beyond competition: China has decided to increase taxes on its textile exports to "smooth the transition for textile integration following the end of the quota system", according to a recent government statement. The 30-year-old export quotas on textiles will end on January 1, 2005. The prices of Chinese textiles are highly competitive, and manufacturers in many countries, including the US, Bangladesh and Mexico, are worried that cheaper Chinese products will outprice their products following the sudden liberalisation in the sector. The increased tax may give these countries an advantage but Chinese textiles might still win the competition.
trade advice: The World Bank's (WB's) Global Economic Prospects 2005 report, released recently, urges nations to work towards unilateral liberalisation. The WB says the multilateral trading system of the World Trade Organization is preferable to bilateral or regional trade agreements. The latter might cause problems and delays in customs clearances and may even lead to military conflicts, it claims. "High levels of trade can create economic inter-dependence, which, in turn, raises the cost of political disputes and military conflicts," the report says.
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