organization: the General agreement on Tariffs and Trade (Gatt) which was set up by 23 countries in 1948 to reduce customs tariffs. The WTO agreements have been negotiated and signed by the majority of the world trading nations and ratified by their parliaments. It counts around 150 countries nowadays.
[...] II) The consequences of the Free Trade Agenda on the European textile sector The positive aspects First the removal of quotas in global textile trade is an important prize for progressive trade liberalisation. Free trade in textiles will compel European textile firms to become more competitive and productive and as a result will have to be more efficient by using their resources and labour force in a more productive way. This will permit the companies to lower their prices. As a matter of fact there is a double decrease of prices: The first one comes from the national enterprises, which have to decrease their prices to face the fierce competition. [...]
[...] The negative aspects The most important consequences the Free Trade Agenda will trigger are on the employment. The following table shows the evolution of employment in textile and clothing between 1995 and 2002. So, the employment has dropped in many European countries, such as France, Spain, Portugal, Germany and United Kingdom. The EU-25 has encountered a drop of 12% of its staff in the textile sector in only 6 years. This trend is going to worsen with the opening of markets, as no barriers will hinder the Chinese importations in Europe. [...]
[...] As a matter of fact, the Free Trade Agenda frightens the European textile actors, all the more so as it will open the European market to Chinese competition (to quote the most relevant one). Some winners will appear nonetheless. This study will first report on the situation of the European textile market, then discuss on the positive and negative consequences the Free Trade Agenda will have on the European textile and clothing sector. The European textile sector The European Union is an enormous agent of the trade exchange as far as the textile and clothing sector is concerned, as well as the USA and China. [...]
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