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World Bank Study
plier of choice’ for most U.S. importers because of its ability to make almost any type of textile and apparel product at any quality level at a competitive price” (USITC 2004, xi). Although, the adjustments in production and trade pa erns have been less drastic and more differentiated than originally expected, T&C exports from China and to a lesser extent from India but also from Bangladesh, Vietnam, and Cambodia have increased substantially after 2004. In contrast, higher-cost, regional suppliers in Mexico, Central America, and the Caribbean for the United States and in North Africa and Central and Eastern Europe (CEE) for the EU as well as producers in SSA countries and several LICs in other regions have lost export shares leading to significant adjustment (see trade data analysis below). Although quotas were eliminated, tariffs still play a central role in global T&C trade, in particular in developed countries and in those developing countries that have important T&C sectors as well as large end markets (such as South Africa, China, and India). Average MFN tariffs on imports of textiles are 6.7 percent for the EU and 7.5 percent for the United States and for clothing 11.5 percent and 10.8 percent respectively. However, these tariffs vary considerably for different product categories. In the United States tariffs on clothing products vary between 0 and 32 percent with duties on co on products ranging on average between 13 and 17 percent and duties on synthetic products ranging on average between 25 and 32 percent2 (see table 2.1). In the EU tariffs on clothing products vary between 0 and 12 percent; there are no systematic differences between co on-based and synthetic products. These tariffs exceed the average of manufactured products, which is typically around 3 percent (Brenton and Hoppe 2007). Markets in fast-growing developing countries are also protected by relatively high tariffs exceeding on average 20 percent. In South Africa the average applied tariff on clothing imports accounts for 36.9 percent varying between 0 and 40 percent, in China for around 16 percent varying between 14 and 25 percent, and in India for 10 percent (which is misleading, however). Looking at India’s tariff rate for a specific product such as HS 610120 (men’s or boys’ overcoats, cloaks, anoraks, etc.) shows that although the applied tariff accounts for 10 percent, the estimated total ad valorem equivalent tariff accounts for 108 percent (ITC MacMap 2010). Table 2.1. U.S. Tariff Rates for Selected Clothing Products Product
MFN duty (%)
Cotton-based clothing knit men’s shirts
19.70
knit t-shirts
16.50
woven men’s trousers
10.30
woven women’s dresses
8.40
Synthetic based clothing knit women’s skirts
14.90
knit sweaters
32.00
woven men’s suites
27.30
woven women’s dresses
16.00
Source: General U.S. duty rates: Harmonized tariff schedule, ITC MacMap 2010.