Even then, upgrading without training would have negative effect- unskilled and semi skilled workers would lose their jobs
However, neither upgrading nor training took place
… Effects (1995-2004)
Transition to Liberalisation (1995-2004)
Loss of revenue and incomes continued owing to loopholes:
No clear benchmark for integrating products
No specification regarding choice of products
Tariff escalation (Das, Op. Cit. )
No significant gains on human development
However, African Growth Opportunity Act (AGOA) brought relative gains
… Effects (AGOA:2000-2004)
Extended SSA preferential access to US market
Increased range of products for which preferential treatment is granted (with respect to T & C sector, apparel included) (USSSATECF, 2004)
Increased preferential coverage by 73 % (apparel constituted 5 % of the 73 %)
May raise Africa’s non-oil exports by between 8 and 11 % by 2008 (Mattoo and Subramanian, 2003)
A number of SSA countries have become highly dependent on the sector for export earnings (IMF & World Bank, Op. cit. )
4 PROSPECTS AND CHALLENGES BEGINNING 2005 ONWARDS
Developed countries may be reluctant to integrate all products (Das, Op. Cit. )- low-skilled women workers in SSA LDCs will suffer most
Balance of payment problems for SSA LDCs highly dependent on the sector for export earnings (IMF and World Bank, Op. Cit. )
Fallacy of composition- lower standards of living and shaky safety nets in SSA LDCs (Peet, 2003; UNDP, 2003)
… Prospects and Challenges (MTR)
SSA LDCs will lose out owing to ‘trade-related’ competitive factor (UNCTAD, 2002; Hayashi and Bauer, 2004)
SSA LDCs adjustments will entail massive job losses (Peet, Op. Cit. ; Hayashi and Bauer, Op. Cit. )
Deteriorating labour conditions owing to increased competition likely (Das, Op. Cit. ; UNCTAD, Op. Cit. ; Peet, Op. Cit. )
SSA LDCs seeking to expand production from a low base will be constrained by normal World Trade Organisation (WTO) safeguards (Das, Op. Cit. )
… Prospects and Challenges (AGOA)
Rule of Origin (ROO) would limit the otherwise welfare gains
Without the ROO, Africa’s non-oil exports would increase by US $ 0.54 (Mattoo and Subramanian, Op. Cit. )
With the ROO, the increase in non oil exports will be US $ 0.1-0.14; total SSA exports will be reduced by 30 percent (Mattoo and Subramanian, Op. Cit. )
… Prospects and Challenges (AGOA)
For SSA LDCs, impact of ROO on exports more dramatic
Mauritius (not an LDC): Exports will be lowered by 26 percent; the decline would be 18 percent in absence of ROO
Madagascar (LDC): exports will be lowered by 19 percent;exports would be higher than in transition period in absence of ROO (Mattoo and Subramanian, Op. Cit. )
Similar trend in apparel sub sector
Before 2004: LDCs (e.g. Madagascar) recorded most impressive gains; more developed countries (South Africa and Mauritius) posted modest growth (Mattoo and Subramanian, Op. Cit. )
Reason for the scenario above: LDCs were exempted from ROO up to September 2004
LDCs growth in the sector expected to be stunted
… Prospects and Challenges (Gender Issues)
T & C sector largest employer of women in developing countries after agriculture (Hayashi & Bauer, Op. Cit. ); Empowering women through access to paid work has greatest multiplier effect to meet MDGs (Kabeer, 2003)
But.. Women empowerment likely to be eroded
Competition= specialisation (LDC specialise in labour-intensive activities)=low value exports= low incomes for women
… Prospects and challenges (Gender Issues)
Competition= adjustments= loss of low skilled jobs (mostly held by women)
Upgrading will require skilled labour; most women lack such skills; many women will lose jobs or benefits will be unevenly distributed (Nicita & Razzaz, 2003)
5 SUMMARY, CONCLUSIONS & RECOMMENDATIONS
Millennium Declaration: Special needs for LDCS (SSA)
Emphasis on manufacturing/agro-industry & textiles necessary; trade key
Gains from trade in T & C sector have been undermined (1961-2004); but AGOA has mitigated this
From 2005 onwards, owing to competition and AGOA’s ROO, LDCs will lose out, jeopardising human development and MDGs in a gendered pattern
… Summary, Conclusions and Recommendations (Conclusions)
The ROO notwithstanding, AGOA has mitigated the costs of industrial globalisation in SSA hence contributing to human development
However…implementation of the ROO beginning 2005 will undermine these gains
The hardest hit by liberalisation will be poor women in SSA
Developed countries should end all trade barriers in the sector (including putting in place adjustment programmes) and ROO should be abolished
SSA LDCs should set up policies that guarantee conditions and rights of workers are met; collaborate with NGOs to set up training programmes to upgrade workers’ skills
At DDA, development principle should be accorded highest priority
Without growth of such key sectors as apparel in SSA LDCs, MDGs will not be met in the region by 2015 (at current rates MDGs in SSA will be met in the next over 100 years (World Bank, 2004). Achieving MDGs would yield the best results for mutual impact and social sustainability than any other economic strategy
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