The impact of regional free trade agreements on global textile and clothing trade

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The impact of regional free trade agreements on global textile and clothing trade

 

Author: Tsang, Wai-yan Vivian
Title: The impact of regional free trade agreements on global textile and clothing trade
Degree: M.Phil.
Year: 2008
Subject: Hong Kong Polytechnic University -- Dissertations.
Clothing trade.
Free trade.
Trade regulation.
Department: Institute of Textiles and Clothing
Pages: xi, 132 leaves : ill. ; 30 cm.
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2190013
URI: http://theses.lib.polyu.edu.hk/handle/200/1640
Abstract: In the perspective of the rapid development of regional trade agreements (RTAs) in recent years, there has been a strong tendency of textile and clothing (T&C) trade along regional lines rather than through inter-continental trade. At present, very limited empirical research has analyzed the effects of RTAs on a particular industry - the T&C sectors. There remains a gap in our understanding of the T&C industries to be filled. This study was an attempt to examine and divulge the impacts of RTAs on global T&C trade. The main objective of this thesis is to evaluate the transformation of the T&C trade patterns of the regional trading groups for the period 1990-2006, and to identify trade creation and diversion effects of the world's most prominent regional blocs on the T&C trade. It further analyzes critically the influences of regionalism on trade liberalization in the perspectives of the T&C sectors. Modified gravity model was employed to measure and compare the impacts of RTAs on T&C trade in different periods and also, to infer the relevance of general determinants of bilateral trade flows such as income level, population size and distance, as well as the determinants of comparative advantages such as production, consumption level and labor cost of the T&C industry in an economy. More importantly, regional indicator variables were used to identify the trade creation and trade diversion effects arising from the RTAs. In this study, the regional trading groups chosen for investigation include the European Union (EU), European Free Trade Association (EFTA), North American Free Trade Agreement (NAFTA), Southern Common Market (MERCOSUR), Australia-New Zealand Closer Economic Relations Agreement (ANZCER), ASEAN Free Trade Area (AFTA), SAARC Preferential Trading Arrangement (SAPTA) and Common Market for Eastern and Southern Africa (COMESA). The eight RTAs were situated in different continents which could represent better the regional integration effects of the RTAs on T&C trade globally. On the evidence of the findings from the gravity regression, five out of seven RTAs were found to have stimulated intra-bloc trade of T&C. Majority of them induced the favorable trade creation effects while three of the FT As (NAFTA, ANZCER, COMESA) provoked detrimental export diversion effects after the formation of RTA. No import diversion effect was observed in any of the RTAs. It is almost certain that the dominating effect of trade creation is high for the T&C trade in the eight selected RTAs. There is a strong possibility that the formation of RTAs can strengthen multilateral trading system in the T&C industries and form a building block to free trade in the world. The findings further suggest that ROOs can be a highly possible source of trade diversion as they protect FTA members at the expense of suppliers outside the FTA. It is hoped that the present research has made a significant contribution in filling the knowledge gap of the effects from RTAs on global T&C trade examined by previous researches and offered a valuable insight on the impacts of regionalism.

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