Changes in global trade between nations have been the most drastic in post-Covid years and the World Trade Organization (WTO) is working hard to ensure that smooth trade flows return at the earliest, especially in the apparel segment. A recent study by The World Trade Statistical Review 2023 and data from the United Nations (UNComtrade) have showcased some interesting trends in international trade, especially in textiles and clothing space that were affected by rising geopolitical tensions and changed trade policies with China.
Four key trends emerge in changed global trade relations
As per Sheng Lu, Associate Professor, Department of Fashion & Apparel Studies, University of Delaware four strong patterns have emerged which are quite different from the past couple of years. Firstly, after the unprecedented frantic buying trend with a stupendous 20 per cent growth in 2021 - right after the global lockdown clothing exports recorded a decrease in 2022. This could be attributed to the economic slowdown and high inflation in leading apparel import markets of the US and Western Europe. Also, reducing demand for raw materials needed to manufacture the personal protective equipment (PPE), led to global textile exports falling 4.2 per cent in 2022, touching $339 billion. This was far lower than other sectors.
The second pattern as per Sheng Lu is, although China remained the world’s largest apparel exporter in 2022, it continued to lose market share, with other low-cost Asian apparel exporters taking over. Countries like Bangladesh surpassed Vietnam and emerged the world’s second-largest apparel exporter. China’s global market share in clothing exports came down to 31.7 per cent in 2022, which was its lowest point ever in its recent history, having lost market share in the US, the EU, Canada, and Japan. Heightened apprehensions about forced labor and the deteriorating US-China relations became important factors in China being nudged out of smooth and ethical global apparel trading markets.
The third pattern that emerged is, the EU countries and the US remained at the helm steering the apparel markets, while accounting for 25.1 per cent of the world’s textile exports in 2022, up from 24.5 per cent in 2021 and 23.2 per cent in 2020. Textile exports in the US increased 5 per cent last year, which was the highest among the world’s top 10 countries. However, the middle-income developing countries are steadily increasing their share with China, Vietnam, Turkey, and India’s market shares in world’s textile exports together making up 56.8 per cent of global clothing exports last year.
With increased focus on near-shoring, particularly in the Western countries, the regional textile and apparel trade models have become far more integrated in 2022, in the fourth emerging pattern. Almost 20.8 per cent of these countries’ textile imports came from within their region last year, which increased from 20.1 per cent in previous year.
China’s diminishing strength
Not just the western countries, The World Trade Statistical Review 2023 has proven that even Asian countries are now diversifying their textile imports away from China to mitigate supply chain risks and all this is leading to a changed expansion for the better, states Sheng Lu. The after-effects of the pandemic has been felt by the fashion industry much more than the others as the unpredictable customer demand in various countries has affected business and the international textile and apparel industry globally.
The WTO and other global organizations are now putting renewed commitment to multilateralism, better transparency and global opportunities for collaboration and reform as other smaller countries join the bandwagon to compete with the biggest but not necessarily the best in in the trade segment.