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Adjusting to Liberalization: Tracing the Impact of the WTO on the European Textiles and Chemicals Industries

Published online by Cambridge University Press:  20 January 2017

Thomas C. Lawton  and
Steven M. McGuire
Thomas C. Lawton
Affiliation:
Imperial College London
Steven M. McGuire
Affiliation:
University of Bath
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Abstract

Rulings made by the World Trade Organization (WTO) dispute settlement body have, since the organization's creation in 1995, significantly advanced global economic liberalization. The response of business has been varied and far from uniformly supportive of the WTO agenda. The reason stems from the fact that adjusting to liberalization measures is easier in some industries than in others. The response is premised on the strategic alternatives available within an industry. Through examining antidumping (AD) elements of the European Union (EU) trade policy regime in the context of two European industries - chemicals and textiles - we find that both are under severe competitive pressure, due to WTO-induced market liberalization. However, the responses taken by companies within the respective industries are very different. We suggest that while WTO activity catalyzes industry evolution, the form of that adjustment is highly industry specific. In the case of textiles, the disaggregation of the industry value chain allows for a variety of product and locational adjustment strategies. In contrast, the chemicals industry is nationally based, reliant on intellectual property for competitive advantage and structurally limited in its ability to adopt a wide range of adjustment strategies. Therefore, in the absence of alternative strategy options, EU chemical companies lobby for rule harmonization in the WTO.

Keywords

WTOindustry adjustmenttextileschemicalsEuropean Union
Type
Article
Information
Business and Politics , Volume 7 , Issue 2 , August 2005 , pp. 1 - 23
Copyright
Copyright © V.K. Aggarwal 2005 and published under exclusive license to Cambridge University Press 

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