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. [...]
[...] The Free Trade Agenda also helps the European countries to expand in the whole world more easily. The opening of boarders and lowering of barriers will permit European businesses to enter new markets or it will cost them less to be present outside the EU. In particular, the following types of businesses will benefit: Firms that want to set up business within China or looking to expand into China, or even firms wishing to set up joint ventures within China. [...]
[...] Or if they do, it will be because of the outsourcing and delocalization of part of their productive processes to developing countries which will kill jobs in their initial country. The lower skilled workers will be particularly touched by employment drop, moreover if their labour markets are rigid, their firms will have to compete with firms in developing countries which also employ low skilled workers, but at much lower rate, longer hours, poor working conditions. With the abrogation of the WTO-Agreement on Textile and Clothing (ATC) which previously limited imports of certain textile and clothing products to specific quotas, the Europe has to face a tougher competition coming from China but also from other major producers such as India and Pakistan. [...]
[...] What interest us more in this study is the trade between the EU and China. China is the EU's second largest trading partner. The amount of their trading exchange was worth 174 billion euro in 2004. China is the second largest exporter to the EU after the US. The EU imported more than 126 billion euros worth goods in 2004, which represent 12% of the EU import market. The importation from China has increased by 17% between 2002 and 2003 and 20% between 2003 and 2004. [...]
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