OTTAWA - A study commissioned for the Canadian government concludes that dropping tariffs on textiles, a key part of the Prime Minister's development agenda for Africa, would be of marginal benefit to the world's poorest countries but cause little harm to the domestic market either.
Jean Chrétien departs today for an 11-day trip to several African countries to drum up support for the development plan he hopes to make the centrepiece of the G8 summit in June in Kananaskis, Alta. Part of the plan, already committed to by Canada and other industrialized countries, is to drop tariffs as high as 20% on imports of textiles and clothes by 2005. Agricultural tariffs, which are well over 100% in some supply-managed sectors, may also be dropped for the world's poorest countries.
The textile industry has already gone on the record saying it believes Canadian jobs will be lost if cheap imports are allowed into the market.
But a study for the Canadian International Development Agency rejects the idea there would be a big impact on most African countries or in Canada, and further suggests the biggest problem facing developing countries on the export front may come from among themselves. China, as it opens for business, may swamp all but the best producers from other developing countries, suggests the study, by Shannon and Associates.
"The impact of a no duty/no quota policy for least developed countries would fall primarily in the textiles and, more particularly, the apparel sector," said the study, whose principal author, Gerry Shannon, is a former Canadian deputy trade minister and chief trade negotiator.
"The small presence of least-developed countries in this market, coupled with the relatively high degree of interdependence between the Canadian and U.S. industries, suggests the domestic impact of such a move would probably also be small, and manageable without recourse to adjustment assistance."
The primary beneficiary would be Bangladesh, which already has 3% of the Canadian market for apparel and represents half Canada's imports from the least-developed countries.
But most sub-Saharan countries are primarily agricultural and mineral producers would gain only "marginally" from such an initiative. Even those countries that might benefit "would also need to become sufficiently competitive to face competition from China, India and other major producers when quotas come off in 2005," said the study.
The report notes the government should expect a fearsome lobby from the supply-managed industries, dairy and poultry, and from textile makers over any suggestion of relaxation of tariffs.
"The domestic pressure will be strong to maintain protection in sectors which rely heavily on trade-distorting border measures and/or subsidies, notably textiles and clothing and agricultural products subject to supply management," it said. "Canada would need to be prepared to take its share of tough decisions in sensitive ares of its own economy if the negotiations [on agricultural tariffs] are to be successful."
The study argues developing countries that have embraced freer trade are the quickest developing ones. Overall, the developing country share of world trade rose to 27% in 2000 from 17% a decade earlier. It pointed to World Bank calculations that suggest reducing trade barriers could cut the number of people in the world living on less than $2 a day to 1.9 billion from 2.8 billion by 2015, 300 million more people than would be helped if nothing is done.
"World Bank calculations suggest export subsidies and other agricultural supports in industrialized countries amount to $1-billion a day, more than six times all development assistance to poor countries," it pointed out. "Agricultural support in the developed countries today is little changed from the record levels of the mid-1980s."
ijack@nationalpost.com
FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. NoNonsense English offers this material non-commercially for research and educational purposes. I believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner, i.e. the media service or newspaper which first published the article online and which is indicated at the top of the article unless otherwise specified.